Still feeling the heat for approving a plan to confiscate up to 80 percent of big bank deposits in return for a 10 billion euros ($13 billion) international bailout, new Cypriot President Nicos Anastasiades said he is considering asking his political rivals to join him in a coalition government to support a wave of pay cuts, tax hikes and firings of public workers as the Greek government has done.
That came as he tried to cobble together a desperate plan to stave off an even worse economic crisis with banks still keeping capital controls in withdrawals. “We are in a state of emergency,” Transport Minister Tasos Mitsopoulos, a long-standing associate of Anastasiades, told Athens-Macedonia News Agency on April 1.
He said that Anastasiades had “inherited a mess” from his predecessor as President, the Communist Demetris Christofias, but still was examining whether to reach out a hand to the Communist AKEL and Socialist EDEK to participate in his conservative government of his DISY party, the Greek newspaper Kathimerini reported.
They vehemently opposed his acceptance of crushing austerity and confiscation and there was no immediate response from them. The President also said that he wouldn’t ask fellow conservative, Greek Prime Minister Antonis Samaras, to loan Cyprus 2 billion euros ($2.6 billion) as was initially being considered.
“This is not Greece’s duty,” he said. “We have to work on our own to build a new era.” In an interview with Fileleftheros newspaper, Anastasiades outlined a 12-point plan to revive Cyprus’s economy, including reversing a policy barring casinos to go along with tax incentives for companies that reinvest profits in Cyprus, encouraging banks to lend for longer terms at lower rates and issuing property development permits within 30 days.
It’s likely to be a hard sell as media reports said he had bowed to demands from the country’s lenders of last resort, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to raise the corporate tax rate from 10 percent to 12.5 percent, the tax on interest and dividends to 30 percent and the Value Added Tax (VAT) from 17 to 19 percent.
The memorandum also calls for 5,000 civil servants to be fired by 2016 and for their retirement age to rise by two years. The government still hopes it can bring in 1.4 billion euros ($1.79 billion) from privatizations and that one day there will be revenues from burgeoning gas exploration off the island’s coast in territories disputed by Turkey, which wants to get its hands on the energy there too.