ATHENS – Failing to meet his goal of finding peace with Turks occupying the northern third of the island and with his country’s banks needing a bailout to stay solvent, Cypriot President Demetrios Christofias laid out plans for what he hopes to accomplish during the nation’s six-month term as symbolic European Union Presidency starting on July 1.
He faced the immediate problem of being ignored by Turkey, which has been seeking EU membership for years but has stalled, primarily over its refusal to allow ships and planes from the Greek side of the island to use its airports and ports. Turkish troops have been in place on the occupied side of Cyprus since a 1974 invasion. Christofias said negotiations are in a deadlock and blamed Turkey but said he hoped that after the February elections when his term ends that the peace process can restart.
Christofias told Greek state television that his government will try to reach a compromise among all bloc members for a growth package agreed upon in Brussels, as well as enforcing measures to streamline the island’s economy without causing any more hardship. A communist who studied in Moscow, he told NET that “the Cypriot presidency will have to manage the package in favor of growth so as to reach a conciliatory conclusion for all of the Union’s members by the end of 2012. The EU consists of governments with conflicting interests.”
He said he was satisfied with the results of the EU meeting that offered $60 billion in additional aid for growth initiatives to struggling countries. “The direct recapitalization [of banks] constitutes a step forward. There have been some positive decisions for the countries of the South,” he said. Cyprus has asked the EU for a loan of as much as $12.65 billion because its banks have been weakened by exposure to the Greek economic crisis and held Greek bonds, which were reduced in value by 74 percent by the Greek government.
Christofias said Cyprus would not withdraw its loan request even if he can get money from Russia or China. “We have approached these two countries, and we are waiting for their answer. But even if we agree, we shall not withdraw our application to the Mechanism.” He added, “We shall not require huge amounts of money. We will have to recapitalize at least two banks of ours with over 2 billion euros ($2.53 billion.)” He said he expected EU officials to come to Nicosia by July 9 for consultations.
Cyprus is the fifth EU country to seek a bailout, behind Greece, Portugal, Ireland and Spain, but Christofias said the problem is European-wide. “Half of the countries in Europe are in crisis due to the deep crisis that has enveloped the system in general. We have fallen into the arms of the Mechanism due to the great exposure of Cypriot banks in Greek state bonds, not because of our state debt or deficit. The crisis has brought a reduction to our state revenues of over 1 billion euros ($1.26 billion) per year.” Cyprus has a Gross Domestic Product (GDP) of $23.13 billion annually.
Responding to a question about statements by the CEO of Cyprus Popular Bank Michalis Sarris regarding tough measures to be asked of the Cypriot economy by its creditors, Christofias promised he would hold Cypriots harmless and not impose the kind of austerity that has had Greeks protesting, striking and rioting for two years, bringing down one government. “Some people have a neo-liberal philosophy, but we do not. We will take the necessary but bearable measures for the people. We will show in documented fashion that we will not need any tougher measures than those we are already taking. As long as there are people, hope springs eternal. They just need to set their targets,” he said, without specifying what he would do.