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IDSA COMMENT

India-Cyprus Relations: Need for Consistency and Diversity

May 08, 2017

President Nicos Anastasiades of Cyprus concluded his State visit to India at the end of April 2017. India-Cyprus relations have had a historical basis. Both countries had a common approach on issues like anti-imperialism, non-alignment and promotion of sovereignty of states without external interference. Cyprus, under the charismatic leadership of its first President, Archbishop Makarios-III, had been a consistent supporter of India in multilateral fora like the United Nations (UN) on issues like the 1962 border conflict with China, the 1965 war with Pakistan and during the 1971 Bangladesh crisis. Successive Cypriot governments have consistently followed the same supportive role vis-à-vis India. India has been a principled supporter of the integrity of Cyprus within and outside the UN system. Irrespective of the changes in the international scenario, the friendship between the two countries has endured. India`s credibility with the Cypriots is high. Generals Prem Singh Giani and K.S. Thimayya rendered distinguished service heading the UN Peace-Keeping Force in Cyprus in the aftermath of sectarian tensions and civil war between the Christian Greek Cypriots and the Muslim Turkish Cypriots.

India-Cyprus relations are now multi-dimensional in nature. There is, however, substantial scope for enhancing bilateral trade and investment. Bilateral trade, though moderate at Euro 75.6 million (USD 83.02 million) in 2015, has substantial scope for growth. It is noteworthy that while Cyprus`s trade with the European Union (EU) declined between March 2013 and March 2015, India-Cyprus trade increased. More than 50 per cent of Cyprus`s trade is with the EU and Cyprus is one of the fastest growing economies (at three per cent of GDP) within the EU. Further, the country’s business friendly and tax efficient frameworks is an asset. The India-Cyprus double-taxation avoidance agreement, effective since April 1, 2017, is a step in the right direction. Cyprus was the eighth largest foreign direct investor country in India with a total investment of USD 8.33 billion in 2015-16. There are further opportunities for investments in the construction, downstream processing of petroleum and agro-based products as well as in maritime management services in India.

India can derive advantage from Cyprus`s ship-owning and ship-management services. Cyprus is considered as the third largest ship management centre in Europe and has substantial expertise by virtue of possessing the 10th largest registered fleet in the world. Setting up off-shore ship management and training facilities in Cyprus could also be a viable option for India. An agreement on merchant shipping was concluded during President Anastasiades`s visit. Cypriot investment in India`s `Sagarmala` project of developing a string of ports, and setting up start-ups in the related ancillary sector, could be gainfully explored.

With the eventual British disengagement from the EU and the concomitant impact on India`s trade with the latter, Cyprus could help mitigate the negative impact of the reduction in the EU market for India. This may be achieved by increasing Indian exports to Cyprus and greater value addition and processing in the Mediterranean country both for direct consumption and re-export to other EU countries. Even though India has a substantial presence as Cyprus`s economic partner, it is not among the top five export and import destinations of Cyprus. New Delhi should leverage the existing and prospective post-Brexit scenario as well as enormous goodwill India has enjoyed consistently since Cyprus`s independence, to boost and deepen bilateral trade and investment relations and transactions with Nicosia.

India should not let the momentum of friendly understanding with the Greek Cypriot regime of President Anastasiades be affected in any manner. India-Cyprus relations have continued to flourish even after the virtual withering away of the non-alignment phenomenon. Governments in Nicosia can play a crucial role in India`s quest for a permanent seat in the UN Security Council. India should further its interests through Cyprus, especially among the Mediterranean littoral countries and West Asian countries with which the latter has an interactive and positive relationship.

On the issue of unification of Cyprus, some low-key hints were dropped by President Anastasiades during his visit, soliciting New Delhi`s indulgence and inviting India`s intercession on the withdrawal of Turkish military forces from northern Cyprus and re-unification of the island country. India may be a little circumspect on the matter. Turkish President Erdogan has been, perhaps deliberately, indiscreet to the extent of offering his country`s help (read mediation) on the Kashmir issue during his recent visit to India. This may be deemed a counter ploy to dissuade India from taking a pro-Greek Cypriot regime posture on the issue. Cyprus already enjoys a degree of support within the EU since it joined that grouping a decade ago. Jean Claude Juncker, president of the EU Commission, and Angela Merkel, German Chancellor, had opined that the EU should do everything possible to re-unify Cyprus. Turkey`s participation in the EU, while it continues to occupy 38 per cent of Cypriot territory, has not gone down well with European governments.

In this backdrop, there is no necessity for India to adopt any overt posture on the re-unification issue. However, New Delhi should continue to consistently adhere to its time-tested and principled stand that re-unification should be pursued without external interference and involvement of coercive methods. India, despite giving up its leading role within the non-aligned movement in the present changed multi-polar and transaction-oriented international milieu, should appreciate the role some of its former non-aligned partners can still play in consonance with its strategic interests. Cyprus is one such partner nation. It could, for instance, play an important role as a hub for the deployment of Indian forces for humanitarian relief in the West Asian region, and for assisting in the evacuation of its citizens in times of distress.

The author is a retired IDAS officer, who has served in senior positions in the Government of India and in a State Government. The views expressed are the author`s own.

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