Sunday, 28 April 2013

No Cyprus settlement talks before October



Above is the interview Ioannis Kasoulides gave this week to the BBC HARDtalk programme, in which Cyprus’ foreign minister talks about the ‘bitterness and disappointment’ Cypriots feel at the way they’ve been treated by their European ‘partners’. Kasoulides also discusses Turkey’s demand that the UN negotiations aimed at a Cyprus settlement be immediately resumed. Kasoulides makes clear that Turkey’s offer is malicious, designed to exploit Cyprus’ current weakness, and insists that no serious negotiations are possible before the Cypriot government stabilises the economic situation, which probably won’t be until October. Kasoulides also asserts, despite Turkey's protestations, Cyprus' sovereign right to explore and exploit the hydrocarbon reserves within its Exclusive Economic Zone.

Tuesday, 23 April 2013

Cyprus Czech-mated

 

Marios Evriviades, who is professor of international relations at Panteion university in Athens, has written a piece (below, which originally appeared here) on the Eurozone’s bailout of the Cyprus economy, which compares the German-inspired ‘rescue’ of the island's economy to the Nazi occupation of Czechoslovakia in 1938. The article reflects the anger and outrage felt by Cypriots at the way they’ve been treated by their European partners, although Evriviades omits to mention that, unlike Czechoslovakia, it was actually the government of Cyprus that invited the troika to interfere in its affairs.

Above is an interview with Christine Lagarde, head of the IMF, that puts the blame for the brutality of the ‘rescue’ squarely on the shoulders of the Christofias government for repeatedly delaying the decisions that could have averted it. There is, of course, a lot of truth to Lagarde’s criticism of the previous administration in Cyprus, but she’s also being disingenuous since however incompetent and cowardly Christofias was, this does not explain or justify the particular form the bailout has taken and the browbeating of Cyprus.


Cyprus Czech-mated
What happened to Cyprus in the early hours of March 25 and in the lead up meeting of March 15 in Brussels, the headquarters of the European Union, was qualitatively no different from what happened to Czechoslovakia on September 29 1938 in Munich of Nazi-controlled Germany.

In both cases a small independent, sovereign state was bullied into accepting a diktat – in the case of Czechoslovakia the loss of about a third of its territory to Nazi Germany. And in the case of Cyprus the virtual destruction of its economy for the benefit of the German dominated eurozone.

In both cases Western Governments, democratic governments it should be emphasized, did not only stand by. They actually cheered the results and praised the bully in-chief.

The most important European democracies of 1938, England and France, welcomed the Munich abomination  in spite of their treaty obligations and moral  commitments to stand by Czechoslovakia against the Nazis. The leaders of England and France reported triumphantly back home that what transpired in Munich preserved peace and stability on the European continent. This is precisely what the sixteen members of the Eurogroup   said of the Cyprus diktat – that it preserved stability in the eurozone.

Don’t take the word of official Cyprus about the bullying tactics of the German-dominated Eurogroup, namely that  Cyprus was forced to capitulate at gunpoint by its partners. Here is how the Finance Minister of Malta, Edward Scicluna, a participant in the 15 March Eurogroup lead up meeting described, in the Times of Malta on March 19, the bullying that transpired: ‘All this was ‘agreed’ to by the Cypriot government representative who, with a pistol to the head, was naturally unusually co-operative. But it took 10 long hours before the Cypriot minister’s body and soul became exhausted enough for him to assent to the accord. As soon as that happened [the German] Schauble demanded that all wire transfers to and from Cyprus banks would cease forthwith.’

This is what passes for EU solidarity these days.

As a result the Cypriot economy, that topped  the performance of the nine other candidates for EU membership in 2004 and performed on par or even better than most other European economies until the global crisis of 2008, now lies prostrate.

Except for the loss of life in the 1974 brutal military invasion of Cyprus by Turkey – when 1% of the Cypriot population was slaughtered by a NATO army – what the Cypriots are now going through is worse. Then, the Turkish army seized about a third of Cypriot territory, two-thirds of its wealth and ethnically cleansed the indigenous population of the conquered territory. But Cypriot resilience prevailed and in five years the lost wealth was regained.

This time however the Eurogroup’s decisions injected a cancerous cell in every Cypriot household. You can certainly fight cancer to a degree. But you can  surely suffer for the rest of your life or die from it as well.

