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CYPRUS: "Go for a deal" says Barroso

08 October, 2012

The European Commission President Jose Manual Barroso has called for compromise among the government, the political parties and the social partners in Cyprus with a view to reaching an agreement between Cyprus and the Troika of the European Commission, the European Central Bank and the International Monetary Fund over Cyprus’ application for financial assistance.
Conveying a message of hope to the Cypriot people, Barroso said, “I know the situation is difficult, the challenges are immense, we need a huge effort from the political system in Cyprus, all the different parties from government and opposition from the social partners, but look it is critically important for the future of Cyprus.”

He also expressed hope that “we can move rapidly to reach an agreement on the measures to be taken to guarantee a long-term sustainability of the Cypriot economy.”
“Cyprus has been suffering from the impact of the financial crisis and also of situations we have known in the Euro area and it is critically important now to come to some level of consensus for a common determination to face the situation and I am sure you will find a way because I know the dynamism of the Cypriot people, I know that if they understand correctly how challenging is the situation there will be the capability to overcome the current situation and also to move together with the other partners of the EU to the future of sustainable growth,” he added.

On his part, President Christofias pointed out that there should be no illusions to the people because «I do not like creating illusions,” adding the government will continue the dialogue with the political parties and the social partners for a Memorandum that would be “as less painful as possible.”
“We have serious problems, which we will have to face jointly with the Union and of course these are problems created by Cypriot companies, these are of Cypriot origin and of Greek origin. This problem is well known, the problem of Cypriot banks and their exposure to the Greek economy,” he noted.

Cyprus has applied for financial support from the EU bailout mechanism to assist the recapitalisation of the island’s two main banks, Bank of Cyprus and Cyprus Popular Bank, which have huge exposure to the Greek economy and have been severely hit by the haircut of the Greek sovereign debt.
Referring to the upcoming EU Council, Barroso said “we need to give a clear direction on the adoption by the end of the year of the Commission’s proposal for a Single Supervisory Mechanism.”

“I think it is critically important that we now are seen as taking concrete important decisions because this SSM will provide the trigger of the ability to have direct recapitalisation of banks while also we will have the opportunity for further orientation on the future of the economic and monetary union on the basis of an interim report that has been prepared by the President of the Council,” he added.
Referring to today’s first meeting of the European Stability Mechanism Board of Governors in Luxemburg, Barroso said that “Europe is making progress in terms of building the integrated capabilities to face the crisis.”

“It is another very important instrument with a very important funding capacity comparable only in the world with the IMF and my point is some years ago it would he unthinkable to mention a kind of ESM of this magnitude,” he went on to say.
In an analogy with the maritime policy, Barroso said “we have been building the life boats during the storm in the Euro area and that’s not easy to put life boats during the storm.”

Replying to a question concerning the EU Multiannual Financial Framework for 2014-2020, Barroso acknowledged that the EU is divided between Friends of Cohesion, a group of states advocating for more spending, and the Friends of Better Spending, the more rich member-states calling for a better management of the EU spending.
“I have proposed that the Friends of Cohesion and Friends of better spending unite as friends of Growth. That is what we need in Europe. In Europe, we need to come back to sustainable growth. And so it is critically important that cohesion, which is also for growth and competitiveness and at the same time is important that the net contributors to show commit to solidarity to the less prosperous regions of Europe,” Barroso said.

Thanking the Cyprus Presidency and President Christofias and Deputy Minister for EU Affairs Andreas Mavroyiannis for the efforts to reach an agreement on the MFF Barroso said “a deal can be made.”
“We are working with the Cyprus Presidency to have a political agreement to a special European Council in November and once again I hope it will be a deal that respects the line of the European Commission proposal. I am not naïve I know not everything would be exactly as we propose but I hope that member states are able to agree on a budget that is the most important issue that we have at the European level for investment and growth,” he said.

On his part, President Christofias said that the Cyprus Presidency wishes, as an honest broker, to reach, if possible a final positive result in November.
Replying to a question, the embargo to Cypriot-flagged ships imposed by Turkey since 1987, President Christofias said “this issue is on our agenda all the time.”

“We strongly criticize Turkey on the measures taken against Cyprus as it violates the Law of the Sea and international law, while still an occupational force on the island and therefore damages itself.”
He also referred to the support of the EU to Cyprus when it comes to its sovereign right to explore and exploit its natural resources within its Economic Exclusive Zone.

Replying to the same question, Barroso said this is a complex issue within the Cypriot -Turkish relations, refraining from commenting on the substance of the question.
“We remain committed to this priority, that is, to achieve a united Cyprus through a lasting settlement,” he went on to say adding that “to have a solution requires political commitment on all sides. We in the European Commission continue to do everything we can to move the negotiations (on the Cyprus question) forward.”

Cyprus has been divided since 1974 when Turkey invaded and occupied its northern third.