By Elias Hazou
OVER €900m in tax arrears were owed to the state at the end of 2012, while foreign creditors – other than the troika – are breathing down the government’s neck demanding repayment of loans given to municipalities.
Those were the key highlights of a presentation yesterday of the Auditor-general’s report for the year 2012 at the House watchdog committee.
According to the report, the Inland Revenue Department (IRD) estimated €968m in back payments on 31 December 2012, of which €366m were considered ‘uncollectible’ due to various reasons, including bankruptcy.
Of the total taxes owed to the state, €392m were in the form of income tax. And unexecuted warrants were valued at €150m.
Auditor-general Chrystalla Yiorkadji noted that at the end of 2012 municipalities had collectively taken out loans worth €588m, with outstanding liabilities at €342m. The government’s outstanding liabilities to municipalities (the state underwrites many of their loans) came to €245m.
Of pressing concern, the official informed MPs, is the demand by an Austrian bank for the immediate repayment of around €100m in loans issued to municipalities and sewerage boards.
Repayment of this amount was due in December 2013. The creditor, ΚΑ Finanz AG of Austria, asked the government here – which underwrote the loan – to repay it.
KA Finanz, a municipal lender, is the so-called bad bank of Kommunalkredit Austria AG, which was nationalised in 2008.
The official noted moreover that her department had never been briefed about this specific liability, which puts the already cash-strapped state in an even tighter spot.
Listening MPs seemed to grasp the gravity of the issue.
“The creditors will be forced to collect the money by other means, which are well known,” remarked Giorgos Georgiou, chairman of the watchdog committee, hinting that state assets may have to be sold off to pay down the loan.
However, Yiorkadji followed up by saying that the finance minister has since contacted his Austrian counterpart asking for a six-month extension for repayment of the €100m loan.
As a condition for the loan, the Austrian bank had said that municipalities and sewerage boards must submit audited accounts.
But as Yiorkadji pointed out, more often than not the accounts prepared by municipalities are rife with errors and omissions, and lack supporting data.
The majority of municipal boards do not have internal audit systems in place ensuring proper bookkeeping from which reliable financial accounts can be compiled, she said.
According to the official, her department is grossly understaffed, currently operating with 80 auditors with around 30 per cent of positions left vacant as a result of the blanket freeze on hiring in the broader public sector.
Her concerns were echoed by Georgiou, who described the department’s circumstances as “dramatic”.
The DISY deputy said parliament has repeatedly asked the government to find a way around the hiring freeze to beef up the auditor-general’s office.
One way would be to second civil servants from other departments. Another – apparently agreed to by the government – is to transfer auditors from the cooperative central bank after the latter’s restructuring.
In her report, the Auditor-general also drew attention to the pricing of imported medicines. From a small sample of pharmaceuticals examined, her office determined that their prices should have dropped by around 18 per cent.
Under the current pricing system, the maximum wholesale prices are determined by calculating the average prices of medicines in four ‘reference’ countries – Sweden, Austria, France and Greece. Although Greece is categorised to be the ‘inexpensive’ reference value in that group, since 2009 medicine prices there have shot up. Despite this, Greece continues to be classed as an ‘inexpensive’ market.

TEN people were remanded in police custody on Tuesday after police busted an illegal immigration ring on Monday night, the police said.
Police officers arrested five illegal immigrants in an area near Latsia in the Nicosia district, four men and a woman, aged 17, 18, 21, 29 and 20 respectively. The woman was accompanied by her two children, aged one and four.
Police officers handed the children over to Welfare Services
The immigrants seem to have originated from Turkey.
After interrogation, those arrested named five other individuals, two Cypriots aged 44 and 57 and three other legal immigrants, aged 34, 24 and 21 as those responsible for bringing them to the island illegally.
The five people were arrested and all were on Tuesday taken to court. The Nicosia District Court remanded nine of the arrested for five days and the woman for two days.
They were accused of assisting third country naturals to enter the country illegally for profit.
Nicosia Police Headquarters will continue investigation.

By George Psylides
PRESIDENT Nicos Anastasiades suggested on Tuesday that the UN special envoy for Cyprus was not objective, as the Turkish Cypriot leader called for a start to reunification talks without a joint declaration.
In an interview with state television CyBC, the president said the role of the people serving the UN, whether it was Alexander Downer or anyone else, was not to alter UN decisions or the decisions made by the leaders of the two communities.
“They should realise that a plan that was rejected by 76 per cent of the Greek Cypriots cannot be brought back in the same form or worse, or with decorative changes,” Anastasiades said.
He was referring to a UN reunification blueprint known as the Annan plan that was rejected by Greek Cypriots and approved by the majority of Turkish Cypriots in separate referenda in 2004.
He added that what was necessary was not a deus ex machina but objectivity from those tasked to serve UN principles.
The two sides have been bogged down over the text of a joint declaration that would pave the way for the start of talks.
On Friday, the Greek Cypriot side said they were informed by the UN that the most recent proposal had been rejected by the Turkish Cypriots, who did not submit a counter proposal.
Turkish Cypriot leader Dervish Eroglu said the two sides must drop the exchange of documents and start talks for an agreement.
According to the Cyprus News Agency, Eroglu said he was prepared to start talks from where they were left off with his predecessor but the “Greek Cypriot leader did not accept this and that was why the joint declaration was put on the agenda.”
Eroglu said the last document tabled by the Turkish Cypriots was viewed positively by the UN Secretary-General, and the countries interested in the issue, but the Greek Cypriot side appeared negative again.
Meanwhile, Cyprus will be on the UN Security Council’s agenda for January, according to Jordan’s Permanent Representative Prince Zeid Ra’ad Zeid Al-Hussein, whose country assumes the presidency this month.
He said a meeting will be held with troop-contributing countries to UNFICYP on January 21, and that on January 22 the Security Council will hold informal consultations on the mission of UNFICYP.
He noted that on January 28 the Security Council is expected to adopt a resolution to renew the mandate of UNFICYP.
On January 22, the members of the Security Council will be briefed by Special Representative Lisa Buttenheim on UNFICYP and by Downer on the good offices mission for Cyprus.