The Eurogroup has subjected Cypriots tο a double economic abomination. It ordered part of their savings confiscated and the rest frozen. In true  Orwellian doublespeak this has been called  a ‘tax’ on savings, or a ‘haircut’. It was in fact outright robbery. Thievery is also ‘freezing’ a person’s deposits and denying him/her the right to do whatever the heck he wants with them.

They did that too.

The inane bullies of Brussels had to have a good sounding excuse for their theft. So, they arbitrarily decided that the savings of Cypriots were ‘mafia’ money, stolen money from someone, somewhere. Perhaps some hard-working Russians. So they decided to punish the Cypriot ‘sinners’ by stealing their savings themselves. Is this the latest version of the ‘protestant ethic’ up in the European north?

The world does have a short memory. But some people do remember. Or read history. The outright confiscation of private property in the western world occurred twice before. In Nazi-Germany against German-Jews and other ‘sub-humans’. And in Nazi-sympathizing Turkey which in 1942 enacted legislation, the infamous Varlik Vergisi or ‘wealth tax’, enabling the Turkish state to confiscate the properties of Turkish citizens – Greeks, Armenians and Jews and sending those who could not pay to ‘exile’ in desert Anatolia from which most did not return.

The EU, obsequious to a resurgent Germany, is now acting as the enabler of econocide (destruction of an economy) and consequently of cratocide (destruction of a state) against the Republic of Cyprus – one of its smallest members.

Shame on the spineless, sinister and self-serving EU. And twice shame on the rest of the hypocritical Europeans who stand by and watch another destructive bullying of a defenceless state in their midst.

Thursday, 18 April 2013

Kasoulides on Al Jazeera: natural gas and UN talks in the aftermath of the economic crash



Good interview from Al Jazeera with Cyprus’ foreign minister Ioannis Kasoulides on the fallout from the economic crisis that is engulfing the island. 

Kasoulides expresses ‘bitterness and disappointment’ at the ECB/IMF/EC rescue for Cyprus, which he condemns as an ‘experiment’ designed to find out if such a remedy can be applied to future banking failures in the Eurozone. He dismisses German allegations that Cyprus was a centre for money laundering and illicit Russian money, and points out that most of the wealth held in Cypriot banks and that will now be confiscated belongs to Cypriot businesses and Cypriot savers. Kasoulides insists that the allegations against the Cypriot economic model were propaganda to prepare the ground for the bail-in experiment, but concedes that Cyprus’ economy was over-reliant on banking and should have diversified. The foreign minister rejects calls for Cyprus to abandon the euro but admits uncertainty as to whether the programme agreed with the troika will work and accepts that it is possible that a further bailout will be required. 

Kasoulides insists that those Cypriot bankers and other officials who made, for example, the calamitous decision to invest in Greek bonds are now being investigated and, if suspected of criminality, will face justice. He goes on that Cyprus will continue to promote itself as an international business centre, boost its tourist product and develop its hydrocarbon reserves in the seas south of the island. 

The foreign minister rejects Turkey’s calls for an immediate resumption of UN talks on finding a solution to Turkey’s occupation of 37 percent of Cyprus. Kasoulides says negotiations will be resumed only when the Cypriot government has dealt with the immediate economic crisis facing the country, and predicts this will be by the end of this year. He dismisses Turkey’s suggestion that money from hydrocarbon reserves be shared with the occupation regime and says the Turkish Cypriots can only expect to feel the full benefits of any gas bonanza in a united Cyprus. Kasoulides argues that if Turkey was sincere about achieving a Cyprus settlement it would stop putting forwards proposals that rather than facilitating the reunification of Cyprus aim at two separate states on the island. Kasoulides also makes clear that Cyprus will not use a pipeline to Turkey to export its gas – allowing Turkey effective control of Cyprus’ gas exports – and will more likely build an LNG plant for this purpose.

Tuesday, 16 April 2013

Crass Cypriot bankers and crasser German politics

Below is a good article by Louis Christofides, an economics professor at the University of Cyprus, which reflects prevailing views in Cyprus as to how the island’s economy collapsed. He emphasises the failure of Cypriots to manage their economy when strains began to show, which exposed Cyprus to hysterical and ill-informed accusations regarding money laundering and Russian oligarchs that reflected less Cypriot reality and more crass German politics – Christofides compares the money laundering rumours to the malicious conjecture surrounding Iraqi WMDs – and, once Cyprus sought recourse to its European partners, Christofides denounces the injustice of the remedy imposed, which he says will bring misery to Cyprus.
 

