THE GOVERNMENT is scrambling to save the multi-million euro Cyprus-Qatar development deal which has run into trouble, the Cyprus Mail learned yesterday.
Negotiations between the two countries appeared to be going well until last week when the government received a letter from Qatar effectively throwing a spanner in the works. The government has hinted that the about turn may have come about following Turkish interference in negotiations between the two countries.
Spokesman for ruling party AKEL, Stavros Evagorou, said yesterday: “I’ve heard there is a sufficient gap between the positions of the two sides, but I’ve been told the negotiations will continue.”
He added: “I’ve even heard reports from various sources that Turkey has got involved in the negotiations with Qatar. But the information we have is that the negotiation process between the Cyprus Republic and Qatar has not been cut and is continuing.”
Evagorou appeared to be backtracking from statements made earlier in the day to Astra Radio where he suggested negotiations were on the “road to collapse”.
According to a source close to the negotiations, just two months ago a deal appeared around the corner, whereas now a collapse seemed “quite likely”.
This is in stark contrast to the optimism expressed by Finance Minister Charilaos Stavrakis following bilateral talks held in Doha, Qatar last November.
The joint project entails construction of a luxury complex in Nicosia for which the government would provide the land while in exchange the Qataris would invest in building hotels and apartments on it.
The two countries signed a multi-million euro deal on the joint project last April, pending agreement on the value of the prime real estate earmarked for construction opposite the Hilton Hotel. Negotiations hinged on finding middle ground between the two sides’ diverging evaluations of the 26,000m² of land.
The government estimated the value at €135m while the Qataris evaluation was much lower at €38m. Following certain clarifications regarding discrepancies in the Qatari evaluation, they increased their estimation to around €65m.
According to the source, the two sides were “very close” to an agreement which was closer to the €100m mark until last week when an employee of Qatari Diar, the state-owned real estate company that is to bankroll the project, sent a letter to the government saying they now estimated the land at €50m.
“They were obviously backtracking. It was a signal that they’ve changed their minds,” said the source.
So what happened? The fact that the letter did not even come from the CEO of the company suggests that the project’s importance has fallen somewhat in the eyes of Qatar Emir, Sheikh Hamad Bin Khalifa Al Thani.
The same source expressed a “strong view that politics played a part” in the change of heart.
“They have very good relations with Turkey but at the same time, the Emir also has good relations with Cyprus,” he said.
Just last week Turkey’s Prime Minister Tayyip Erdogan went to Qatar with a massive business delegation in an effort to secure contracts relating to Qatar’s hosting of the 2022 World Cup, for which the host country is expected to invest billions of dollars.
On Monday, he joined the Qatari Emir for a meeting in Damascus with Syrian President Bashar al-Assad on how to handle the crisis in Lebanon where the government looks set to implode.
Whatever the factors at play in changing the landscape for approval of the project, the Cyprus government’s final move is to make an effort on a political level to rescue the project, though the chances of success seem much less than they were in November. The government’s position seems to be negotiations and contacts between the two sides will continue.
“We are very far from an agreement now. I’m not optimistic,” said the source.
“If this fails and we hope it doesn’t, my view is this (project) needs to be opened up to local and foreign interests. If the government doesn’t want to sell the land, then they can offer a very long-term lease with the option of renewal,” he added.