By Toby Davis
Sunderland grabbed the upper hand over Manchester United by winning their League Cup semi-final, first leg 2-1 on Tuesday to compound a testing week for visiting manager David Moyes.

Fabio Borini scored a second-half penalty to give the Premier League’s bottom club a one-goal lead ahead of the return match at Old Trafford after a 52nd minute Nemanja Vidic header cancelled out Ryan Giggs’ own goal in first-half stoppage time.

It was United’s third straight defeat after they were beaten in the FA Cup third round by Swansea City on Sunday and by Tottenham Hotspur in the league the previous week.
The second leg will be played on January 22 to decide who will face either Manchester City or West Ham United in the final.

The trial of deposed Egyptian President Mohamed Mursi on charges of inciting murder was postponed until February 1 on Wednesday after officials said bad weather had stopped him from being flown to court.

Another Islamist politician,  Essam el-Erian, on trial in the same case cast doubt on the explanation, telling reporters Mursi had refused to attend “because this court is unconstitutional”. He did not say how he knew this was the case.

Though the weather was fine in the capital Cairo, a commercial flight from Dubai to Alexandria on the north coast where Mursi is being held was redirected to Cyprus because of fog, the director of Alexandria’s civilian airport said.

Mursi had been due in court for the second session of his trial in the case relating to violence outside the presidential palace in December, 2012, when he was still president. He is charged with inciting the killing of protesters and could face the death penalty.

The army deposed Mursi, who won Egypt’s first freely contested presidential election, on July 3 after mass protests against his rule.

In his first appearance in court on November 4, he declared he was still president, shouting: “Down with military rule”.

State media earlier reported that Mursi, who is being held separately from other Brotherhood leaders at a jail near Alexandria, had arrived at the Cairo police academy where the court was due to convene.

But the state news agency, citing a senior security official, later reported that bad weather meant Mursi would most probably not be taken to court, where riot police in body armour were deployed in nearby streets.

Five Mursi supporters were arrested outside the police academy, state TV reported. Police also closed off central Cairo’s Tahrir Square.

The case relates to violence outside the presidential palace during protests ignited by a decree that expanded Mursi‘s powers. Around a dozen people were killed in the violence. Fourteen other Islamists are standing trial with Mursi.

The army-backed authorities brought two new cases against Mursi last month, accusing him of conspiring against Egypt with the Palestinian group Hamas, Lebanon’s Hezbollah and the Shi’ite Islamist government of Iran, and separately charging him over a mass jail break during the 2011 uprising against Hosni Mubarak.

Already mounting a crackdown on the Muslim Brotherhood, the authorities stepped up pressure on the group last month, officially declaring it a terrorist organisation. The group says it is committed to peaceful activism.

The government is moving forward with a political transition plan that includes a Jan. 14-15 referendum on a new constitution. Overseas voting was due to start on Wednesday.

Army chief General Abdel Fattah al-Sisi, who overthrew Mursi, is now widely seen as the leading contender to be elected president in an election that could happen as soon as April.

Cyprus Airways (CY) said on Wednesday it was in the final stage of a deal with Qatar Airways for the sale of the national carrier’s time slot at London’s Heathrow airport for $20 million (€14.7 million).

The two sides’ legal advisers were in the process of drafting the agreement and further statements will be made after it was finalised, the airline said.

Workers had voiced opposition to the sale in the past.

Pilot union PASYPI said it had written to four ministers – finance, communications, commerce, and labour — asking for financial support to avoid selling the time slot.

In a statement issued on Wednesday, PASYPI said the board wanted to sell one of two time slots at Heathrow because of significant deficits in the “guaranteed” provident fund caused by bad management.

As the main shareholder, the pilots said, the state must find ways to boost the company’s cash flow and avoid the sale.

Flights to London are an important source of income for the airline and link Cyprus with the large Cypriot expat community.

“In our view, the effort to cut expenses and raise revenues must continue so that the airline can return to profitability, without the sale of other assets,” PASYPI said.

The troubled airline is seeking ways to survive, which include implementation of a restructuring plan, the latest in a series.

CY posted losses of €55.8 million for 2012, doubling its 2011 losses of €23.9 million.

Last month, Qatar Airways announced it would start flying to Cyprus’ Larnaca airport starting April 29, 2014.

The airline said it will fly to Larnaca from Doha four times a week.

Former US basketball star Dennis Rodman led an auditorium of North Koreans in singing “Happy Birthday” to their leader on Wednesday, a day after he sparked controversy by appearing to suggest a Korean-American was to blame for his captivity in North Korea.

Rodman brought a team of fellow former National Basketball Association stars to the North Korean capital, Pyongyang, to mark the birthday of leader Kim Jong Un with an exhibition game. The birthday is believed to have been on Wednesday though that has not been confirmed.

