Friday, July 6, 2012 CYPRUS MAIL
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Unions and parties lay down red lines for troika ‘We stressed... that we will not accept the abolition of CoLA’ By Stefanos Evripidou PARTIES AND unions put down their ‘red lines’ on the corporate tax rate, indexlinked Cost of Living Allowance (CoLA) and retirement age yesterday in separate meetings with troika officials on a fact-finding mission in Cyprus ahead of bailout negotiations. A delegation of the troika – representing the European Commission, European Central Bank and International Monetary Fund –met yesterday with unions and parliamentary parties as part of its bid to assess the capital requirements of the island’s public and banking sector in the wake of Cyprus’ application for financial assistance from the EU bailout mechanism. The team is due to leave Cyprus on Friday to prepare their assessment report and return mid-July when negotiations will be launched on the bailout. It is not yet clear how much of an input Cypriot authorities, parties or unions will have in the ‘negotiations’ once they get started. Since their arrival on Monday, the troika has met with various stakeholders, including the Ministers of Finance, Commerce and Labour, the House Finance Committee, House President, business leaders and employer organisations. Yesterday, the troika heard the opinions of unions and party representatives on the state of the economy and the best way forward. The meetings were clearly one-sided, with troika officials sticking to gathering information, rather than engaging in dialogue or discussion on the sensitive matters at hand. The heads of unions SEK, PEO, DEOK and PASYDY rejected in unison any effort to abolish CoLA while also voiced their dissent against extending the retirement age. Speaking after the meeting with the troika at the finance ministry, SEK’S Nicos Moy-
seos said: “We stressed to the troika technocrats that we will not accept in any case the abolition of CoLA and analysed our reasons.” At the same time, he said the unions assured the troika that “through the social dialogue that characterises Cyprus we will be flexible to continue dialogue with the labour minister and our partners to modernise and maintain CoLA.” PEO’s Pambis Kyritsis said the unions are ready to help deal with the difficulties facing the Cyprus economy, but in a way which is socially fair within the framework of social justice. He added that the union movement expects the troika “to respect the Cypriot tradition of social dialogue and collective bargaining”. Head of the powerful civil servants union PASYDY, Glafcos Hadjipetrou, said: “CoLA is successful in our country, for years it was seen as a blessing. We clarified that we don’t want to see a distortion or abolition of CoLA.” DEOK’s Diomedes Diomedous said the economy needs restructuring to lead the country to economic growth and job creation through the development of the education, health and energy sectors. “We asked that this be their main message and diagnosis,” he said. The troika officials also met with all parties in parliament, where they heard a great deal about Cyprus’ low corporate tax rate. DISY representatives stressed the need to preserve the low rate which will act as the “vehicle to help Cyprus return to economic growth”, said DISY number two Averof Neophytou. The DISY deputy said he told the troika “how important it is for Cyprus as a service-based economy to maintain a low corporate rate”, adding that any possible positive impact that might come from changing the corporate tax will be negated by the multiple problems it will create. DIKO leader Marios Ga-
Troika members on their way to see the unions yesterday royian said he asked the troika to consider “balanced and fair measures” focusing on growth, and not strict austerity measures which crippled Greece and increased unemployment. “We stressed that strict austerity is not the solution,” he said. He warned against changing the corporate tax rate as this could destroy the financial sector. Mirroring the unions, Garoyian said any measures should not be imposed but negotiated, socially just and maintain social cohesion. Ruling AKEL leader Andros Kyprianou said yesterday he still hoped Cyprus could secure another interstate loan:
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“The effort to secure the loan continues and we hope to get loans to put us in a better negotiating position with the troika.” After meeting the troika, he said the corporate tax rate was something all parties agree on. As for CoLA, AKEL insists on the need for it to continue but with a fairer distribution. EDEK deputy Nicos Nicolaides said his party was prepared to make the necessary structural changes while at the same time, taking into account cohesion and the need to move towards growth and job creation. The troika also met with EVROKO and the Greens. Asked by reporters what his party’s red lines are, Greens deputy Giorgos Perdikis replied: “Do you think we are in a position to put down red lines?” Officials here have declined to even speculate on the size of an EU bailout.
(Christos Theodorides) Fitch ratings said last week that Cypriot banks would need €6.0 billion in capital, foreseeing significant loan losses in Greece and an increasing non-performing loan ratio in Cyprus. Following a meeting of its board of directors yesterday, after bank executives had met with the troika, the Bank of Cyprus said it was in favour of speeding up the process of the banks’ recapitalisation needs. “In order to address market uncertainty, the Board considers that the finalisation of the process to recapitalise the banking sector, in collaboration with the relevant parties, including Troika, the Central Bank of Cyprus and the Ministry of Finance, should be expedited,” a statement said. The island’s largest lender needs at least €500 million to meet new capitalisation requirements; the Popular Bank needs some €1.8 billion, underwritten by the government.
‘Let’s ask the Troika to bail out Paphos to Polis highway’ THE COMMUNICATIONS minister yesterday assured lawmakers that plans for the Paphos-Polis Chrysochous connecting road would go ahead, even though the tenders’ procedure had been cancelled. Briefing the House Communications Committee, minister Efthymios Flourentzos said his ministry planned to launch a new tenders’ procedure within the year, following the collapse of the last one. Speaking after the meeting, Committee Chairman, DIKO’s Antonis Antoniou, said MPs had suggested the government seeks a low-interest loan from the troika – the EU/IMF delegation assessing Cyprus for a bailout – to promote the project. Affected residents are bound to be unhappy, as Antoniou said the government was toying with the idea of cancelling expropriations and compensation, and deeming the area a white zone. As Antoniou pointed out, this would be deemed as unfair treatment towards the land owners who hadn’t yet received compensation. “When parliament uses express procedures to approve €1.8 billion to recapitalise the banks, it is incomprehensible for it to not move ahead with the payment of the €40 million in compensation that is pending,” said Antoniou. He added: “Now that the troika is examining the state’s finances, why can it not be asked for an added low-interest loan to pay off the state’s obligations to these owners”. The entire cost of the expropriations was estimated at €83 million, while only €35 million has been paid out. “Delays in paying these compensations for six to seven years could be seen as squandering public funds, as the interest rate is 9.0 per cent,” Antoniou pointed out. He called on the finance and communications ministries to immediately launch new tenders and have second thoughts over what they plan to do with the expropriations. The committee also asked for work on the LimassolSaittas road to be sped up.
Christofias meets Ashton PRESIDENT Demetris Christofias yesterday pledged Cyprus’ support to the efforts of High Representative of the EU for Foreign Affairs and Security Policy, Baroness Catherine Ashton by utilising its friendly relations with countries in the region. Christofias received Ashton during a meeting yesterday at the presidential palace. During their meeting, an official statement said: “They discussed the developments in the region, as well as the coordination between the Cyprus Presidency of the Council of the European Union with the High Representative and the European External Action Service, which has the competency to promote the foreign relations of the Union, to achieve and solidify peace and stability in the region”.