THE UK’s Brexit minister warned this week that a no-deal outcome could hit the island hard in everything from halloumi exports to tourism, but observers claim he was scaremongering to force the government to pressure the European Commission to bow to the UK’s demands for a better deal.
During a lightning visit to Cyprus on Wednesday, Stephen Barclay squeezed in a brief interview with the Sunday Mail after a meeting with President Nicos Anastasiades and foreign minister Nicos Christodoulides.
“Whether it’s businesses, whether it’s tourism, whether it’s the [British] bases, whether it’s the rights of citizens, whether it’s the one per cent of Cypriots that get their professional qualification in the UK at any one point – what protects all of those points is to get a deal. And the UK is committed to getting a deal, but it does require creativity and flexibility from both sides – to coin a phrase it takes two to tango,” Barclay told the Sunday Mail.
Within minutes, Barclay had laid down all the “disruptions” the island can expect in the case of a hard Brexit.
The EU would ban data sharing between Cyprus and the UK. Currency valuations may plummet. UK holidaymakers would not be able to use e-Gates entering the country, impacting tourism, a third of which comes from the UK.
Piling on to the list, he said we should also expect detrimental consequences to the island’s car market, which trades significantly in UK imports. The thousands of Cypriot students who study in the UK may have difficulty getting their qualifications recognised. And then, there was the danger to our weak spot: halloumi exports.
But observers say many of these statements are part of the British government’s attempts to force divisions within the 27-member bloc in the lead up to October 31, the date when Prime minister Boris Johnson has said Britain will leave the EU, deal or no deal.
First of all, we need to understand the reason for Barclay’s visit to Cyprus, and why he is visiting other European states, the chairman of the Cyprus Hotel Association (Pasyxe), Haris Loizides, told the Sunday Mail.
Loizides was among the elite of business leaders who met with Barclay at a reception hosted at the British High Commission during the minister’s visit.
“He is trying to persuade Cyprus to pressure the Commission on the issue of the [Irish] backstop, which Barclay himself voted in favour of each time Theresa May’s deal was put to a vote – but now, ‘alternative arrangements’, as Barclay told me, must be found,” Loizides said.
“While playing the card of the UK’s historical importance to Cyprus, and of the fact that the UK is our largest market for tourism, Barclay told me point-blank that he’d like me to use my lobbying power to push our government to push the Commission,” he added.
Barclay did, however, stress that the UK government is striving for a deal, Loizides said, noting that a disorderly Brexit would create three problematic fronts for tourism: visas, flight routes, and Britons’ purchasing power.
The blow of the first two will possibly be lessened through a transition period where not much will change, “but whatever the outcome of Brexit, the purchasing power of Britons will decrease, particularly in the short-run, though things may possibly improve with time.”
Adding to the scare of the consequences of Brexit is the fate of UK travel giant Thomas Cook, which may fall into administration this weekend unless it finds a £200m (about €226.6m) injection to secure its future. According to Loizides, the company also owes the Cyprus tourism industry €70m to €80m.
Trying to form alliances
Mirroring Loizides’ claim, the director of labour relations and social policy of the Employers and Industrialists Federation (OEV), Lena Panayiotou, told the Sunday Mail that she has a similar hunch regarding the purpose of Barclay’s travels.
“My take is that he [Barclay] is travelling around trying to form alliances so that other EU member states pressure the Commission with regards to the backstop, which the UK wants out of the question if a deal is to be reached.”
Panayiotou was among business representatives from 20 EU member states that took part in a Brexit task force session organised by one of the EU’s most powerful lobbies, BusinessEurope, on September 11 in Brussels.
What she took away, she said, was that “it’s a political game of strategy, and back-to-back technocratic and political meetings are bumping up the pressure for the EU to be more flexible. In a way it is being asked it to compromise all it has built throughout the years to give the UK what it wants, and allow for mini-deals.”
So, how far should Cyprus be worried about a no-deal Brexit?
Halloumi, Cyprus’ treasured export, is a particularly soft spot for the island as 44 per cent of the cheese is exported to Britain, leaving cheesemakers terrified at the thought of the imposition of tariffs.
“I think they’re right to be concerned about that, because the arrangement we put in place is very temporary,” Barclay told the Sunday Mail.
By “arrangement”, Barclay was referring to a decision taken by the UK government to slash tariffs on 87 per cent of imports for 12 months in the case of a no-deal Brexit, to lessen the blow.
But he warned that could change.
“Sometimes, people think that it’s protected for up to 12 months, but that’s not the case. It is temporary, it is up to 12 months, but we will move much more quickly.”
Even more worrying for producers is that Barclay said that the UK is prepared to tango solo as regards the production of halloumi.
“In the case of a no-deal, there will be scope for the UK to look for its own procurement, where there are domestic suppliers, and what they may do to boost those industries as part of our response to a no-deal outcome.”
According to the head of the cheesemakers association, Giorgos Petrou, it is highly likely that the UK will ditch Cypriot halloumi producers and conveniently find local imitators.
After Cyprus lost its halloumi trademark in the UK last November due to a blunder by the government, the one covering the EU was still in force.
“But in the case of a hard Brexit, the trademark covering the EU will also be lost, and so anyone in the UK can make a cheese, call it halloumi, and sell it way cheaper due to lower costs,” Petrou said.
Tariffs worse for halloumi
Tariffs, coupled with a potential devaluation of the pound, will only make things worse for the demand of the cheese in the UK, he added.
But even Petrou, who highlighted that the livelihood of 12,500 Cypriots is tied to the fate of halloumi, admitted that “they are definitely trying to play up the danger.”
How big the danger is, is still undefined, said the Chamber of Commerce and Industry’s vice president for trade, Othonas Theodoulou.
“A no-deal Brexit would mean that the UK becomes a third country, and therefore the imposition of tariffs for exports to the country. But even in that scenario, what the tariffs will be, whether there will be quotas, or quantity restrictions, is still up in the air,” Theodoulou said.
And the pressure that the UK is applying, OEV’s Panayiotou said, has already forced the EU to make mini-deal concessions, for example as regards fishing activities.
In the EC’s latest ‘No-deal Brexit preparedness checklist’ issued on September 4, the Commission said that it has “proposed to extend the approach in the adopted contingency Regulation (Regulation (EU) 2019/498) with a similar measure for 2020, providing a framework for EU and UK fishermen to maintain access to each other’s waters for 2020.”
Barclay did not refer to these developments in his interview with the Sunday Mail.
Rather, on the issue of trade, he said that “we stand ready to agree mitigations with the [Cyprus] government, but the Commission has refused any ‘mini-deals’”.
He added that while in public the Commission claims to be creative and flexible in its negotiations, in practice it is not.
Halloumi was not the only sensitive area Barclay touched upon. He told the Sunday Mail that also on the line are professional qualifications obtained in the UK. He said that they may cease to be recognised within the EU, rendering all the diplomas obtained by Cypriot nationals in the UK, including those that the 10,000 Cypriots currently in UK universities are working towards, inadmissible.
The EC’s September 4 ‘Brexit preparedness checklist’, stated that “post-Brexit, the recognition of professional qualifications obtained in the UK will follow the (national) rules for recognition of third country qualifications. In many cases, this recognition process is more burdensome.”
A more burdensome process is to be expected in most areas as a result of the UK’s departure from the EU, but an inadmissibility of qualifications is a long way away from a suggestion that they will not be recognised.
Asked if Barclay’s grim picture being painted less than 40 days before the UK’s exodus is due to take place is a purposeful exaggeration for other ends, the Chamber of Commerce and Industry’s Theodoulou replied: “Everything is possible.”