“It started out as surreal, then people joined in and it sort of faded a bit, but it seemed pretty heartfelt from Rodman‘s side,”Simon Cockerell, a tour guide who watched the game in Pyongyang, said of Rodman‘s birthday singing.

“It was unexpected, and probably unplanned,” he said. “Kim Jong Un appeared to smile, but he didn’t appear to expect it.”

Cockerell, whose company Koryo Tours took a group of tourists to the game, said the audience had stood and cheered Kim for up to six minutes when he appeared with his wife.

“Dennis Rodman gave a charmingly shambolic speech where he thanked Kim Jong Un and his wife for showing up, along with the other players for being brave enough to come with him and join in his ‘engagement effort’.”

This was Rodman‘s fourth trip to Pyongyang. On previous visits he spent time dining as a guest of Kim, with whom he says he has a genuine friendship.

The visit come weeks after the execution of Kim’s uncle, Jang Song Thaek, who until then was one of the most powerful figures. South Korean President Park Geun-hye has described events in North Korea as a “reign of terror”.

Rodman has said he would not interfere in North Korea’s politics but he raised an outcry at home when, in a television interview on Tuesday, he appeared to suggest that Korean-American missionary Kenneth Bae was to blame for his captivity.

During an interview with CNN about his trip, Rodman seemed to say Bae, held in North Korea since November 2012 and convicted in May on charges of crimes against the state, was responsible for his situation.

“If you understand what Kenneth Bae did … Do you understand what he did in this country? Why is he held captive in this country?” Rodman said, declining to respond to questions to clarify what he meant.

Former New Mexico Governor Bill Richardson, a periodic troubleshooter on North Korean issues, told CNN on Wednesday Rodman‘s comments were damaging and said North Koreans were clearly using him to get a message to the United States.

“I think what’s most reprehensible is his implication that Kenneth Bae, an American detained on very spurious charges who deserves to come home, might be guilty,” said Richardson, who was US ambassador to the United Nations in the 1990s.

“Obviously, Rodman was briefed by the North Koreans. They see him as their link to the United States because they don’t want to talk to us,” he said.

Bae’s sister, Terri Chung, said her family was outraged by Rodman‘s comments and he could do a lot of good by using his access to the North Korea leader to advocate on Bae’s behalf, rather than “hurl outrageous accusations” at her brother.

“He is playing games with my brother’s life,” Chung said in a statement. “There is no diplomacy, only games, and at my brother’s expense.”

“He is clearly uninformed about Kenneth’s case, and he is certainly not in any position to pass judgment,” Chung said, adding that Bae never had hostile intentions against the state.

BAE “AILING”

Asked about Rodman‘s comments, White House spokesman Jay Carney told reporters: “I’m not going to dignify that outburst with a response,” emphasizing that the trip was private travel not endorsed by the US government.

“I’m simply going to say that we remain gravely concerned about Kenneth Bae’s health, and continue to urge DPRK authorities to grant his amnesty and immediate release on humanitarian grounds,” Carney said.

Bae, 45, was sentenced to 15 years of hard labor for state subversion in North Korea. He was detained in 2012 as he led a tour group through the north of the country. North Korea’s Supreme Court said he used his tourism business to form groups aimed at overthrowing the government.

Following a visit to her son in October, Bae’s mother, Myunghee Bae, said her son was “alone and ailing”.

A devout Christian, Bae has acknowledged he conducted religious services in North Korea, which has long been hostile to Westerners advocating religious causes.

US Representative Eliot Engel, the leading Democrat on the House Foreign Affairs Committee, criticised Rodman and the other Americans for what he called an ill-advised trip.

“As North Korean dictator Kim Jong Un continues to starve and oppress his citizens, it is unthinkable that a few fading celebrities would use such an opportunity to reward his brutal regime,” he said.

By Luke Baker
Greece took over the presidency of the European Union on Wednesday and chose the moment to deliver a staunch defence of its efforts to recover from six years of recession and two bailouts that have cost it more than 200 billion euros.

Meeting Brussels-based journalists as Athens took on what is largely a ceremonial EU role for the next six months, Foreign Minister Evangelos Venizelos and Finance Minister Yannis Stournaras were quick to highlight nascent signs of recovery, with forecasts for the economy to grow marginally this year.

Prime Minister Antonis Samaras delivered a similar message, while all of them trod carefully around the possibility that Greece will need another loan or else have to write off or renegotiate a portion of its vast debts later this year.

Since it emerged in late 2009 that Greece had fiddled its statistics, the country has received two rescues totalling 240 billion euros – more than its annual output – from the EU and International Monetary Fund, and flirted with leaving the euro.

To try to put the economy back on a stable footing, the government has slashed spending, cut public sector salaries and pensions, raised taxes and begun to sell off state assets, enforcing a dramatic and deeply unpopular internal devaluation.

“No other country during peacetime has achieved as much as Greece has achieved since 2009,” Stournaras said when asked what specific steps he had taken to make the economy competitive again after six years of contraction.
“People should this year begin to feel the impact in their pockets and in their everyday lives.”

Asked if it was not essential for Greece to write off some portion of the money loaned to it by the EU and IMF to have any chance at a sustained recovery, both Venizelos and Stournaras demurred, while Samaras played up the signs of improvement.