Bad luck in a ‘casino economy’
Pierre Moscovici said: ‘To all those who say we are strangling an entire people... Cyprus is a casino economy that was on the brink of bankruptcy.’

As late as 2011, the Republic of Cyprus (Cyprus) was still a good performer within the Eurozone: Its debt to GDP ratio was 71% (lower than many Eurozone members, including Germany and the UK), its fiscal deficit as a percent to GDP was 6.3%, its real growth rate was 0.5%, its unemployment rate was 7.9% and the rate of inflation was 3.3%. How did Cyprus come to the brink of bankruptcy within 12-18 months?

Responsibility rests with the previous government, Cyprus’s legislative and supervisory institutions, and, importantly, its senior bankers. Clouds on the horizon had been gathering for a while: The budget surplus for 2007 and 2008 turned to a deficit in 2009, the current account deficit reached 15.6% of GDP in 2008, nominal wage growth exceeded inflation until 2011 (with minimal productivity growth), the unemployment rate (5.3% in 2009) rose to 7.9% in 2011, and competitiveness slipped. Under full wage indexation, the broader public and banking sector pay gap (relative to the rest) remained substantial. The government ignored these signs, limping into the next election.

During 2011 and until February 2013, the political climate became polarized. Abroad, the Eurozone had decided that the banking system in Cyprus was too big. The German election campaign did not help. Rumours of money laundering reached hysteria, rivaled only by those on chemical weapons in Iraq, even though a US State Department report on money laundering placed Cyprus in the same category as Germany. Mr. Schäuble pronounced that the Cypriot model had failed, not distinguishing between the model and its application (sufficient ring-fencing, maturity matching, extensive diversification, risk awareness and eternal vigilance might have allowed the model to continue). Cypriot senior bankers had, of course, failed to meet these principles.

To the bad luck of election timing was added Basil III, the Eurozone’s PSI in Greek debt which cost the two largest Cypriot banks (the Bank of Cyprus and Laiki) dearly (25% of GDP), and the austerity ‘solution’ for Greece which increased the number of NPLs at Cypriot branches there. Yet, Cypriot banks did not reduce their exposure to Greek debt and NPLs. Mr. Moscovici’s statement should have been targeted at the banks’ leadership, not an entire country: The banking-related business and legal services sector does not exceed 20% of GDP – and there are no casinos in Cyprus!

The new president (March 1, 2013) and his party had supported severe austerity measures (December 2012) and wished to sign an MoU. This change in regime was not used by the Eurozone appropriately, surmising that this government would accept anything. By then, the Danish model, resolving two of its banks in 2011 through bailing in, had gained ground. Mr. Dijsselbloem refused to rule out a haircut on deposits, despite persistent questioning by journalists who warned of a bank run in Cyprus. On the Ides of March, the new president was faced with a take-it-or-leave-it choice involving a haircut on all deposits, including insured ones. A feature which played to crass German politics was that the haircut hit Russian ‘oligarchs’ in Cyprus, a group so numerous in Germany, the
UK, and other countries that the term ‘oligarch’ is a misnomer – polygarchs perhaps?

Read the rest of the article here.

Sunday, 14 April 2013

Wikileaks: the Americans abandon Ioannides after shambolic coup against Makarios

Below is an interesting Wikileaks cable (original here) sent from the US Embassy in Athens to the US State Department detailing a meeting on 16 July 1974, i.e. the day after the Athens-engineered coup that overthrew President Makarios in Cyprus, between Greece’s junta leader Dimitrios Ioannides and the US ambassador to Greece, Henry Tasca.

It’s clear from the cable that Ioannides believed he had American support for the coup and that he is infuriated when it becomes clear to him that, with Makarios alive and the coup a shambles, the Americans were now not prepared to defend Ioannides’ putsch in Cyprus, which meant, it must have been obvious to Ioannides, there was now nothing to stop a Turkish invasion of the island, that, indeed, the Americans were sympathetic to such a development. Ioannides desperately seeks to assure Tasca that the coup was in American interests, ranting about Makarios and the imminent prospect of Cyprus ‘falling into the hands of the communists’. The cable also confirms that, inasmuch as Ioannides had thought through the coup, his immediate aim was not annexation of Cyprus to Greece, but the removal of Makarios in order to facilitate an understanding with Turkey on the future of the island, i.e. partition of the island between Greece and Turkey.


