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Anastasiades unhappy with Cyprus bailout: a few thoughts

17 June 2013

I read with some confusion a recent press statement from Greek Cypriot President Anastasiades which says that he is less than happy with the terms imposed by the EU in return for a Euro 10 billion aid package.

If memory serves, Mr Anastasiades and his team were involved in all stages of the negotiations relating to the terms of the package.

In fact at the end, the package terms were discussed, analysed and approved by a majority in the Greek Cypriot parliament.

Now after accepting the bailout terms and, in fact payments, under the bailout, he is complaining that he does not like them.

He feels that South Cyprus was hard-done by and compares it to the more generous terms afforded to Greece for their bailout funding.

Now there is no doubt that the huge overblown banking system in the South was cut down to size and that many depositors lost a lot of money in the process. In addition capital controls imposed are still largely in place and these are deepening the recession.

What the president conveniently forgets is that there were many warning years ago that the whole offshore banking edifice would come crashing down. Also there were warnings about enormous state subsidies to nationalised firms as well as an overpaid civil service and militant trade unions forcing overmanning.

Another reason for the crisis was the massive holdings of Greek sovereign debt by Cypriot banks.

Also it is well known that the previous president Demetris Christofias managed to delay the inevitable EU funding for months so that he did not have to sign any bailout package.

At present, the South Cyprus’ constitution offers presidential immunity from prosecution. That protection is only removed for high treason or moral turpitude.

Attempts to strip the immunity of former president Christofias were blocked by the Supreme Court last year.

Finally, bank transactions were leaked showing that a firm owned by relatives of Anastasiades was among hundreds that shifted millions out of one bank before the island’s financial system was locked down on March 16.

Anastasiades has not commented on that case but his in-laws denied any wrongdoing in what they called normal business transactions.

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