Cyprus Gets Back EU Finance Ministers Scared Off by Drone Attack

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(Bloomberg) — For Cyprus’s embattled tourist industry, this week’s arrival of 27 European Union finance ministers with an entourage of central bankers and officials is better late than never.

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The bloc’s closest territory to the Middle East war is sorely craving a visitor boost after an Iranian drone strike scared off holidaymakers. Following attacks on a UK military installation in March, allies rushed materiel to boost defenses, while finance ministers put a big meeting there that month on ice.

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Tourist numbers slumped in March by more than 30% from a year earlier, while in April they were down almost 28%. Package-holiday bookings fell sharply and hoteliers have reported cancellations from major European markets as governments updated travel advisories to warn of the dangers.

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“We’re bleeding money,” said Marios Ellinas, group general manager of Lordos Hotels (Holdings) Public Limited, whose properties include the 5-star Golden Bay Beach Hotel in Larnaca. “The competition is suffocating. But with costs so high, we can’t even afford to offer discounts.” 

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The postponement of the ministers’ gathering that’s now taking place on Friday in Nicosia was all the more crushing for Cyprus given how the EU presidency it holds marked a rare opportunity to tout the long-toiled-for rehabilitation of its economy. The only other time the country ever led the bloc’s meetings was in 2012, during debt turmoil that ultimately forced its bailout.

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Those turbulent times are long past. Cyprus is now a paragon of fiscal virtue, boasting one of the EU’s few budget surpluses and debt well below the bloc’s average. But the war has stoked a whole different crisis for parts of the island’s tourist industry, even if hostilities have halted.

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While the economic shock from the war has been global, its impact on Cyprus has been distinct within Europe given that the fallout extends to actual security. The Mediterranean island located off the coast of Lebanon and Syria is closer to Beirut than to any part of the EU.

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Such considerations prompted finance ministers to put off their meeting in late March, in a fairly unique example in EU history of security considerations derailing such a gathering.

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The timing of the first drone attack on the Akrotiri UK sovereign base on March 1 was particularly unfortunate because it’s around that time that the holiday industry typically locks in summer reservations. 

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Hermes Airports, which manages Cyprus’s international airports, suffered a 16% annual drop in arrivals in April. For the summer season running from April through October it expects passenger numbers to fall by almost a 10th.

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Tourism is only one source of growth, contributing 14% of economic output in 2025, according to officials. Even so, the brand damage to Cyprus has cast clouds over the resilience of a success story for prosperity, and a pivotal element to its outlook.