FOR THE SECRETARY

1. I USED SECURE RELIABLE CHANNEL DIRECTLY TO GENERAL IOANNIDES TO DELIVER MESSAGE REFTEL [Reference Telegram]. HE BEGAN BY EXPLAINING HE HAD PERSONAL MESSAGE FROM USG [US government]. AFTER EMISSARY HAD READ TWO PARAGRAPHS, IOANNIDES COMMENTED MESSAGE MUST BE SAME AS THAT AMBASSADOR HAD GIVEN KYPREOS [Greece’s foreign minister],IN WHICH CASE EMISSARY WASTING HIS TIME SINCE HE WOULD RECEIVE MESSAGE ANYWAY. EMISSARY EXPLAINED HIS JOB WAS TO FINISH READING MESSAGE AND HAD IT TO HIM AND WOULD DO SO, TO WHICH GENERAL IOANNIDES SAID FINE.

2. AFTER EMISSARY COMPLETED MESSAGE, THE GENERAL LITERALLY BLEW UP, JUMPED UP, BACKED UP, KNOCKED OVER A TABLE, BROKE EMPTY GLASS AND UTTERED A STRONG OBSCENITY. HE CONTINUED THAT ONE DAY KISSINGER MAKES PUBLIC STATEMENTS REGARDING NON-INTERFERENCE IN GREEK INTERNAL AFFAIRS AND A FEW WEEKS LATER THE USG SAYS "CONSISTENT WITH THE ABOVE PRINCIPLES..." AND THREATENS INTERFERENCE. NO MATTER WHAT HAPPENED IN CYPUS I (IOANNIDES) WILL BE BLAMED. IF I HAD PULLED THE TROOPS OUT THE FORMER POLITICIANS WOULD HAVE BLAMED ME FOR TURNING THE ISLAND OVER TO THE COMMUNISTS. SOME DAY USG WILL REALIZE THAT ON 15 JULY 1974 CYPRUS WAS SAVED FROM FALLING INTO THE HANDS OF THE COMMUNISTS".

3. GENERAL THEN CALMED DOWN, CAME OVER TO WHERE EMISSARY WAS SITTING AND SAID HE KNEW HE UNDERSTOOD HIM: DIPLOMATIC TALK IS TIME-CONSUMING BUT HE WOULD ANSWER IN AS DIPLOMATIC FASHION AS POSSIBLE BECAUSE HE HAD DIPLOMATIC MISSION.

4. GENERAL STATED THAT GREECE ALSO BELIEVED IN NON-INTERFERENCE AND IN A FREE, INDEPENDENT, SOVEREIGN STATE OF CYPRUS; GREECE WOULD ABIDE BY THE DECISION OF THE MAJORITY OF THE GREEK CYPRIOTS, MOST OF WHOM WERE NATIONALISTS, AND THESE NATIONALISTS WERE THE ONES WHO HAD MOVED AGAINST MAKARIOS. IT WAS IMMATERIAL WHETHER THESE GREEK CYPRIOT NATIONALISTS MOVED WITH OR WITHOUT THE PRIOR BLESSING OF GREECE OR WHETHER GREEK OFFICERS SUBSEQUENTLY ASSISTED THEM. AT THIS POINT HE WENT OFF ON A TANGENT STATING THAT NEITHER GREECE NOR THE GREEK CYPRIOTS HAD ASKED FOR ENOSIS, THAT GOT [government of Turkey] HAD OBVIOUSLY ACCEPTED THESE DEVELOPMENTS IN CYPRUS, THAT TURKS UNDER STOOD THAT THE MATTER WAS AN INTERNAL GREEK CYPRIOT AFFAIR.

