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Cyprus Can’t Weatherproof Its Economy With Halloumi Alone

by News Editor

April 17, 2025

As global markets brace for the ripple effects of U.S. tariffs and escalating trade tensions, Cyprus remains curiously optimistic, reacting more to the potential price of halloumi in Manhattan than to the deeper structural vulnerabilities exposed by this moment. The real problem isn’t Trump’s tariffs. It’s Cyprus’s chronic habit of planning for perpetual sunshine in a world where economic storms are increasingly common.

The Halloumi Distraction

When news broke of Trump’s 10% tariffs, the public conversation in Cyprus largely revolved around dairy. Will halloumi cost more in the U.S.? Will Americans still buy it? Yes, a €10 million slice of the halloumi export pie may be at risk—but that accounts for just 3% of total global halloumi sales, which topped €324 million last year. In real terms, a $2 uptick on a $12 block of halloumi barely moves the needle.

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Salt, olive oil, and even sugar were also dragged into the drama. But while tariffs may raise prices at the margins, they’re not about to send Cyprus’s economy into a tailspin. The danger lies elsewhere: in a local policy mindset that’s still banking on uninterrupted growth.

Budgeting For The Boom, Ignoring The Bust

Just weeks before these tariffs made headlines, Cyprus’ Parliament voted to lift a longstanding freeze on public and semi-public sector hiring—a move initiated well before global markets showed signs of turbulence. The argument? Cyprus was financially strong enough to afford it.

But that logic only works if you assume the good times will last. Now, with a fresh wave of global economic uncertainty taking shape, the government is still pushing forward with policies designed for prosperity, not resilience. That’s a gamble—and history suggests it’s not one Cyprus can afford to keep making.

Public sector wage hikes and expanded hiring may look like progress on paper, but they risk dragging the country backward if another global downturn hits. Private sector workers, after all, are the ones who’ve repeatedly borne the brunt of past crises. They’re first to lose, last to recover—and often forgotten when the next wave of government spending begins.

A Three-Month Wake-Up Call

The 90-day buffer before the full force of U.S. tariffs kicks in offers Cyprus a rare gift: time. Time to think, plan, and pivot. Rather than react to each new headline, the country has a window to develop a forward-looking strategy—one built on economic realism, not optimism.

This doesn’t mean panicking or slashing public programs. It means balancing ambition with prudence, ensuring that future decisions reflect both the potential of growth and the reality of risk.

The Real Threat To Halloumi

Ironically, while the U.S. tariffs made noise, the louder alarm is coming from Brussels. The EU’s Protected Designation of Origin (PDO) status for halloumi could have devastating consequences if enforced without compromise. A new regulation requiring at least 51% of all halloumi to be made from goat or sheep’s milk by 2029 threatens up to 60% of exports, according to Cyprus’ dairy producers’ association.

Unlike the marginal impact of U.S. tariffs, the PDO rules could dismantle a €324 million export engine and put over 15,000 jobs at risk. The government is aware and has introduced a digital system to track milk sourcing and meet existing quotas. But compliance with the future standard is logistically improbable, given local supply constraints.

A committee chaired by Chamber of Commerce head Stavros Stavrou is now lobbying for a more realistic compromise. If Brussels won’t budge, Cyprus may be forced to amend the PDO file itself—or risk losing the international market that’s been built over decades.

Conclusion: Prepare Smarter, Not Louder

Cyprus’ economic vulnerabilities go beyond tariffs or dairy quotas. What’s missing is a mindset shift—from reactive firefighting to proactive planning. Tariffs are temporary. Trade wars may fade. But unless Cyprus stops anchoring its policies to good times and “what ifs,” it will remain unprepared for the economic realities of tomorrow.

Halloumi deserves protection. But so does the broader economy. And that starts with treating global signals—like Trump’s tariffs—not as passing headlines, but as warning shots.

Cyprus doesn’t need to panic. But it does need to be prepared. Because in today’s world, having an umbrella isn’t pessimism—it’s just smart policy.