“Greece, after huge sacrifices, is able to say that it is leaving behind the crisis,” he told a joint news conference with European Commission President Jose Manuel Barroso.
Ahead of the arrival of Barroso and the rest of the members of the European Commission, police and paramilitary units sealed off the centre of Athens and demonstrations were banned to prevent any disruptios to the launch of the presidency.

Because of Greece’s enormous debt and low prospect of being able to pay them back in the next 30 years, the expectation is that some form of renegotiation will be required later this year, although it is a subject Greece is reluctant to broach.

Venizelos, a combative former finance minister and Socialist party leader, said no request for a ‘haircut’ or write down in the value of its loans had been made and said he was only interested in how to make the outstanding debt more manageable.
“We want a serious technical discussion about how to make the debt sustainable in the long term,” he said, adding that to this point none of the loans had cost European taxpayers a cent because all obligations had been paid in full.

Stournaras said there was room to lower the interest rates on the loans still further – even though they are barely above the cost of financing – as well as making changes to the pay-back schedule and using EU development funds in more imaginative ways to keep Greece solvent and on a recovery path.
“A reduction in the interest rate and a pushing back of the amortisation schedule is more effective from the point of view of the financial markets,” he said, dismissing suggestions that what Greece ultimately needed was debt relief.

Any new loan would likely come with further strict conditions on spending cuts and tax increases that Greece is determined to avoid, not least to avert further social unrest.
“There can be no more fiscal conditionality,” the finance minister said, highlighting the dire impact earlier rounds of spending cuts, state salary reductions and tax increases.
“It’s quite illogical to impose any more conditionality. It’s totally self-defeating at this stage.”

Over the past four years, Greece has forced through a 22 per cent reduction in the minimum wage, cut average public sector salaries by nearly a quarter and slashed some pensions by more than 40 per cent, delivering a deep “internal devaluation”.

While the economy has contracted by almost 25 pe rcent from its peak, the current account deficit has been erased, exports have picked up and growth of 0.6 per cent is scheduled this year. Unemployment has stabilised, albeit at a painful 27 per cent.

In a sign of increased confidence, Stournaras said it was likely Athens would offer a five-year bond in the second half of 2014, with the funds raised via an investor roadshow.
While that would mark a significant step forwards, it would still fall a long way short of full market access – and socially and politically Greece remains deeply troubled.
Samaras’ coalition government is barely holding on to a three-seat majority in parliament. He dropped plans to increase healthcare costs this week and will raise taxes on cigarettes instead, largely to avoid the threat of a parliamentary revolt.

The major event during Greece’s presidency will be the European Parliament elections in May, when a surge in support for extreme-left, -right and anti-EU parties is expected.
In Greece, the left-wing Syriza group is forecast to top the polls, potentially disrupting Samaras’ delicate coalition.

By Nemanja Bjedov
CUP holders Apollon Limassol left it late before securing a narrow 1-0 advantage over Nea Salamina in the first leg of their Coca Cola Cup Round 16 clash after Greek midfielder Fotios Papoulis headed the ball home in the last minute of regular time, yesterday evening at the Tsirion Stadium in Limassol.

“This was only the first half. We deservedly won, but who will go through will be decided in two weeks in Larnaca. It was an open game and both teams had chances to score.
“Before we start thinking of the second leg we will be fully focused on Omonia who are our next opponents in the league this coming weekend,” assessed Apollon coach Christakis Christoforou.

At the GSP Stadium in Nicosia, APOEL beat AEL 1-0, with Irish striker Cillian Sheridan scoring the only goal of the game in the 40th minute.
AEL midfielder Dede and APOEL’s Nektarios Alexandrou got into an argument after the final whistle and the referee showed them both yellow cards. Dede will now miss the return leg as he was sent off for his second yellow card of the game.

“We lost, but we still have a solid chance of advancement because the second leg will be played at our stadium in two weeks time. Both teams had their chances, but it was APOEL who managed to score and that goal was the difference between the two teams tonight,” said AEL spokesman Ploutis Avraam.
“In the second leg we will have to play without Dede, but we are expecting a few new players to arrive in Cyprus by then so our chances should be good to achieve progress into the next round,” he added.

APOEL vice-president Vassos Eliades also thinks his side have a good chance of reaching the next round: “This is only the first half of the tie. There are another ninety minutes and maybe more to be played two weeks from now, but I believe we have a good chance after today’s result. However, our focus now shifts to AEK who we play in the league this weekend.”

Elsewhere, Doxa Katokopia beat Olympiakos Nicosia 3-1 away from home, while AEK Kouklion celebrated a 1-0 victory over Ermis Aradippou. Enosis Neon Paralimni and Ethnikos Achnas played out a goalless draw.

By Peter Stevenson

THE new €15 monthly bus-fare for secondary school students introduced on Tuesday is another blow to the educational system, according to student body PSEM.

“Two months ago, the Education Ministry tried to intimidate students not to attend any PSEM demonstrations as it considered them unjustified,” PSEM leader  Panayiotis Monoyios said.

He added that introducing the new fee was ‘criminal’ as it coincides with figures that show one in five students cannot afford the necessary school items and that more and more parents are unemployed or have had their salaries cut.

“We don’t have food to eat and they are asking us to pay for buses. Is this the future for our public education system?” Monoyios asked.

The first step that was decided following a meeting of parents, student and teachers unions, he added, is that students from secondary schools around Cyprus will abstain from the third period on Thursday.

“The aim is to make our voices heard so a real public dialogue can take place which will give us the opportunity to fight for the right to give free public transport to students,” Monoyios added.