5. ACCORDING TO IOANNIDES ONLY REAL RESISTANCE LEFT ON CYPRUS WERE COMMUNIST SUPPORTS OF MAKARIOS IN PAPHOS;THESE SUPPORTERS WERE EVEN SINGING EAM/ELAS SONGS. MOST OF THE REST OF ISLAND WAS IN NATIONALIST HANDS. GENERAL IOANNIDES STATED THAT EVERYONE SHOULD FORGET THAT MAKARIOS WAS AN INTERNATIONAL FIGURE, THAT HE WAS A NATIONAL HERO, THAT HE HAD SERVED SEVERAL USEFUL FUNCTIONS AND THAT HE WAS A MAN OF THE CLOTH; MAKARIOS HAD BECOME A ROTTEN PRIEST HOMOSEXUAL; HE WAS PERVERTED, A TORTURER, A SEXUAL DEVIATE AND THE OWNER OF HALF THE HOTELS ON THE ISLAND. TO PRESERVE HIS POSITION AND TO CONTINUE HIS ACTIVITIES, MAKARIOS WAS WILLING TO SACRIFICE SEVENTY PER CENT OF THE GREEK CYPRIOT POPULATION (ONLY THIRTY PER CENT WERE AKEL) AND ENTIRE ANTI-COMMUNIST TURKISH CYPRIOT POPULATION. IOANNIDES ASSERTED GREEK CYPRIOTS IN NATIONAL GUARD REALIZED THESE FACTS AND HAD BEGGED MOTHERLAND FOR CHANCE TO ACT AGAINST MAKARIOS; GENERAL CLAIMED THAT HE ONLY ASSISTED AFTER BEING PRESENTED WITH A FAIT ACCOMPLI.

6. AT THIS POINT EMISSARY INTERJECTED AND TOLD IOANNIDES POINT-BLANK THAT, WITH COUP ONLY TWENTY-FOUR HOURS AFTER HIS REPORTING TO US REGARDING A POSSIBLE OVERTHROW OF MAKARIOS THIS WAS VERY DIFFICULT FOR ANYONE TO BELIEVE. AT THIS POINT THE GENERAL AGAIN BLEW UP WITH ARMS WAVING, KNOCKED OVER SAME TABLE, BROKE A SECOND GLASS AND, BETWEEN OBSCENITIES, STATED THAT HE DID NOT PLOT AND ARRANGE THE COUP; INITIAL PLAN AND APPROACH WAS FROM GREEK CYPRIOT NATIONALISTS ON 13 JULY, AFTER LATTER LEARNED THAT GOG [government of Greece] INTENDED TO ACCEDE TO MAKARIOS' DEMANDS TO REDUCE NUMBER OF GREEK OFFICERS IN NATIONAL GUARD.GENERAL STATED HE COULD NOT ACCEPT AT LEAST 85,000 GREEK CYPRIOT REFUGEES  FROM MAKARIOS' TYRANNY. THIS COUPLED WITH MAKARIOS' ANTI-REGIME EFFORTS, MADE HIM DECIDE TO ASSIST GREEK CYPRIOT NATIONALISTS. THE GENERAL STATED THAT IF MAKARIOS SUCCEEDED IN KICKING  GREEKS OUT OF CYPRUS WHAT COULD KEEP HIM FROM THINKING HE COULD NOT KICK JUNTA OUT OF GREECE. AFTER DECIDING TO ASSIST GREEK CYPRIOTS, THE GENERAL CLAIMED THAT HE DID NOT TELL THE ARMED FORCES LEADERSHIP NOR ANY GREEK OFFICIAL. HE LIMITED KNOWLEDGE OF HIS INTENTIONS TO FEW SELECT OFFICERS ON 13/14 JULY; NO ONE ELSE KNEW AND EVEN AFTER EVENTS UNFOLDED ON 15 JULY ONLY A HANDFUL OF PEOPLE WERE AWARE OF HIS ROLE. IOANNIDES JUSTIFIED THIS ACTION BY ASSERTING THAT IF HE HAD BRIEFED NUMEROUS PEOPLE THEY WOULD HAVE RAISED SUGGESTIONS, ADVICE, ALTERNATIVES, AND POSSIBLE PROBLEMS. HE ADDED THAT HE ACTED ON SPUR OF THE MOMENT.

7. IOANNIDES DECLARED THAT GAME WAS NOW OVER FOR MAKARIOS, THAT GREEK CYPRIOTS HAD BOOTED HIM OUT, THAT NATIONAL GUARD AND GREEK OFFICERS HAD ASSISTED NATIONALIST GREEK CYPRIOT BROTHERS, AND THAT ONLY RESISTANCE NOW WAS IN PAPHOS. IN REPLY TO EMISSARY'S DIRECT QUESTION IOANNIDES STATED THAT MAKARIOS WAS STILL ALIVE  "BUT WHO CARES; HE NOW HAS NO POWER AND NO ONE, IF HE BELIEVES IN PRINCIPLE OF NON-INTERFERENCE IN INTERNAL AFFAIRS OF SOVEREIGN NATION WILL ASSIST HIM- NOT EVEN THE RUSSIANS UNLESS TURKS ASK THEM TO DO SO AND THE TURKS JUST DON'T CARE."

