Business & Economy

Eurogroup decision on Cyprus predetermined, says President

30 April, 2013

Α Eurogroup decision on Cyprus’ financial predicament was predetermined, President of the Republic Nicos Anastasiades has said.

In an interview with the Greek TV station NET, broadcast Monday evening, President Anastasiades said that Cyprus was a guinea pig in the way that problematic banking systems would be dealt with in the Eurozone.

“It was a predetermined decision which had been taken before the Eurogroup meeting and all that remained to be done was to impose it. It was a model decision for dealing with the risks some banks were faced with. Schaeuble (the German Finance Minister) has said it many times; the guinea pig had to be a small country that would not pose a systemic risk on the rest of the Eurozone”, the President stressed.

On Μarch 25 Eurozone Finance Ministers, known as the Eurogroup, decided on a €10 billion bailout for Cyprus coupled by a bail-in by uninsured depositors.

The decision provided that Cyprus` second largest lender, the Cyprus Popular Bank, will be wound down, whereas Bank of Cyprus` uninsured deposits will take losses up to 60%.

The Cyprus government concluded in early April a 10 bln euros bailout deal with the Troika (European Commission, ECB, IMF), which needs to be ratified by six national parliaments and the Eurogroup. The interest rate for the financial assistance loan is approximately 2.5% and is repayable over a 12-year period after a grace period of a decade.

Invited to comment on suggestions that Cyprus should exit the Eurozone, President Anastasiades said that those who advocate this course of action are the ones who have applied to the Troika. Asked whether he would support a referendum on the euro exit, he noted that he wouldn’t oppose to “anything that is an expression of democracy”.

Asked about a possible solution of the Cyprus problem in parallel with the exploitation of the natural gas reserves in Cyprus’ Exclusive Economic Zone, the President underlined that this would be a good outcome.

He noted that a solution to the Cyprus problem is long overdue, adding however that “nobody can impose a solution that would be rejected again by the Greek Cypriots”.

Exploratory drilling conducted by Noble Energy in Block 12 of Cyprus’ exclusive economic zone has revealed a gross natural gas reserve from 3 to 9 trillion cubic feet with a 60% probability of geologic success.

Confirmatory drilling in block 12 of Cyprus` exclusive economic zone will begin as soon as the rig is transferred there, in mid or late June, and is expected to be completed by October.

Cyprus has been divided since 1974 when Turkey invaded and occupied its northern third. The latest round of negotiations with the aim to reunite the island under a federal roof began in 2008, however this came to a halt in 2012 as a result of the Turkish stance.

In 2004, a UN solution plan known as the Annan Plan-named after the then UNSG Kofi Annan –was put to a referendum and was rejected by the Greek Cypriot community.