Cyprus Mail newspaper

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Cyprus Mail www.cyprus-mail.com

Wednesday, December 5, 2012

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President: bailout is a necessary evil Christofias warns of many painful measures as part of bailout deal By Stefanos Evripidou

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RESIDENT Demetris Christofias last night made it clear there was no going back on the bailout deal and its contents, which he warned would be painful. In a televised address to the nation, Christofias called for unity and responsible action from all to “overcome the difficulties” brought about by Cyprus’ recourse to the European Stability Mechanism. Cyprus has reached a preliminary deal with the IMF and the EU to borrow up to €17.5 billion - almost equivalent to the country’s entire annual output. Christofias, dressed in a dark suit and red tie, flanked by the flags of Cyprus and the EU, said Cyprus had no choice but to turn to outsiders for help after its largest banks took huge losses on exposure to debtcrippled Greece and looked to the state for aid. The collapse of one of the big banks would have led the country to bankruptcy, he said. “I am the last person who will attempt to idealise this memorandum and attempt to whitewash things ... there are many measures which are truly painful, and measures which, under other circumstances I would not even discuss,” Christofias said. However, he asked, what would happen if the banking system collapsed and the country was destroyed. This was not the time for populism, nor for personal interests and ambitions, or petty political and electoral considerations, he argued. “These moments demand maximum unity. We should not forget that nothing is fin-

ished as yet,” he said, noting the difficult issues of determining the amount necessary for the recapitalisation of the banks and the procedures still to go through in the EU and among member states. “It is for this reason that we must all act responsibly and seriously. This is why we should all raise ourselves to the challenge - political parties, organised groups and the media- so as not to cause more difficulties or give the chance to those who want to harm our country to succeed.” He called for “hard work and sacrifice” to “bring into effect another economic miracle” like the one witnessed after the 1974 Turkish invasion. “We took the decisions we did with heartfelt pain,” Christofias said, arguing that the government exhausted all other options before requesting help from the so-called troika of international lenders. “Many citizens are asking themselves: why should we pay for the criminal mistakes, oversights, perhaps even the abuses of some senior bankers or why do we have to pay for the inadequate supervision of the banking system by the Central Bank and the former governor?” he said, in reference to Athanasios Orphanides. Looking sombre in the prerecorded speech and appealing for public unity, he said: “Decisions of the banks, and inadequate supervision by the central bank, are costing Cyprus many billions of euros.” The president referred specifically to the €4 billion losses incurred by the Cypriot banks due to their exposure to Greek bonds, and another

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About 100 loyalists protest outside an Alliance Party office in east Belfast, Northern Ireland yesterday after city councillors voted not to fly the British flag all year round, police said. Nationalists opposed to Northern Ireland being part of the United Kingdom wanted the flag taken down permanently, but in a compromise it will now be flown only on 17 designated days (AFP)

German finance minister warns on money laundering By Elias Hazou GERMANY said yesterday it expected complete transparency from Cyprus on money laundering issues and expects quick implementation of suggestions made under international requirements. The warning came from German finance minister Wolfgang Schaeuble after the meeting of EU finance ministers yesterday in Brussels. Asked about the Cyprus bailout, Schaeuble said: “We expect complete financial transparency from Cyprus relating to money laundering issues, which fulfil

EU standards and international requirements. We also expect quick implementation of all requirements that international organisations make.” “On top of that we need extensive cooperation on tax questions,” he added. There have been several articles in the German press recently with European politicians expressing concern over handing bailout money to Cyprus when there were question marks over Russian money and allegations of money laundering. Eurozone finance ministers are to decide on a bailout programme for Cyprus at the latest by January 21, Eurogroup president Jean-Claude Juncker said on

Monday after the Eurogroup meeting. Juncker said eurozone ministers would take a decision on Cyprus either on December 13 “or definitely by January 21.” Commenting on this Schaeuble said yesterday: “We discussed the first draft of a memorandum of understanding for Cyprus. A lot more work is needed. That’s everyone’s opinion and many member states have said that yesterday (Monday). “That’s both about the banks’ needed volume as well as the question who the creditors are and how the creditors can be involved in taking the costs of

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