8. IN REPLY TO QUESTION WHETHER GREEKS WERE IN DIRECT TOUCH WITH TURKS, GENERAL STATED WE HAVE NOT BOTHERED THE TURKS; WE HAVE NOT DECLARED ENOSIS. TURKS AGREE THAT "THE PRINCIPAL THORN" (I.E., MAKARIOS) IS GONE AND, "I AM NOT IN TOUCH WITH THE TURKS." HE EXPRESSED VIEW THAT GREECE AND TURKEY COULD NOW PROCEED AT SOME FUTURE TIME TO SIT DOWN, TALK AND SOLVE THEIR DIFFERENCES. INDEED, ACCORDING TO IOANNIDES GREEKS MIGHT EVEN BE WILLING TO SHARE PROFITS OF PETROLEUM FINDS IN A JOINT EXPLORATION COMPANY; HOWEVER, GREECE WOULD NEVER SURRENDER AEGEAN CONTINENTAL SHELF BECAUSE THIS WOULD MEAN TURKISH CONTROL OF GREEK ISLANDS. HE ALSO EXPRESSED BELIEF THAT GREEK AND TURKISH CYPRIOTS COULD PROBABLY SOLVE THEIR DIFFICULTIES PEACEFULLY, QUIETLY AND AMICABLY. HE EVEN JOKED THAT IN A YEAR OR PERHAPS MORE REALISTICALLY TEN, THE TURKS MIGHT WANT TO SELL THEIR SHARE OF CYPRUS FOR INCREASED PERCENTAGE OF PETROLEUM RIGHTS. AGAIN IN REPLY TO DIRECT QUESTION, GENERAL IOANNIDES STATED THAT HE WAS NOT IN CONTACT WITH ANY TURKISH OFICIAL; HOWEVER, HE ADDED THAT TURKS WERE "OFFICIALLY AWARE" THAT ENOSIS WAS NOT THE OBJECTIVE AT THIS POINT AND THAT GREEK CYPRIOTS DID NOT INTEND ANY BLOODY ACTION AGAINST TURK CYPRIOTS.

9. WHEN ASKED FOR SPECIFICS ON MAKARIOS, IOANNIDES STATED THAT ACCORDING TO GREEK INFORMATION, MAKARIOS WAS ALIVE AND IN HANDS OF BRITISH AT EPISKOPI BASE, HE HAD GONE THERE WITH ASSISTANCE OF CANADIANS AND BRITISH ON ISLAND.

10. AT THIS POINT IOANNIDES SUMMED UP AS FOLLOWS:
A) HE STRESSED THAT HE TOO HAD A GOD; HE WAS DEFINITELY NOT ANTI-AMERICAN; "EVEN A JACKASS NEEDED A POST TO BE TIED TO" AND IN HIS CASE IT WAS THE U.S.

B) HIS HASTY DECISION ON 13 JULY MIGHT HAVE BEEN STUPID. INSTEAD OF ABANDONING CYPRUS AND LETTING U.S. WORRY ABOUT ITS FATE AND POUR MONEY DOWN ANOTHER RATHOLE, HE HAD ALLOWED LOVE OF COUNTRY, A MORAL OBLIGATION TO THE GREEK CYPRIOT NATIONALISTS AND HIS "PHILOTIMO" TO OVERRULE LOGIC AND TO ASSIST GREEK CYPRIOTS.

C) GREECE WOULD DO WHATEVER WAS NECESSARY TO PRESERVE ITS NATIONAL IDENTITY AND TO STAY ANTI-COMMUNIST. IF THIS MEANT KEEPING YIAROS OPEN IT WOULD STAY OPEN AS LONG AS IT WAS NECESSARY AND HE WOULD ACCEPT NO STATIC FROM ANYONE ON THIS SCORE. INDEED,HE HAD INSTRUCTED A GREEK OFFICIAL TO TELL BRITISH OFFICIALLY THAT WHENEVER THE BRITISH LET IRISH POLITICAL PRISONERS OUT OF BRITISH JAILS, HE WOULD FREE THE FORTY-TWO GREEK POLITICAL PRISONERS ON YIAROS.

