NEWS

Cyprus foreign minister says only Luxembourg backed Nicosia in Eurogroup

Cypriot Foreign Minister Ioannis Kasoulides has admitted that Cyprus had not anticipated the Eurogroup’s demand that Nicosia impose a deposit tax and that Luxembourg was the only country to support the Cypriot position publicly.

“We were alone,” Kasoulides told Skai TV’s New Folders program. “That’s not to say Greece did not stand by us, as it always does, but we recognize its difficult position, as we recognize the difficult position of our Mediterranean partners. They told us behind the scenes they supported us but only Luxembourg spoke up in our favor during the Eurogroup and in general,” he added.

“France maintained silence. France’s problems might appear in the future and then it will need the help of its partners.”

Kasoulides said that Cyprus found itself in an extremely weak position at the first Eurogroup, on March 15, when the deposit tax was proposed and at the meeting of eurozone finance ministers on Sunda.

“It was clear that the directorate, in other words the European Central Bank, the International Monetary Fund and Germany wanted to impose the solution that was adopted in the end. Our position was weakened by the fact that apart from fiscal problems, we had a banking sector ready to collapse without the support of the European Central Bank,” he said.

“At the first Eurogroup, on March 15, our delegation was not prepared, or encountered something different to what it had been expecting. At the start of the evening, the European Commission was against a haircut on deposits but under pressure from the IMF and the threat that ELA funding for our banks would be stopped, the final proposal was formed.”

Kassoulides said the second Eurogroup agreement was only reached after the European Central Bank agreed to continue providing liquidity for a restructured Bank of Cyprus.

He also questioned the role Germany had taken in the negotiations.

“It’s clear that Germany wants to impose its views on the peoples of southern Europe, which need her at the moment. The toughest decision was that for Cyprus: it was a ruthless decision to wreck the country’s economic system, which will have huge and unpleasant consequences.”

Kasoulides added that the German opposition Social Democrats (SPD) had played a part by adopting a tough line on Cyprus in the country’s Parliament.

“They wanted to show the Germany taxpayers’ money would not be used to bailout Russian deposits, some of which they claimed was of dubious origin. This is where the game began.”

On Cyprus’s ties with Russia and a failure on Nicosia’s part to attract further investment from Moscow, Kasoulides said that Russia’s interests were in maintaining good relations with the European Union.

“This is their best market for natural gas exports and I don’t think they would risk this relationship for something that appears out of the blue,” he said.

“We want to maintain good relations with Russia but the usefulness of these relations passes through our ability to be a trustworthy member of the European Union.”

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