The head of PSEM said the parents and teachers associations have stood by their side and called on bus drivers to also help the campaign by not demanding bus fares.

The Communications Ministry said on Wednesday that it would cooperate with the Education Ministry to keep an eye on the new fare scheme and did not rule out making any adjustments.

“Despite any legitimate complaints about the scheme, the majority of people responded responsibly,” a Communications Ministry statement said.

The Ministry clarified that the fare, that had been fully subsidised by the state in the past, was introduced by the previous government in December 2012 and was part of the bailout deal with the troika.

Primary school pupils are exempt from paying the fare, as are students whose families qualify for state welfare benefits.

“Through dialogue with the Education Ministry, parliament and student and parent associations, we have decided to exempt certain groups to help the needy,” the Communications Ministry said.

It added that various suggestions have been made about saving money from various other services but that the Ministry needed to save €10m from the public transport system.

The statement added that it was still discussing with bus companies and unions in an effort to reduce operating costs to help save money which could then be allocated to help needy students.

“In cases where groups would receive an exemption from paying the bus fare, savings would need to be made elsewhere,” the statement said.

The Ministry concluded that the budget, despite all good intentions, has been approved and any transgression could lead to the total collapse of the public transport system.

Opposition AKEL said introducing a charge was feasible but that that savings could be made from other sources.

In a letter, Childrens’ Commissioner Leda Koursoumba called on Communications Minister Tasos Mitsopoulos to rethink the decision to introduce the bus fare. She said that free public transport is something which should be provided to all children regardless of their social standing.

By Stefanos Evripidou

THE National Council on Wednesday discussed the latest efforts in the peace talks and measures to curb the sale of Greek Cypriot properties in the north, without concluding on either.

According to government spokesman Christos Stylianides, decisions on the next steps in the peace process and measures to dissuade Greek Cypriot refugees from selling off their occupied properties have been deferred to later in the month, with the Council due to convene again on January 24.

President Nicos Anastasiades discussed with the advisory body of former presidents and party leaders the Turkish Cypriot rejection on December 27 of the Greek Cypriot draft proposal on the joint communiqué that had been submitted on December 18.

The Turkish Cypriots failed to present any counter-proposal, effectively bringing the effort to an impasse.

Turkish Cypriot leader Dervis Eroglu was quoted by the Turkish Cypriot press as saying that his side has submitted its “last draft” on the issue. He is due in Ankara in the coming days, invited for the first time in a long while to discuss the Cyprus problem with the Turkish leadership.

His ‘foreign minister’ Ozdil Nami appeared to sing a different tune, quoted as saying that the two sides have achieved “serious convergences” in the joint declaration and only “minor differences” separate them which could be overcome.

Anastasiades briefed party representatives on Wednesday on the contents of a letter he sent to UN Secretary-General Ban Ki-moon on January 2, where he suggests the two leaders agree on a shorter joint declaration based on specific criteria, as an alternative means to get the talks started.

Stylianides told reporters after the Council meeting that UN Special Adviser Alexander Downer was due to meet with Anastasiades on Monday.

“The solution to the Cyprus problem is the basis of the political philosophy of this government. That is why we do not accept the attribution of any blame to our side when we have demonstrated that we do our utmost in order for a substantive dialogue to commence,” he said.

Reports on Wednesday suggested the UN chief would call a meeting of the two leaders in New York to get the process started, however UNFICYP spokesman Michel Bonnardeaux said this was currently not on the cards.

“No, right now the plan is still the same. The plan is to get the work done here which is what Mr. Downer is doing,” said the UN official.

Downer, who arrives in Cyprus on Sunday, will stay on the island for a week before heading to New York to brief the UN Security Council on January 22, and “see what the next steps shall be,” said Bonnardeaux. On January 28, the UNSC is expected to vote on the renewal of UNFICYP’s mandate.

Asked to comment about a possible meeting in New York, Stylianides failed to rule out the prospect, saying that for the Greek Cypriots, the aim was the resumption of dialogue, in any format, so long as the basis for a solution is clear, and there are prospects for substantive dialogue leading to a successful conclusion.

The spokesman also rejected comments by opposition AKEL leader Andros Kyprianou that the government wasted four months on experimentations in the peace talks.

EDEK leader Yiannakis Omirou and Greens leader Giorgos Perdikis came out of the meeting suggesting the future was bleak for the talks.

DIKO leader Nicolas Papadopoulos said the effort was to avoid the dilemma of “either accepting Mr Eroglu’s terms or heading to a deadlock”.

“What concerns DIKO is for the talks to start” on a clear basis so no one has the opportunity to table unacceptable positions at the negotiating table, he added.

EVROKO leader Demetris Syllouris said it appeared Downer, who was appointed by the UN and should be the first to protect UN resolutions, does not support this process.

“For us this is not a surprise,” he said.

The only positive note seemed to come from Archbishop Chrysostomos II, who, speaking at another event on Wednesday, said Turkey will eventually realise it is in their interests to create a proper federal state as the hydrocarbon reserves in Cyprus’ exclusive economic zone are much bigger than we think.

Meanwhile, regarding the National Council subcommittee’s proposals for measures to curb applications to the IPC Turkish Cypriot property commission, Stylianides said the matter was “very difficult, very complex” with a legal dimension.