D) HE PERSONALLY DIDN'T LIKE NIKOS SAMPSON, BUT THAT WAS GREEK CYPRIOT NATIONALIST DECISION. HE KNEW SAMPSON PERSONALLY AND IN HIS OPINION SAMPSON WAS "CRAZY." HE JOKINGLY REMARKED THAT NEW CYPRIOT MINISTER OF DEFENSE DIMITRIOU WAS VERY PRO-AMERICAN AND THAT OUR EMBASSY THERE WOULD SOON REALIZE THIS. HE ALSO KNEW DIMITRIOU PERSONALLY.

E) WHILE SHAKING HANDS AT CLOSE OF CONVERSATION IOANNIDES STATED "REMEMBER WE TOO BELIEVE IN A FREE, INDEPENDENT AND SOVEREIGN CYPRUS, WE TOO BELIEVE IN NON INTERFERENCE, ALONG WITH TURKS AND ESPECIALLY WITH KISSINGER. WE TOO BELIEVE THAT THE CYPRIOTS SHOULD BE FREE TO SOLVE THEIR OWN PROBLEMS, BE THEY GREEK CYPRIOTS, TURK CYPRIOTS OR BOTH."

Thursday, 11 April 2013

Should Cyprus leave the euro?

Good piece below jointly authored by Michalis Attalides, Antonis Polemitis and Stavros Zenios on how Cyprus reached its current dire economic situation and whether the bleak prospects of recovery merit the country abandoning the euro and returning to its own currency.

Cyprus: six reasons for staying within the euro and one question about whether it can

As in many arguments about a political and/or economic situation, in the argument about whether Cyprus should be in or out of the Euro, there is a tendency for the confusing and invalid conflation of a number of issues.

One issue is the cause of the crisis. The communist party, AKEL, which bears much responsibility for Cyprus reaching this state, tends towards arguments deceptively implying that the current condition of Cyprus is due to the Euro Group and the Troika. However, Cyprus has 14% unemployment, while still having experienced only a minor impact from Troika measures.

Herman van Rompuy referred to “years of mismanagement”, which every Cypriot knows is true. The main attribution of responsibility to the euro is that being in the euro area contributed to the attractiveness of Cyprus to foreign (including Russian) depositors. However the economic problems were the result of the world economic crisis combined with three other factors: The first was that, based on the foreign deposits, Cyprus bankers followed an expansionary policy of loans and investments, and (second factor), a profiteering attitude which verged on gambling. When the crisis came, the banks faced severe liquidity problems and the second largest bank of the island became insolvent. Policymakers and the regulating institutions, the Ministry of Finance, or the Central Bank of Cyprus, fell short in their job.

The second issue is the treatment of Cyprus by the Troika and the Euro Group, just two weeks after Nicos Anastasiades became president, after the end of the term of our previous, communist president, Demetris Christophias. The new president had committed himself to immediately negotiating, agreeing and signing a Memorandum of Understanding on the bailout.

The treatment he received from the Troika and the Euro Group has caused shock all over the world. Other Mediterranean and small members of the EU should be warned. After showing patience with anti-EU Christophias for months, they exposed Anastasiades to pressure and deadlines, threatening to suddenly cut off Emergency Liquidity Assistance funds to the banks, assistance which had been provided for over a year to one bank that many local analysts considered insolvent, by-passing ECB policies.

The reasons given both by the Euro Group president and the sole large power active in the EU now, Germany, for the harsh treatment of Cyprus are deceptive or straight-forwardly wrong. They are deceptive because they never mention that, though with many weaknesses, the Cyprus economic model, which is based on services, and not heavy industry, functioned and was not in danger of collapse, until the Euro Group decided the PSI to the Greek public debt, which landed the Cyprus banks with a 4.5 billion euro loss, equivalent to 25% of the country’s GDP. We are not aware of any other country suffering similar losses, since Finland was hit by similar proportionate loss of GDP with the collapse of the Soviet Union.

Read the rest here.

Tuesday, 9 April 2013

Thatcher on Papandreou: ‘a charming and agreeable man’

Strange going through Margaret Thatcher’s autobiography, The Downing Street Years, and finding rather flattering references to Andreas Papandreou, whose tenure as Greece’s prime minister in the 1980s coincided with Thatcher’s leadership of the UK. Ideologically, Papandreou and Thatcher were as far apart as it’s possible to imagine.

