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Commission blames Christofias for economic meltdown

8 October 2013

An investigating committee which was formed to examine the causes of South Cyprus’ economic failure has pointed the finger of blame at former president Christofias.

The committee, comprised three members, one of whom was Supreme Court Judge Andreas Kramvis and the other, former Cyprus Ombudsman and former judge Eliana Nicolaou and was chaired by Giorgos Pikis, a former Supreme Court President and former member of the International Court of Justice in the Hague. The three were commissioned by the South Cyprus Cabinet in March to investigate any possible civil, criminal or political liabilities relating to the country’s economy and banking sector.

Having completed their findings, the committee chairman read out sections of the 178 page report at a press conference held yesterday.

The committee said that in the main, it was former president Christofias who was responsible for the economic crisis, that it was he who had “determined the economic policy of the country, ignoring the impact of its policy on every aspect of the economy” and “insisted on imposing his positions, ignoring the experts’ advice and promptings on issues related to the economy”.

The investigating committee also blamed President Anastasiades and his government for being ill prepared for negotiations with the Euro group meetings which began on March 15th. Cyprus was at that time tasked with imposing a haircut on bank deposits in two of its largest banks which were closely linked to debt in mainland Greece, after it asked for a 10 billion euro financial aid package from the Troika (European Commission, the European Central Bank and the International Monetary Fund).

The committee also blamed the members of Christofias’ cabinet “who had the power to reject proposals and bills on the economy but did not do so”.

Political responsibility is also attributed to the Democratic Party (DEKO) and the socialist movement EDEK which participated in Christofias’ administration for three and a half years and two years respectively.

A supplementary report was drawn up by Eliana Nicolaou who stated that, “the economic crisis was caused by the activation of a vicious circle of interdependence between the banking system and the country’s finances”. Nicolaou said that she would not read out her report as “it did not reflect the positions of the other two members of the committee”.

The bailout considerably reduced Cyprus’ banking sector which saw the closure Cyprus Popular Bank (Laiki) and its deposits being transferred to the Bank of Cyprus. Deposits of over 100,000 euros were subject to a swinging 47.5% haircut.

Cyprus since that time has seen a steep rise in unemployment and many businesses forced to close down.

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