He noted that following the decisions of the European Court of Human Rights deeming the IPC an effective domestic remedy, this has created “terrible problems”, highlighting the danger of time passing with the Cyprus problem remaining unsolved.

Interior Minister Socrates Hasikos said proposals on the IPC will be discussed again on January 24, adding that the only sure way to stop Greek Cypriots selling their properties in the north was to solve the Cyprus problem.

“There are some measures proposed, but I want to be completely honest. There is one way, a Cyprus solution, everything else is a half-measure, and that is where we need to focus our efforts.”

He acknowledged that the deep economic crisis did not allow the state to buy refugees’ properties in the occupied areas from them, “even at 10 per cent of their value as they are given in the occupied areas”.

To date, 5,714 applications had been filed with the IPC of which 463 have been concluded through friendly settlements and 11 through formal hearing. The IPC has paid out GBP 143m to the applicants as compensation so far.

It has only ruled for some form of restitution in no more than seven cases.

THE car belonging to Pano Polemidia community leader Koullis Papamichael was damaged by an explosion early yesterday while it was parked outside his home, police said. At around 4.10am, the fire service was called to put out a blaze in the village after an explosive device had been set off on the 68-year-old man’s car.

The blast caused extensive damage to the vehicle, to the front of Papamichael’s home and to a neighbour’s car parked nearby.

Investigations carried out at the scene showed the blast was caused by a pipe bomb.

Papamichael said he was unaware of any motives behind the incident but did not rule out that it could be connected to decisions made by the local council.

Limassol CID is investigating the case.

LIMASSOL district court remanded a 23-year-old man for seven days and a 36-year-old man for four days yesterday after their arrest in connection with shots fired at a fast food shop in Limassol on Saturday.

The pair were driving in a car on the Nicosia to Limassol highway when officers stopped them at 11.30pm on Tuesday, police said. During the search, the 23-year-old passenger handed a small plastic bag containing 28 grammes of cannabis to the officers. The two men were arrested and taken to Limassol police headquarters where it was established that the 23-year-old had pending arrest warrants in his name. He was wanted for cases involving the illegal possession and transportation of a firearm, possession of explosives, drugs possession and for firing a gun in a residential area.

Police had originally arrested four men in connection with the case on Sunday.

Limassol CID and Nicosia’s drug squad are both investigating the case.

FIRE-fighters in Paphos responded to more than 2,000 calls to put out fires and rescue people last year, according to the district’s fire chief Spyros Papamichael. But despite the total number being fewer than in 2012, the actual number of calls for fires had risen.

Of the total 2,121 calls, 1783 were for fires in residential and farming areas.
According to Papamichael, 34 calls were hoaxes, while 304 calls were for special services such as rescuing people trapped in elevators. Fire-fighters were also called to rescue people and animals fallen in ditches, people trapped in vehicles after accidents, pumping water from buildings after heavy rainfall and flooding, opening drains and cutting trees that blocked traffic on public roads.

Some of the calls included fires which had started in kitchens after electrical devices or other appliances had been left unattended, from faulty heaters or fireplaces with faulty flues.

Papamichael said that in 2012 fire-fighters were called to respond to a total of 1669 fires of which 1187 were in residential and farming areas. The same year, the fire service received 218 hoax calls and 434 calls for special services.

Papamichael added that the Paphos fire service responded to the best of its abilities to prevent and suppress fires by hiring seasonal workers for six months during summer.

By Eva Taylor and Sakari Suoninen
The European Central Bank said on Thursday it was determined to use all available tools to prevent inflation falling too low, but left interest rates unchanged despite price rises slowing further into a “danger zone” below 1 percent.

ECB President Mario Draghi told a news conference after a monthly rate-setting meeting that the 18-nation euro zone may experience a prolonged period of low inflation before a gradual return to the ECB’s target level of just below 2 percent.

The central bank, which last shaved its main rate to 0.25 percent in November, “strongly emphasised” its willingness to act boldly if needed to prevent any slide towards deflation – a term it rejected – but left itself more time to assess price and money market trends.
“Overall, we remain determined to maintain a high degree of monetary accommodation and to take further decisive action if required,” Draghi said.
He acknowledged this was a more strongly worded expression than in the past of intent to act if money market interest rates rose too far or there was a further fall in the bank’s inflation outlook.
“Right now, we don’t see deflation,” he said, but a prolonged period of low inflation could entail downside risks. “By and large we don’t see a deflation in the Japanese sense of the 1990s.”

The decision to hold rates unchanged was widely expected despite news earlier this week that euro zone inflation slowed to 0.8 percent in December, a development Draghi blamed on a one-off technical quirk in German service sector figures.

ECB watchers listening for any hints about the central bank’s preferred tools for holding down market rates, which have begun to creep up as banks repay ECB loans, pulling liquidity stimulus from the system, gained little clarity.

Draghi said it was pointless to speculate what instruments the ECB might use. He would not be drawn on the possibility of outright purchases of securities similar to the quantitative easing policies of the U.S. Federal Reserve, the Bank of England and the Bank of Japan, saying only that the ECB could do whatever its treaty mandate allowed.
With policy rates so low and the ECB’s toolbox depleting, the threshold for further policy easing has risen, even as the central bank worries about slow price rises.

“We must be very careful that we do not permanently fall below 1 percent inflation and thus into the danger zone,” Draghi told German weekly Der Spiegel last week.

