Cyprus says no to ‘blackmail’

http://www.euronews.com/ With Cyprus deep in a bank-triggered recession, we asked the head of state for his views. Even with a bailout, Cyprus’s GDP is predicted to shrink by more than eight percent this year, as the EU keeps close watch.

Efthymia Koutsokosta, euronews: “Almost two months after the euro zone finance ministers’ decision to bail out the Cypriot economy, we welcome the President of the Republic of Cyprus, Nicos Anastasiades.

“Has Cyprus been a ‘lab rat’ for the EU?”

President of the Republic of Cyprus Nicos Anastasiades: “The terms were such that we really feel we were used as a test model. It seems that this encouraged many EU officials and many governments to see this as a good solution for the future, unless we reach something better through a banking union.”

euronews: “The International Monetary Fund, in its annual report, sketches out what is coming for the Cypriot economy. It says that from 2015 to 2018 additional disciplinary measures will be applied, which are equivalent to 4.7 percent of the annual income of Cyprus. What’s your plan so that people can have some hope?”

Anastasiades: “There are many things that our friends in the IMF don’t take into account. For example, during the discussions which were aimed at avoiding the bailout, even in the banking resolution, they did not take natural resources into consideration. I believe that the keys to disproving the IMF’s bad forecasts will lie in the cooperation over natural gas that we are pursuing with Israel, the strengthening of relations and co-exploitation in some sectors.”

euronews: “European leaders and the IMF were saying for months that a country the size of Cyprus can’t have a banking sector which is eight times the size of its GDP. Cyprus’s economy was largely based on its banking sector. Given the Eurogroup’s decision, do you think that the danger of a national default has been completely overcome?”

Anastasiades: “The problem was bad management by the bankers. The banking sector in relation to GDP was not many times larger. Luxembourg’s banking sector is the biggest part of the state’s economy. That was not the problem. Unfortunately, sometimes we get big-headed and we mismanage our capacity. A very healthy banking system was led to the edge of collapse, endangering us with default on our national commitments.

“Of course, there were also mistakes made in providing liquidity for one of the two banks. The Popular Bank which went bankrupt and merged with the Bank of Cyprus absorbed 9.5 billion euros of European Central Bank Emergency Liquidity Assistance. That is how much the state of Cyprus needs. If you take this into account, you realise there are grounds for blame.”

euronews: “You have just referred to the management of the banking sector and to the bankers; what is happening in your dispute with the Central Bank of Cyprus?”

Anastasiades: “What is important now is to work together and not in confrontation – not to think that the European system of independent central banks opposes mutual respect. The system is indisputable and we totally respect it. However, the actions of central bank governors affect the policies of elected governments. Therefore, there should be mutual respect between an elected leadership and an independent appointed official. This independent official should respect the government’s decisions.”

euronews: “Let’s look at another unresolved matter of importance for Cyprus: reunification. Recently, there have been some diplomatic and political moves from all the sides involved: from Turkey, the EU and even NATO. These have moved the subject back up the agenda, to discuss a new solution. I’d like to ask you about the report from the United Nations Special Adviser on Cyprus, Alexander Downer. What exactly does it say? Do you accept its findings?”

Anastasiades: “This ‘famous’ document was made public at my request. I have to say that it is nothing but a description of what was done from 2008 until 2012. It covers so-called ‘convergence and divergence’. But it is not in any way a basis on which we are going to pursue the negotiations, nor we are bound by any convergence which was successfully accomplished in the past.”

euronews: “Are you saying that when the negotiations start up again you are not going to begin from the point where you left them?”

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