A sad day for the Cypriots, the result of wrong priorities on behalf of past and current governments and of an ill-targeted solution contrived by a vindictive European Union family. The ordinary Cypriot citizen is actually paying the price for agreeing to bail out the Greek economy when the haircut on Greek bonds had been decided. Cyprus had the greatest exposure to the Greek economy amongst all Member states but this was not taken into consideration at the time of the Greek haircut, nor did President Christofias-at the time- try to negotiate before signing away at least 10 billion euro of a gift to ‘’motherland’’ Greece.
It is true that the policy decided after 1974 to maintain a low corporate tax rate resulted in the gradual accumulation of foreign deposits into Cypriot Banks, to an extent which exceeded the size of the local economy by 7 times and that this was the reason why Cypriot banks had invested heavily in Greece.
That’s why I consider that the decision taken by Eurogroup last evening is not sufficiently targeted, in the sense that instead of concentrating on the root of the problem which is foreign deposits, it penalizes many Cypriot Small and Medium Sized enterprises active in non-financial economic sectors, such as construction, manufacturing and tourism -companies which just happened to be keeping their accounts with the two major banks in Cyprus.
Asking SMEs in construction, manufacturing and tourism, i.e., in the real economy to pay through their working capital for the bailout of foreign deposits which had been invested and forfeited in Greece is ill-targeted and will strike hard at the real economy of Cyprus. Punishing innocent citizens rather than incompetent local leadership will not really do the trick in Cyprus and the European leadership of today has to think harder as to how to uphold the vision which had inspired the founding fathers of the Union.
Comment by Praxoula Antoniadou Kyriacou on Eurogroup’s decision on Cyprus.