Lessons from Cyprus

When Cyprus suffers, Greece naturally stands by its side. People here are following developments on the island with sadness and concern. That said, there are some conclusions to be drawn from the crisis and its political handling.

The island’s lenders and EU peers no doubt played a tough game, and they obviously made grave political errors. Nevertheless, a government must act on the basis of cold calculations rather than sentiment.

Many Cypriot politicians were caught up in geopolitical fantasies that were quickly debunked. When talks started they appeared totally unprepared. Making threats works when when you have done your homework and drawn up plans B and C. Otherwise, they tend to backfire.

This should be a lesson for those here who insist that the best policy for Greece would be to set ourselves on fire so as to scare off our lenders. This is not the road of responsibility but of self-destruction. Greece must bargain hard, but without losing its pragmatism and credibility. The Cyprus experience provides a painful yet clear lesson.

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