Bailout candidate Cyprus slams eurozone's austerity measures
By Charlie Charalambous, AFPNICOSIA -- Cyprus President Demetris Christofias hit out on Monday against the harsh austerity measures being meted out against struggling eurozone members as the Mediterranean island faces a bleak New Year.
January 2, 2013, 12:02 am TWN
The communist head of state, who tried repeatedly to avoid the inevitable punishing terms of an EU bailout by seeking credit from Russia, said that the policies imposed by the bloc's richer members have been counter-productive.
“It must be admitted that policies implemented on a pan-European level have not succeeded in providing a solution to the economic problems created by the crisis,” Christofias said in a televised New Year's message.
“On the contrary, they have recycled and worsened economic and social injustice,” he added.
Resort island Cyprus has already pushed through tough austerity measures to meet the demands of eurozone creditors for more than a billion euros in cuts and savings. The four-year adjustment program represents 7.25 percent of gross domestic product.
Parliament has approved public sector salary cuts, a freeze on index-linked wages until 2016, extended emergency salary contributions in the public and private sectors, and increases in duty on cigarettes, alcohol and gasoline.
But eurogroup finance ministers are not expected to take a final decision until Jan. 21 on a draft agreement with international lenders for a bailout reportedly totaling 17.5 billion euros (US$23.1 billion).
Christofias said the picture painted by many European countries in trouble does “not honour” the European Union.
“The future of a United Europe cannot be poverty, deprivation, unemployment and homelessness.”
Christofias said the EU's “one-sided” approach has failed to achieve growth in those recession-hit countries it has tried to help.
“A different approach is needed which will emphasize development, social cohesion and true solidarity within the Union. It is with sadness that we observe the absence of such policies.”
Nicosia requested a bailout in June when its two largest Greek-exposed banks asked for assistance after failing to meet EU capital buffer criteria.
It has been negotiating the terms with the so-called troika of the European Central Bank, the European Union and the International Monetary Fund.
The money needed by Cyprus has been widely reported to total 17.5 billion euros (US$23.1 billion) — 10 billion euros for the banks, 6 billion euros for maturing state debt and 1.5 billion euros for public finances.
The country's entire GDP in 2011 was 17.97 billion euros and, according to 2013 budget projections, it is expected to shrink 2.4 percent this year.