THE EUROPEAN Central Bank yesterday put the blame for initial market turmoil over Cyprus' bailout squarely on the government, and pledged that taxing depositors would not become normal procedure.

ECB President Mario Draghi said Cyprus' bailout was “no template”, a statement designed to ease market fears that bank deposits would in future be fair game for international lenders seeking to help struggling eurozone countries.

But he was also scathing about the island’s initial plan to impose a levy on insured as well as uninsured bank depositors, even though the move was rubberstamped by the EU in the early hours of March 16. Draghi said the finance ministers and the International Monetary Fund had wanted Cyprus to help pay for its €10 billion with a levy on wealthy depositors only.

Cyprus, however, had initially also sought to charge those with €100,000 or less even though they had a bank deposit guarantee. “That was not smart, to say the least, and was quickly corrected (by eurozone finance ministers),” Draghi said. The move was not reversed by eurozone minsters however, it was rejected by the Cyprus parliament. 

Draghi said depositors with guarantees should be sacrosanct, but that it was best not to touch any depositors if possible. “You have a pecking order, ideally insured depositors should be the very last category to be touched. The (European) Commission draft directive (on banking) foresees exactly this.

“There isn't actually a specific distinction between categories of bondholders and uninsured depositors in the draft directive. But basically the point is that you, if you can, don't touch uninsured depositors,” Draghi said.

He also said it would be of no help to Cyprus if it left the eurozone, as some have floated. “What was wrong with Cyprus’ economy doesn't stop being wrong if they are outside the euro,” he said.

Draghi also sought to soothe concerns that charging depositors - called a “bail in” - would now be imposed on other troubled countries.

Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, caused a stir in March when he told Reuters that the Cyprus bailout, including depositor levies, could be replicated in future.

Draghi insisted this was not the case. “Cyprus is no template,” he said. “I am absolutely sure that the chairman of the Eurogroup has been misunderstood.” 

Dijsselbloem however clearly states that Cyprus would be used as a template but later backtracked when markets became spooked. 

Draghi also rejected yesterday the notion that the ECB bankers wield inordinate power over elected officials, as for example in the case the ECB threatened to cut off Emergency Liquidity Assistance (ELA) to Laiki and Popular Bank unless a bailout programme was agreed.

“We acted exactly within our mandate,” the ECB chief said. “We would have been acting politically if we had not done this. ELA could be extended only to solvent and viable banks. In the absence of a programme, these banks would not have been solvent and viable, and at that time the governing council assessed there was no programme in place [for Cyprus]. On all other occasions, there was a programme in place.”

“Cyprus events show that we are ready to act within our mandate. When the governing council objected to ELA, it did that within its mandate. It did not replace what could have been fiscal action.” 

Responding to another question, Draghi went on to say that ELA was the responsibility of the national central banks, not of the ECB – perhaps in a bid to shift blame away from the ECB for having okayed billions in emergency funding to Laiki while the bank was on the brink of collapse.

ELA funding, however, does need approval from the ECB, which is the ultimate financier. Moreover, in July last year – long before a preliminary bailout deal was clinched – Laiki was neck-deep in ELA, to the tune of some €9bn, and continued receiving these funds thereafter.

In May 2012, the state underwrote €1.8 billion to float the stricken bank. But in July of the same year, Cyprus’ sovereign debt was rated junk, meaning it could not be held as collateral for underwriting the bank, and it’s understood that at that point Laiki was therefore technically insolvent.

In June Nicosia formally requested assistance from the EU, and it’s likely that with this in mind the ECB agreed to continue providing emergency funds to Laiki. The ECB did threaten to cut off ELA in November, at which point the previous administration was forced to agree a draft memorandum for a rescue package.

ECB President Mario Draghi said Cyprus' bailout was “no template”

A Chinese company is interested in buying ailing national carrier Cyprus Airways (CY), it was announced Friday.

In a statement to investors, CY said officials from Beijing Yi Xiang Da Investment Co Ltd held talks with finance ministry and airline officials.

Signs for a conclusion appear to be encouraging, the airline said, but there has not been an agreement yet.

The airline is currently going through what is perhaps the most critical period since its creation, unable to keep up with competition from cheaper carriers and rising fuel costs.

It has been kept afloat with state assistance, which however, EU competition regulators are currently investigating.

THE FORMER chief executive officer of the Bank of Cyprus Andreas Eliades - the man considered responsible for the destruction of the bank - decided to give his views about the crisis for the first time last Tuesday. 

He issued a long-winded announcement with the aim, he wrote, of giving a picture of the absolute truth. It was titled ‘Truths and lies’. I am in no position to say how many truths were contained in his announcement, but I think that some of the things he wrote were blatant lies. I will restrict myself to one issue, the infamous sale and subsequent re-purchase of Greek government bonds that left the Bank of Cyprus with losses in the region of €2 billion.