Economic recovery, while weak, has proceeded as the ECB has expected, giving it time to see whether inflation picks up.
Low inflation is not the central bank’s only concern. A lack of lending and receding excess liquidity – the amount of money in the market on top of what banks need for their day-to-day operations – are adding to its dilemma.

Excess liquidity – the money from ECB loans – almost halved overnight to 157 billion euros as banks took up fewer funds from the ECB, which has reduced liquidity further by offsetting its bond purchases.

Early repayments of three-year central bank loans resume next week, meaning even more funds will be siphoned out of the markets, helping push money market rates up more.
Draghi has repeatedly said banks returning money to the ECB is a positive sign and has said interbank markets are working better. But if banks hoard less cash, borrowing costs rise.
Lending to companies in the bloc shrank at the fastest pace on record in November and the difference in corporate loan costs around the bloc grew. This suggests the ECB’s low rates are still not filtering into all countries.

Nevertheless, Draghi said confidence was gradually returning to the euro zone economy and the central bank’s very accommodative monetary policy stance was finally find its way into the real economy.

He acknowledged that some banks might be reducing lending to repair their balance sheets before the ECB conducts an asset-quality review of European banks starting next month.
But he said this would lead in the longer term to greater health of the banking system, a prerequisite for a sustained economic recovery.

The condition of former Israeli Prime Minister Ariel Sharon, in a coma since 2006, has deteriorated sharply in recent hours and he is close to death, the hospital treating him said on Thursday.

Sharon, 85, has been on life support and out of the public gaze since suffering a massive stroke eight years ago. His vital organs started to fail a week ago at the Sheba Medical Center, near Tel Aviv.

One of Israel’s most famous generals, Sharon left his mark on the region through military invasion, Jewish settlement building on captured land and a shock, unilateral decision to pull Israeli troops and settlers out of the Gaza Strip in 2005.

Afghanistan has enough evidence to try only 16 of 88 prisoners that the United States considers a threat to security and plans to free the remaining detainees, the president’s spokesman said on Thursday.

The move will further strain relations between the two countries that are already near breaking point over Presiden Hamid Karzai’s refusal to sign a security deal to shape the US military presence after most foreign troops leave this year.

Without a deal, Washington could pull most of its troops out after 2014.

The United States is strongly opposed to their release because it says the prisoners have been involved in the wounding or killing of US and coalition troops.

The Afghan government says, however, there is no evidence against 45 of the 88 prisoners, while the evidence against a further 27 detainees is not enough to put them on trial.

“We cannot allow innocent Afghan citizens to be kept in detention for months and years without a trial for no reason at all,” Karzai’s spokesman, Aimal Faizi, told Reuters.

“We know that unfortunately this has been happening at Bagram, but it is illegal and a violation of Afghan sovereignty and we cannot allow this anymore.”

The president’s decision came after the head of Afghanistan’s spy agency presented the cases against the prisoners at meeting on Thursday morning.

US senators visiting Afghanistan last week said releasing the prisoners would irreparably damage ties with the United States, but stopped short of saying it would prompt a full military withdrawal.

Karzai has called the so-called “zero option” an empty threat and suggested any security deal can wait until after the presidential elections in April. The United States says it needs time to prepare a post-2014 mission.

By Peter Stevenson

THREE motorists who had their cars clamped while parked at Larnaca and Paphos airports are suing airports operator Hermes claiming the company has no right to issue on-the-spot fines and clamp vehicles.

The three plaintiffs are not contesting whether or not their vehicles were parked illegally, a wrongdoing which they admit, but that they were not given the right to contest the charge, their lawyer Evagoras Anastasiou told the Cyprus Mail.

“If someone gets a parking ticket then they have the right to take the matter to court and contest the ticket. Essentially by giving them an on-the-spot fine and clamping the vehicle, Hermes Airports was depriving them of that right,” he said.

At the old Larnaca airport, Anastasiou added, traffic police were given jurisdiction to hand out tickets for illegal parking but that no longer applies and Hermes have taken it upon themselves to issue fines and collect the money.

Anastasiou’s law firm sent a letter to the chief of police and asked him if he could clarify whether a private company can hand out fines for any offences or whether they are covered by any other law.

“Currently legislation is clear and does not permit private companies to give out or collect fines,” was the response given by Superintendant Kyriacos Kouyiountas on behalf of the chief of police.

In a response to the accusations, Hermes Airports said that the airports it manages are private spaces and their smooth running is a private matter.

“Just because it is a private space does not give them the right to hand out fines. Imagine if everyone who owned a private plot of land started handing out fines to people who they had felt had parked illegally, it would be chaos,” Anastasiou said.

The first case involved a Russian woman who is a permanent resident on the island who claimed that she parked in a disabled spot within Larnaca airport’s parking lot because her daughter was late for her flight. When she returned to her car she found that it had been clamped and that she would need to pay €85 to have it removed. Not having any cash on her, she asked if she could be allowed to return at a later date to pay the fine. According to the woman’s statement to Anastasiou, she was told that if she did not pay the fine on the spot then the clamp would not be removed. Having no other choice as she claimed, she was escorted by airport staff into the departure lounge to find her daughter who gave her the money.

In the second case, a man had parked outside Paphos airport’s main terminal building to carry his relatives’ suitcases inside the airport. He claimed that he returned after ten minutes and found that his vehicle had been clamped. He was informed by airport staff that he would need to pay 85 euros to have the clamp removed.

The third case took place at 5am when a man parked his car in a spot for taxis at Larnaca airport and when he returned five minutes later had found it also had been clamped. He paid the airport 85 euros and the clamp was removed.

