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16th Jul 2018

Cyprus foreign minister: the EU has taken us back to 1974

  • Cyprus in 1974: abandoned shop. Some premises in the UN buffer zone have stayed untouched for 40 years (Photo: UN)

Cyprus' foreign minister Ioannis Kasoulides has said lack of EU solidarity has put the country's economy back to where it was after the Turkish invasion in 1974.

Kasoulides spoke out on Wednesday (27 March) in two interviews, with French newspaper Les Echos and with Greek broadcaster Skai TV.

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He told Les Echos: "We need to start from scratch, as in 1974, when our economy was levelled to the ground after the Turkish invasion."

He added: "I refuse to speak of solidarity. Europe is pretending to help us but the price to pay is too high: nothing less than the brutal destruction of our economic model which will cause enormous, long term difficulties for the Cypriot people."

Kasoulides was referring to the terms of the EU bailout, agreed on Monday, which force it to seize billions from savers and investors in its two top lenders and which undermine its status as an offshore banking centre.

Turkey invaded Cyprus after a coup d'etat on the island 40 years ago and still occupies its northern half, which it calls the Turkish Republic of Northern Cyprus.

The Cypriot minister added that tourism, Cyprus' second biggest sector, is also "in danger because hotels and restaurants can no longer function normally" due to bank closures and capital controls.

Looking back on the bailout talks, he blamed fellow EU countries for lack of transparency.

He told Les Echos: "Nobody told us the truth or warned us, either during the campaign that led to the election of President Anastasiades on 24 February or in the days after he came to power, that the [bailout] talks would lead to such a sudden, radical and violent rupture of our economic model."

He told Skai TV that Luxembourg, another offshore centre, was the only EU country which took its side in the final negotiations.

"They [Greece] told us behind the scenes they supported us, but only Luxembourg spoke up in our favour during the Eurogroup," he said, referring to the club of euro-countries' finance ministers.

"France maintained silence. France’s own problems might appear in the future and then it will [also] need the help of its partners," he noted.

He singled out Germany for its "ruthless" behaviour.

"It’s clear that Germany wants to impose its views on the peoples of southern Europe, which need her at the moment," he said.

He added that Cyprus should also take some of the blame, however.

He told Les Echos that Cypriot authorities did nothing to stop savers at Laiki bank, which is to be wound down, from moving their money abroad in the run-up to the final EU deal on 25 March.

"[The] amounts [were] large enough for Laiki bank, the second biggest bank in the country, to find itself on the edge of a precipice: it had no more than €55 million left in cash. We had no other choice than to restructure our banks," he said.

"There were errors on both sides: for example, was it reasonable for the European Central Bank and the central bank of Cyprus to keep financing Laiki when it was on the verge of bankruptcy? The emergency loans represented €430 million in September 2011, but went up to €9.2 billion in mid-March [this year]," he added.

The issue of who knew what and how the information was used in the run-up to the bailout has the potential to create a new political storm.

The Cypriot parliament also on Wednesday demanded that the central bank publishes a list of people who transferred large sums money out of Cyprus ahead of the Eurogroup deal.

Eurozone agrees Cyprus bailout 2.0

Cyprus' Laiki bank is to be wiped out. Depositors in Bank of Cyprus will also take a hit under a new bailout deal. But details remain sketchy.

Cyprus economy to shrink 12.5% despite EU bailout

Cyprus' economy will shrink by 12.5 percent and its government needs to sell part of its gold reserves in order to meet the conditions of an EU-IMF bailout, a leaked paper says.

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