He wrote that the purchase was made with “unanimous, on the record decisions by all the relevant committees and the board of directors” and the “claim that the purchase was made without the knowledge of the bank’s board of directors is a lie.”

These are the facts. On December 12, 2009, Yiannis Kypris, the first general manager of the group, told Stockwatch website that “the exposure of the bank to Greek bonds is very small.” He explained that from the start of that year until October, 1.7 billion bonds had been sold and the bank only held 100 million (106 million, on October 12, 2009 to be precise). “For us, there is no longer any danger,” he said.

Two days later, on December 11, 2009, at a meeting of the bank’s board, at which Eliades was present, his trusted lieutenant Nicholas Karydas, after referring to the recent downgrading of Greece’s credit rating, said, according to the minutes, the following: “The risk undertaken by the bank, in relation to the bonds of the Greek government, is low as the Bank of Cyprus significantly reduced its holdings of Greek bonds from the start of the year until October.”

This shows the culpability of Eliades and Karydas. While they were assuring the board that the bank had “significantly reduced” its holdings of Greek bonds and the “risk is low”, at the same time they hid the fact that on December 1 they had again bought 50 million bonds and on December 10, 2009 (the day before the above-mentioned board meeting) another 100 million.   

This was considered calculated deception of the board by members, but even though this is gist of the matter, Eliades avoided addressing it in his announcement. But this was not the end of the matter. Four days later, on December 15, the bank bought another 305 million bonds, on January 4 of the following year another 50 million, on January 5 45m, January 7 25m, January 8 25m, January 12 200m and January 14 100m. 

The buying frenzy continued until March 19 by which time the total holdings had become 2.106 billion. There were two more purchases on July 4 and September 4 of 2010, by which time the whole world knew that Greece was, in effect, bankrupt. So, in October 2010, exactly a year after it had unloaded them, the Bank of Cyprus held 2,068,350,000 Greek government bonds. 

Eliades claimed that all these crazy and insane ‘investments’ were unanimously sanctioned by the board of directors. He should provide some proof for his claim, because the truth is that the purchases of bonds on December 1 and 10 2009 had not been mentioned at the board meeting of December 12. It is difficult under the circumstances to accept that Eliades has the monopoly on the truth.

I am not suggesting that the other members of the board are blameless, especially those who subsequently accused Eliades of autocratic behaviour and of imposing his wishes on the board by threats of resigning. The fact that they tolerated this behaviour makes them culpable.

Of course this does not change the strong impression that the former CEO does not give “a picture of the absolute truth”, with regard to what happened in December 2009. Hopefully, the truth will be revealed by the investigative committee appointed by the government, because we need to know how the biggest bank in Cyprus was driven to bankruptcy.

Interview with Charles Ellinas, chairman of the state hydrocarbons company KRETYK

* ‘Business as usual’ for oil and gas giants: Cyprus’ financial crisis not a problem

* Noble rebuffed Turkish demands to back away from exploratory drilling

* Six licensed blocks may hold 30 trillion cubic feet of gas - building an LNG first is a must

Q: There appears to be some confusion over the precise role of KRETYK, with reports suggesting some overlap with the duties of the Natural Gas Public Company, DEFA. Could you clear that up?

A: We are an oil and gas company, much like, say, Italy’s ENI. There is no overlap with DEFA, because we’ve met with them, and we agreed we have no intention of getting involved in gas sales and distribution in the island. And as far as I’m concerned, when we do bring the gas to the island - hopefully in 2018 - to Vasilikos plant there will be a link there and DEFA will take their gas and off they go. They’ll sell and distribute it and everything else. That’s not our job. DEFA is much like a utility company, much like for water. Gas is also a utility.

KRETYK is responsible for developing, managing exporting and operating gas. The Energy Service at the Commerce Ministry is responsible for licensing, and also polices adherence to the requirements of the production-sharing agreements. The companies involved in the production-sharing agreements have obligations to fulfill. We are not going to be policing that, it’s the job of the Energy Service, and there’s a very good reason for it: it could be that by the third round of licensing we could be strong enough to go into business with someone else and be part of a license. So we can’t be policing ourselves, someone else has to do it.

Q: What is the status of KRETYK, legal and otherwise?

A: It’s a legal and properly registered company. The charter was vetted and set up by the Attorney-general’s office. The state is the owner of the company. The state should pay for the share capital, but parliament has not released that payment of shares. The key is to make these decisions and ‘unblock’ KRETYK. The longer it takes to resolve these matters, the longer it takes to develop gas resources.

Q: But even in this limbo, you are able to carry out certain functions...

