The government of Cyprus has brought in international communications help as the country fights to secure a €17 billion ($22.6 billion) bailout from the European Union.
The country is deep in negotiations with the EU, the International Monetary Fund, and the European Central Bank over a recapitalization package that would see approximately €11 billion ($14.6 billion) ploughed into the country's banking sector. The Cypriot banking industry is suffering from its exposure to Greek debt.
However, a number of key European lawmakers have objected to the aid package, claiming that Cyprus' regulatory regime promotes tax evasion and is a haven for Russian money laundering.
The country has hired FTI Consulting to help it during the negotiations and correct what it believes to be misconceptions about its tax system.
The Cyprus Investment Promotion Agency initially held competitive pitches late last year for a brief to increase foreign direct investments into the Cypriot economy.
However, as the bailout talks intensified, and with a presidential election looming in mid-February, the account has morphed into supporting key Cypriot institutions.
The agency is working with the CIPA, the Ministry of Finance, and the Central Bank, offering communications support and advice during the recapitalization process.
“We are trying to provide balance to what has been biased coverage on what is really going on…the Cypriot story is a positive one, but the underlying story isn't coming out,” said Neil Doyle, MD in FTI's strategic communications practice.
He explained that accusations about the country's attitude towards money laundering and tax evasion were “legacy issues” from a period before its 2008 membership in the EU when the country operated as an offshore financial center.
Doyle said Cyprus now has “world-class anti-money laundering rules and enforcement” and that an IMF study recently ranked the country's anti-money laundering measures above many EU contemporaries.
Doyle is leading FTI's engagement alongside senior MD Cleopatra Kitti and MD Paul Marriott.
The agency will take up its inward investment brief after the conclusion of troika talks and the Cypriot election, when President Dimitris Christofias will stand down.
FTI will work primarily in the UK, Russia, and Ukraine to generate international investment in five key sectors of the Cypriot economy: energy; financial services; professional services; technology, media, and telecommunications; and shipping.
The government has particularly high hopes for the nation's nascent energy sector after about 7 trillion cubic feet of natural gas were found off the Cyprus coast in late 2011.
Christopher Clark, MD, will lead the inward investment brief.
FTI Consulting has previously worked with the governments of Hungary and Iceland, as well as the Bank of Spain, during their respective financial recapitalizations.
- Cyprus' banking sector is five times the size of its entire economy, according to The Wall Street Journal, and held Greek loans and bonds worth 160% of GDP in 2011.
- German Chancellor Angela Merkel is calling for regulatory and economic reform and privatizations before supporting a bailout.
- Christofias categorically rejects the privatization of state-owned firms.
This article originally appeared on the website of PRWeek UK, the sister publication of PRWeek at Haymarket Media.