Cyprus to ease citizenship requirements, attacks EU 'hypocrisy'

NICOSIA (REUTERS) - Cyprus will relax its requirements for citizenship, including for bank depositors who lost large amounts of money in the deal with the European Union and the International Monetary Fund (IMF), in an effort to keep foreigners interested in investing in the island state.

Cyprus was forced to wind down one major bank and impose considerable losses on large depositors in a second bank in return for 10 billion euros (S$16.2 billion) in aid from the IMF and the EU in a move that was devastating to both Cypriots and foreign investors. Euro zone finance ministers approved the aid on Friday.

In prepared remarks to Russian businessmen in the port city of Limassol, President Nicos Anastasiades said his Cabinet would this week approve the relaxation of restrictions on foreigners seeking Cypriot citizenship. Non-resident investors who held deposits prior to March 15, when the plan to impose losses on savers was first formulated, and who lost at least 3 million euros would be eligible to apply for Cypriot citizenship, he said.

Cyprus' existing "citizenship by investment" programme - similar to that of many countries - would be revised to reduce the amount of investment required to be eligible for the programme to 3 million euros from the previous 10 million euros.

"These decisions will be deployed in a fast-track manner," Mr Anastasiades said in the address.

Other measures were also under consideration, he said, including offering tax incentives for existing or new companies doing business in Cyprus.

Mr Anastasiades, whose centre-right government has been in power for less than two months, said countries who accused Cyprus of being a money laundering hub for businesses from countries such as Russia were being hypocrites, since those same countries were now trying to lure foreign businesses away from Cyprus.

Used to robust growth and a thriving financial services sector, Cyprus is now bracing itself for record unemployment and at least a 12 per cent drop in output this year.

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