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Reassessing Cyprus’ Competitive Electricity Market: Structural Distortions and Pathways to Reform

by THEFUTURE.TEAM

December 9, 2025

Two months ago, Cyprus embarked on its journey with a competitive electricity market model, promising enhanced competition, increased consumer choices, and lower prices. However, the real-world implementation under the so‐called “target model” has revealed significant distortions that are driving up costs for the end user.

Market Distortions in a Small, Isolated System

The fundamental issue lies in the wholesale market’s pricing mechanism. Specifically, the clearing price is determined by the most expensive conventional generation unit of the Electricity Authority of Cyprus (EAC), which must meet the entire demand. This single pricing benchmark is then applied across all market participants, including renewable energy sources (RES). In a market characterized by just two main players—the EAC and limited RES providers—the distortions become inevitable. Moreover, Cyprus’ lack of interconnection with neighboring countries further exacerbates the situation, reinforcing a de facto monopoly where the EAC controls over 90% of production.

The Timing of Price Setting and Its Implications

An analysis of the hourly operations in the wholesale market reveals the inherent biases. During night and early morning hours (00:00-06:30 and 16:00-24:00), the EAC operates exclusively, setting prices solely in its favor. In contrast, during peak morning and afternoon periods, both the EAC and RES are active, benefiting both groups. It is only during brief midday windows, usually spanning 2-4 hours, that RES might operate alone, potentially lowering costs for consumers. However, given the modest share of RES operations (only 3.4% of daily demand), the overall pricing mechanism remains steeply skewed towards EAC’s most expensive units, leading to higher bills for consumers.

Data Insights From November 24, 2025

The Cyprus Grid platform data for November 24, 2025, offers a clear illustration of these distortions. For 22 hours of the day, the wholesale price is dictated by the highest-priced conventional unit, while RES participation remains marginal. Even when a small portion (1.2%) is negotiated at a zero wholesale price during low-demand periods, the remainder (2.2%) is still subject to the expensive pricing mechanism. Consequently, both conventional and RES operators are remunerated based on the EAC’s highest cost, further inflating consumer expenses.

Toward a Sustainable Solution

Immediate and long-term reforms are essential to realign the market with the interests of consumers. Two critical measures have been proposed:

1. Immediate Relief: Implementing a Wholesale Price Cap

Setting a ceiling based on thorough analyses of actual production costs could protect consumers. Any excess pricing over this cap would be automatically rebated as reduced bills. This approach, similar to the successful Iberian Exception mechanism implemented in Spain and Portugal from June 2022 to December 2023 for gas-powered generation, would provide immediate consumer relief without disincentivizing investment in storage and flexible generation units.

2. A Permanent Solution: Contracts for Difference (CfDs)

CfDs have gained prominence across Europe and in markets such as the United Kingdom, France, Poland, and Greece. Under this model, renewable energy producers secure fixed prices via competitive tenders for extended periods (typically 15-20 years). When the wholesale price falls below the fixed price, a dedicated CfD fund compensates the producer, and vice versa—if the wholesale price exceeds the fixed rate, the surplus is returned to the fund, ultimately reducing consumer bills. This approach not only stabilizes long-term electricity prices but also enhances investor confidence and ensures an equitable distribution of any premium charged.

Implementation Roadmap and Final Thoughts

Pragmatic steps must be taken immediately:

2026: Launch a pilot CfD program targeting 100 MW of new projects in solar and storage.
2027-2028: Transition to mandatory CfDs for all new renewable, storage, and hybrid projects.
2026 Summer: Amend the relevant legislation to incorporate these reforms.

The experience of markets like Greece and the UK shows that a well-organized, closely monitored tender system for hybrid projects (combining RES and battery storage) can ensure a fairer, more efficient market. The misfit of the current target model in Cyprus does not necessitate its abandonment but rather its rapid recalibration to suit local conditions.

Conclusion

By implementing a temporary price cap for immediate relief and transitioning to CfDs as a long-term solution, Cyprus stands to lower consumer bills, foster investments in renewable energy and storage, and build a fairer, sustainable electricity market. The time to act is now—not after another expensive five-year cycle of high electricity costs, but today, to build a more resilient and cost-effective energy future for every household and business in Cyprus.