Thatcher mentions Papandreou in reference to her battles in Europe to secure British interests and sovereignty. At one point, she describes him as ‘remarkably effective in gaining Community subsidies for Greece’, while, elsewhere, recalling discussions to expand the EEC to bring in Spain and Portugal, she calls him ‘a charming and agreeable man’ and reveals his hardball tactics aimed at securing more European funding for Greece.

‘At least on this occasion it was not Britain but Greece which was marked out as the villain of the piece – and with some justice. The two outstanding issues as regards the terms for Spain’s and Portugal’s entry had turned out to be wine and fish, on both of which the Iberian countries were heavily dependent. The negotiations seemed to be nearing a mutually satisfactory conclusion. It was at this point that Mr Papandreou, the left-wing Greek Prime Minister, suddenly treated us to some classical theatre.

‘A charming and agreeable man in private, his whole persona changed when it was a question of getting more money for Greece. He now intervened, effectively vetoing enlargement unless he received an undertaking that Greece should be given huge sums over the next six years. The occasion for this arose as a result of discussions which had been going on for some time about an “Integrated Mediterranean Programme” of assistance, from which Greece would be the main beneficiary. It seems that the Greeks’ appetite had been further whetted by unauthorized discussion of large sums within the Commission. Mr Papandreou’s statement threw the Council into disarray. Everyone resented not just the fact that Greece was holding us to ransom, nor even the particular tactics used, but still more the fact that, though Greece had been accepted into the Community precisely to entrench its restored democracy, the Greeks would not now allow the Community to do exactly the same for the former dictatorships of Spain and Portugal.’

Saturday, 6 April 2013

How Marfin looted Laiki and propelled Cyprus towards economic meltdown



Above is a report by Simon Cox from BBC World Service radio on the economic crash in Cyprus. Cox traces the collapse of Cyprus’ banking sector to 2006 when the second largest bank on the island, Laiki, was taken over by Marfin Investment Group, a Greek investment company run by Andreas Vgenopoulos who, it is alleged, with his cohorts, proceeded to loot the Cypriot bank.

In Cox’s report, Laiki employees describe having their doubts over the intentions and practices of the new regime from Greece assuaged by large, unwarranted bonuses or overridden by fear of being branded dead wood or trouble makers. Employees, it is claimed, were induced, and browbeaten, into buying and holding onto Marfin-Laiki shares as a demonstration of loyalty to the bank.

Cox also reports on the way Marfin siphoned money from Laiki’s Cypriot operations to finance unsecured loans to Vgenopoulos’ business associates, friends and family in Greece. These loans included one of €700m to a Greek shipping company; €500m to a Greek TV station; and €400m to Marfin-Laiki’s Greek directors.

Wednesday, 3 April 2013

Cyprus’ foreign policy after the flood



Above is a very good interview aired last night on Cyprus TV with foreign minister Ioannis Kasoulides, who discusses the state of Cypriot diplomacy in the wake of the island’s economic crash. 

Specifically, Kasoulides stresses that there has been no rupture in relations with Russia and argues that the recent rapprochement between Israel and Turkey is not necessarily a setback to energy co-operation between Tel Aviv and Lefkosia. (Kasoulides points out, in fact, that he’s off to Israel on Monday with energy minister Giorgos Lakkotrypis to discuss joint Israeli-Cypriot hydrocarbon projects). 

Kasoulides also notes that Cyprus does not feel under pressure to agree the transfer of its hydrocarbon products through Turkey to facilitate a Cyprus solution and adds that such a pipeline would not, in any case, be the most profitable way to export Cypriot gas, with an LNG plant making more sense. 

Kasoulides also reveals that Turkey is pressing for the immediate resumption of Cyprus negotiations in order to exploit the current political and economic weaknesses of the Greek side, and he strongly rebukes the UN’s special Cyprus adviser Alexander Downer for promoting Turkey’s agenda. Kasoulides also condemns Downer for the way he has handled the Cyprus talks since being appointed in 2008 and stresses that Lefkosia will insist that when negotiations resume, which may not be until September, the groundwork has been thoroughly prepared so that talks can be meaningful. Kasoulides says the Downer-led negotiations have become a pointless exercise, consisting of the Greek and Turkish sides meeting and reading out statements outlining their positions. 

Two questions not posed to Kasoulides in the interview. 1. How have relations between Athens and Lefkosia been affected by recent Eurozone events? 2. Given the breakdown in relations between Cyprus and its European ‘partners’ how will this affect Cyprus’ ability to advance its policies in the EU regarding Turkey?