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Ukrainian crisis threatens Cyprus's economic recovery: tourism sector leaders

by Petros Petrides

NICOSIA, May 8 (Xinhua) -- The Ukrainian crisis poses a serious threat to the recovery of Cyprus's economy even as there are signs that it may be defused, a leading hotelier told Xinhua on Thursday.

Haris Loizides, who heads the Cyprus Hoteliers Association said that Cyprus was counting on an increase of between 20 and 25 percent in tourism from Russia this year to help it weather the fallout of a meltdown of its economy last year.

Following last year's tumultuous bailout in which Cyprus was brought back from the brink of bankruptcy, tourism replaced the banking and services sector as the steam engine of the economy.

Technocrats who represent Cyprus's lenders -- the Eurogroup and the International Monetary Fund -- in a 10-billion euro bailout currently in Cyprus on a survey mission made a point on Thursday of conferring with the leaders of Cypriot hoteliers and tourist oriented enterprises.

"They were clearly interested in being informed about this year's prospects as they consider tourism to be the main sector to push the economy back on growth," Loizides said after the meeting.

He said the Ukrainian crisis has considerably slowed down bookings.

"We would be lucky if we have an increase of 10 percent in Russian tourists," said Loizides.

He cautioned that the drop may be reversed if moves to defuse the Ukrainian crisis proved successful but also said that the situation was being complicated by a slip in the value of the ruble.

Loizides said hoteliers had to adjust their tourism package downwards to compensate for a devaluation of the ruble which had reached about 20 percent against the euro at its peak.

"It is not only a question of number of tourists; it is also a matter of spending by tourists and Russians now have less money available to spend on their holidays," said Akis Vavlitis, who manages the Cyprus Tourism Enterprises Association.

Cyprus Tourism Organization (CTO) data for 2013 showed that Russian visitors to Cyprus were only second to visitors from the United Kingdom, the island's primary tourist market.

Tourists from Russia topped 600,000 last year and CTO said it expected this number to increase by a quarter during the current tourist season.

This would help Cyprus to beat a projected 5.4 percent of GDP contraction of its economy this year, before returning to a modest growth in 2015.

Loizides said he was afraid that travel advice by Russia to its citizens to avoid visiting countries where United States interests were strong may hold back several thousand tourists.

A deterioration of the situation which would lead to further sanctions on Russia, including visa restrictions, would be catastrophic for Cypriot tourism.

Cyprus also expected an 80 percent increase of a much smaller number of Ukrainian tourists who visited Cyprus last year.

CTO said the number of tourists from Ukraine in 2013 was only 35,000 and the target of raising it almost twofold seemed quite feasible before the crisis erupted.

But still, it says that an increase of 10 to 15 percent is expected this year, depending on developments in the Ukrainian crisis.

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