By Stefanos Evripidou

DUTCH FOREIGN Minister Frans Timmermans yesterday praised the way the Cyprus government and people are implementing the financial adjustment programme agreed with their international lenders, saying it is an inspiration for the rest of Europe.

Speaking at a joint press conference with his Cypriot counterpart Ioannis Kassoulides in Nicosia, Timmermans saluted the way Cyprus has stuck to the agreement reached with the Eurogroup last March on the €10bn bailout which included a substantial raid on uninsured deposits in the Bank of Cyprus and Laiki (Popular) Bank, winding down the latter and the transfer of €9bn in debt, , and the imposition of capital controls for the first time in the Eurozone.

The adjustment programme also includes provisions for a wide range of public spending cuts and salary reductions, as well as the contentious stipulation for the privatisation of some of the many semi-government organisations.

“The way also in which the people have taken the responsibility in implementing the agreement which is very difficult and painful to them, I think is an inspiration to the rest of Europe,” said Timmermans, adding that as a result Cyprus will come out of this crisis stronger.

Even though there was a lot of skepticism before, the agreement reached is actually working, thanks to the fact that the Cypriot government and people are willing to implement it to the full, he said.

The Dutch minister reiterated the strong partnership between Cyprus and the Netherlands, saying that the two countries share the same values in terms of European integration and solving the crisis in a way that is bearable to the people and underlines European solidarity.

Timmermans rejected the view that there is a north-south divide in Europe, arguing there is only one Europe and one solution to the common problems.

Kasoulides said he briefed his counterpart on the ongoing efforts to address the financial crisis and implement the adjustment programme in full, as well as on the latest developments in the Cyprus problem.

The Cypriot minister also expressed the government’s appreciation for the return by the Netherlands of the stolen icons from the Church of Christ Antifonitis in Kalogrea in the occupied north.

“This underlines the unwavering commitment of both Cyprus and the Netherlands to the protection of our common European culture and heritage. It also reaffirms the need to respect all the provisions of the 1954 Hague convention and its protocols by all the contractive states,” he said.

The two ministers also discussed the situation in Syria and ways to tackle the refugee and other humanitarian issues in the volatile region of Eastern Mediterranean.

Timmermans also met with President Nicos Anastasiades and Archbishop Chrysostomos II, after which he visited the Byzantine Museum to view some of the stolen icons and religious art returned to Cyprus in recent years.

By Elias Hazou

SOME €500m worth of foreign investments were made in Cyprus during the last eight months of 2013, primarily through the land-for-residency scheme, interior minister Socratis Hasikos said yesterday.

“Over the past eight months, the Republic has brought in around half a billion in new money which has gone into the economy. These numbers are based on hard facts, not hypotheses,” Hasikos told reporters.

This was particularly impressive given it occurred in the midst of the financial crisis, he added.

The minister was speaking shortly after a meeting at the Palace between President Nicos Anastasiades and leaders of the Cyprus Land and Building Developers Association (LBDA).

Hasikos said real estate and construction were the areas which primarily attract foreign investment.

“And it would be no exaggeration to say that the lion’s share of the hundreds of millions that came to Cyprus through sales to third-country nationals seeking permanent residency or [Cypriot] citizenship, was achieved through the efforts of these people,” Hasikos said, alluding to the developers.

It’s understood the numbers cited by Hasikos at least partly pertain to new investment citizenship programmes introduced by the administration last May soon after coming into office.

Most of these investments were made by non-EU nationals permanently living on the island, the rest from foreign investors with the aim to obtaining a Cypriot passport.

The vast majority of the investments during the time period in question were in real estate (home purchases), the remainder in the form of bank deposits, sources said.

Speaking about their meeting with the President, LBDA chairman Pantelis Leptos said their association had asked for more incentives and less red tape in order to attract foreign investors to the island.

Leptos noted that the construction sector employs some 40,000 people and accounts for 16 per cent of the country’s GDP.

“Supporting this sector therefore means supporting the economy as a whole,” he said.

Back in May 2013 the government announced a plan incentivising investment by foreign nationals.

Foreigners would be granted citizenship if they met certain criteria, including depositing €2m into the state treasury to purchase shares or bonds with the state-run investment company and also donating €0.5m towards the government’s Research and Technology fund.

Another way was for applicants to invest at least €5m in projects ranging from the purchase of houses, offices, shops and hotels provided the real estate is put to use. Also eligible were foreign nationals who purchased companies that were founded and were active on the island or else bought shares in companies registered in Cyprus.

Yet another option would require applicants to have deposits or own a company of which he is the main beneficiary of up to €5m in a local bank for at least the last three years.

Citizenship applications from Chinese nationals comprised the bulk of all the applications filed last year by non-EU nationals in relation to applications by investors and those who can prove they have independent means of income, both ways of earning residency.

Applications by Chinese nationals to gain permanent residency in Cyprus soared from a couple of dozen in 2012 to hundreds in 2013. In October 2013, data from the interior ministry’s migration department counted over 400 applications at the end of August.

Cumulative data on applications for the whole of 2013 were not immediately available.

It’s not clear – though unlikely – that the €500m cited by Hasikos relates to all inward foreign direct investment (FDI).

Numbers for inward FDI for 2013 are not yet available. According to Central Bank data, inward FDI stood at €979m in 2012, €987m in 2011, €578m in 2010 and €2.49bn in 2009.