Tuesday

4th Oct 2022

Debt-ridden Cyprus takes on EU presidency

  • Cyprus - keen to put itself on the EU political map (Photo: ColinsCamera)

Debt-ridden Cyprus took over the day-to-day running of the EU Sunday (1 July) becoming the first euro state to take on the presidency since the end of 2010.

A first-time presidency, the Mediterranean island - for many seen only through the prism of its almost 40-year division - is hoping to put itself on the EU political map.

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Cyprus has almost tripled the number of staff to over 200 in its Brussels office and is spending around €61m on the presidency.

The sum is large for the island. And all the more so since the country recently admitted it would seek a full-blown bailout from the eurozone. Cyprus' books exploded because of its banks' heavy exposure to Greece.

The fact that it will likely be under the sovereignty-reducing supervision of EU officials is likely to reduce its political clout in the Brussels machinery.

Even before it became clear that Nicosia would need a bailout, Cyprus officials had been fretting about how it would "remind" other EU states that a euro country had taken over the presidency and would need to be involved in all single currency discussions.

Denmark, which has just relinquished the presidency, is not a member of the euro group.

One of the key unwritten parts of Cyprus' agenda is likely to be trying to minimise the political tension between the euro ins and outs - a task that has become increasingly difficult as the eurozone considers major steps forward in fiscal and political integration.

The major stated issue on Nicosia's presidency agenda is sealing a deal on the EU's multi-annual budget. A difficult discussion in good times, the talks are set to be even more bad-tempered than usual as cost-conscious member states seek to send the least possible money to the EU coffers for 2014-2020.

"This is going to be our baby," Cyprus' EU ambassador Kornelios Korneliou said recently.

Russian connection

Meanwhile the EU stage is set to spotlight Nicosia's close relations with Russia.

The Central Bank of Russia recently said Cyprus was the largest single source of FDI in the Russian Federation. Up to 40,000 Russians now live in Cyprus. The port city of Limassol has its own Russian newspaper, schools and restaurants. Last year, Moscow pledged a €2.5bn loan to Cyprus.

The tortured Cyprus-Turkey connection will also feature. Cyprus has been divided since 1974 following Turkish invasion of the island, itself sparked by a Greek-led coup. A series of UN-led rounds of talks have failed to bring about reconciliation between the two sides.

The Cyprus question has seen Turkey's EU membership talks grind to a halt. Ankara, for its part, has said it will have no communication with the Cyprus EU presidency.

Denmark

Cyprus takes over from Denmark, widely seen to have run an efficient and transparent presidency.

As a non-euro country, Danish diplomats have noted that potential political rifts between the euro ins and outs did not worsen under their watch.

Among their other achievements was a deal on legislation significantly increasing Brussels’ budgetary oversight on eurozone countries; an eleventh-hour compromise on an energy efficiency law, a deal on where to house the EU patent court; and an agreement on a law on capital requirements for banks.

But the six-month stint ended on something of a sour note when member states agreed amongst themselves not to let the European Parliament have a say in how EU border rules are applied. Furious MEPs denounced the Danish presidency as having betrayed parliamentary democracy.

Cyprus presidency to-do list shrinks

At the end of the month, the day-to-day running of the EU will be handed over to Cyprus - a member state with more political baggage than most.

Denmark to battle for European unity

Denmark takes over the EU rotating presidency on Sunday, kicking off what is expected to be another traumatic year for the eurozone and its single currency.

MEPs: Schengen row mars Danish EU presidency

Member states' decision to exclude the EU parliament from monitoring the EU's passport free area has blighted the entire Danish EU presidency, MEPs have said.

Analysis

Cyprus - buoyed by gas hopes

There is a spring in Cyprus' step as it considers the major energy reserves off its coast. It wants to become a Meditarranean hub. But the politics of the region make it extremely complicated.

Cyprus could 'combine' Russian and EU loans

Cypriot President Demetris Christofias is waiting to see whether the EU or Russia offers the best deal for his troubled banks - and has not ruled out taking loans from both.

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