Abu Dhabi, United Arab Emirates, January 18, 2021. Interview with visiting Foreign Minister of Cyprus, Nikos Christodoulides at the Cyprus Embassy, Abu Dhabi. The National
Abu Dhabi, United Arab Emirates, January 18, 2021. Interview with visiting Foreign Minister of Cyprus, Nikos Christodoulides at the Cyprus Embassy, Abu Dhabi. The National
Abu Dhabi, United Arab Emirates, January 18, 2021. Interview with visiting Foreign Minister of Cyprus, Nikos Christodoulides at the Cyprus Embassy, Abu Dhabi. The National
Abu Dhabi, United Arab Emirates, January 18, 2021. Interview with visiting Foreign Minister of Cyprus, Nikos Christodoulides at the Cyprus Embassy, Abu Dhabi. The National

Cyprus seeks quiet conversation over gunboat diplomacy in Mediterranean


Ahmed Maher
  • English
  • Arabic

Close co-operation on the Mediterranean is needed to tackle common threats, with quiet mediation preferable to gunboat diplomacy, Cypriot Foreign Minister Nikos said on a visit to Abu Dhabi this week.

But, he added, Turkey must respect Cyprus’s territorial integrity in disputed waters.

“This is a prerequisite for any kind of co-operation with Turkey. But we believe that only diplomacy and negotiations can solve our problems. We can’t change geography,” he said.

Speaking in an exclusive interview with The National, Mr Christodoulides pointed to deepening ties between Cyprus and its Middle East neighbours to tackle security threats in the region.

“The geopolitical realities are bringing Cyprus and the United Arab Emirates together to face common concerns and challenges with a positive agenda. We signed our first military co-operation agreement recently [on January 12] to bolster relations with nearby countries in the Middle East,” Mr Christodoulides said.

Tensions flared when Turkey last year sent research ships to explore for gas riches west of Cyprus. Greece condemned the move as destabilising. France sided with Greece and despatched two warships as a sign of solidarity.

Cyprus already had military agreements with Egypt, Israel and Jordan to hold joint military training exercises. But the EU nation is expanding its relations in the region and also signed a military pact last May to help train Lebanon's army.

The new agreement with the UAE comes after the Emirates participated in a large-scale sea and air military exercise off Egypt in November 2020. French, Greek, Egyptian and Cypriot personnel were also involved in the exercise, named Medusa.

“We are all like-minded countries … Cyprus, UAE, Egypt, Greece, Israel, Jordan and some European countries like France, are all working together for positive agenda for the region,” said Mr Christodoulides, who met with Sheikh Abdullah bin Zayed, UAE Minister of Foreign Affairs and International Co-operation, on Monday.

The Cypriot minister told The National that the UAE is a "pillar of stability" in a region that has great potential, voicing his country's support of the UAE's observer status in the Cairo-based East Mediterranean Gas Forum (EMGF).

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Egypt, Israel, the Palestinian Authority, Greece, Cyprus, Italy and Jordan established the EMGF in September as an intergovernmental organisation, in a virtual ceremony hosted by Cairo. Turkey was excluded.

In recent months, many old status quos in the Middle East have been overturned and now with the clock ticking down to Joe Biden’s inauguration as US president, a host of regional countries have begun readjusting their foreign policies.

The UAE and Bahrain signed an agreement last year with Israel to establish diplomatic ties, known as the Abraham Accords. And this month Saudi Arabia, the UAE, Bahrain and Egypt agreed to fully restore ties with Qatar at a Gulf Cooperation Council summit in the city of Al Ula, in north-western Saudi Arabia.

So could Cyprus readjust its foreign policy with its nearest neighbour, Turkey and Turkish President Recep Tayyip Erdogan?

“Frankly speaking, we have a serious problem with Turkey. It’s an existential issue and security is a great concern for Cyprus. We just want Mr Erdogan to respect international law and our territorial integrity,” Mr Christodoulides said.

Cyprus, which is home to both Greeks and Turks, was divided along ethnic lines in 1974 when Turkey invaded after a coup aimed at union with Greece. Only Turkey recognises a breakaway Turkish Cypriot state in the island's northern third.

Cyprus, including the north, joined the EU in 2004, but EU laws and membership benefits only apply to the Greek Cypriot south where the internationally recognised government is seated.

An aerial photo shows Turkish-flagged drill ship Yavuz' continue offshore drilling operations in company with Turkish battleship west of of Cyprus in the Mediterranean Sea on July 11, 2019. (Photo by Turkish National Defence Ministry / Handout/Anadolu Agency/Getty Images)
An aerial photo shows Turkish-flagged drill ship Yavuz' continue offshore drilling operations in company with Turkish battleship west of of Cyprus in the Mediterranean Sea on July 11, 2019. (Photo by Turkish National Defence Ministry / Handout/Anadolu Agency/Getty Images)

In the interview, Mr Christodoulides welcomed last month's vote by the EU to expand sanctions against Turkey for its exploration of energy sources in a disputed Mediterranean area, calling it a "very important step that sends a clear message to Mr Erdogan and his Ottoman ambitions in the region to respect the sovereignty of other countries".

The EU has repeatedly condemned Turkey’s exploration off Cyprus, saying it breaches the sovereign rights of a member nation.

But the Cypriot diplomat signalled his country's support of the recent signs of rapprochement between Turkey and Greece to resume next week long-suspended talks over territorial claims in the Mediterranean Sea. These claims brought the two Nato members close to conflict last year.

Their dispute threatened to become open conflict when Turkish and Greek warships collided in August as they shadowed the Turkish seismic exploration vessel Oruc Reis while it surveyed for oil and gas.

Mr Christodoulides acknowledged that Cyprus’s so-called golden passport scheme had been problematic.

The 2013 scheme, scrapped in November last year, offered passports in exchange for investment with hundreds of people gaining citizenship through the programme.

Media reports said that foreign criminals found loopholes in the application process

and obtained EU passports.

“There will be no more such programmes for our citizenship,” Mr Christodoulides said.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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