A: Some things. We are still working with the oil companies, but certain things are not progressing. For example, we have been in discussions with Noble Energy about the LNG plant, but now that’s at a standstill because of the uncertainty. Also, we can’t hire more staff. With what, borrowed money? We have a loan right now [from a cooperative bank] and we have two ladies working here on temporary contracts until we sort these things out. So for example if we want to proceed and negotiate deals of any kind, especially to do with the LNG plant, we need suitable international advisors. We can’t go and hire any advisors now because of the uncertainty and we have no money for that. If we do get the €1 million, which is the initial share capital, then we can do a lot more.

We’ve already begun discussions with ENI, we had a meeting with them two weeks ago. Last week we had the first meeting with Total and more meetings are expected in the next few weeks. At this point, the companies are more focused on exploration, and we’re not involved in that, we are merely facilitating.

Q: Any news on whether this limbo will be resolved?

A: We’ve been advised that the matter will be resolved, but probably not right away. Things are crazy right now, and lawmakers have a lot on their plate.

Q: What are the steps toward exporting gas? Can you describe the timeline?

A: Let’s start with the Aphrodite well in Block 12. Noble have retained the services of a French consultant, a contractor called Technip, to do the pre-FEED (preliminary front-end engineering design). This concerns everything - from the offshore facilities as well as the LNG plant. The preliminary design should be completed by May. And it’s based on that work that we know the approximate cost of the project. We know that the offshore facilities, including the subsea pipeline, will be in the order of $3.5bn (€2.7 bn), and the LNG plant will be in the order of $6bn to $6.5bn. Next, Noble plan to carry out the appraisal drilling in Aphrodite during the summer. They confirmed this to me when I met with them in Tel Aviv on Tuesday [March 19]. I saw Terry Gerhart, Noble vice president for international operations, among others. I heard it from the horse’s mouth, if you will. Once the appraisal drilling is carried out, we should be able to assess more accurately how much gas we have, whether it’s 7 trillion tcf or more - we hope it’s more - and declare commerciality. The production-sharing contract requires Noble to declare commerciality three months after appraisal. Once that happens, we then proceed with the selection of the contractor to do the design proper, the FEED design, and we start looking for buyers of our LNG.

And the aim ought to be to complete the long-term sales of LNG, that is to say all the contracts, as well as the design, by early 2015. Before that, we will also be looking for investors in the LNG plant project. As you know, as far as the offshore facilities are concerned (pipeline etc), Noble and their partners are obliged to pay for that. We don’t contribute to that. What we do need is to build the LNG plant. There are ways of doing it where we don’t necessarily need to contribute that much. Also, in 2015 after the FEED design is completed, we should be looking for the contractor to build the facilities. And we need to do that because they will submit a price for the facilities, so we need to know exactly how much it’s going to cost. It matters, because before the end of 2015 we aim to reach what it called the final investment decision. Once that is out of the way, we want to start construction by early 2016.

That in turn will create a lot of jobs at Vasilikos. There is going to be a large number of people working there, perhaps anywhere from 6,000 to 10,000 on construction. A lot of them will be foreigners, because we don’t have the people with the necessary skills. Still, quite of a few people with lower-level skills will be Cypriots. There will also be Cypriot sub-contractors doing a lot of the work. For example, there is a lot of earth that needs to be excavated and moved , flattening and preparing the area. Also, the utilities: power, water, catering that can be done by local contractors. In addition, there is the housing: we’ll need to set up a labour camp where all these people from overseas can be housed. You also need to create an area where all the materials and equipment for the LNG plant will be placed. My own estimate is that in addition to the people actually working on the plant itself, we will have thousands of Cypriots supporting them with services, supplies, and so on. And that should start happening in early 2016. However, we need to prepare in advance, to make sure we maximize the use of Cypriots. 

Assuming we do all these things, we should be able to bring gas to the island by the end of 2018 for electricity generation. That itself should reduce the price of fuel for electricity by almost 50 per cent. And in late 2019 we should be able to start exports of LNG. That’s the grand scheme of things.

Q: You said construction of the LNG plant would begin early 2016. How long does it take to build?

A: The offshore facilities should be completed in three years, and the LNG plant in four. The plant is going to be the largest project ever in Cyprus. It’s a huge undertaking. Think of the logistics: you’ve got to bring equipment worth $3bn...where do you put it all?

Also, we need to draft a final master plan for Vasilikos. There was a very preliminary plan prepared five years ago. Currently, there’s space for three LNG trains, but we’ll probably need more than three. So we have to look at how much more land we can make available, what other facilities are there and may need to be relocated.

My estimate is that we will need five to six trains, from the six blocks licensed so far. The six blocks combined, we hope, might contain five to six times the amount of gas there is in Aphrodite, which alone needs one train. The optimum size or capacity of one train is 5 million tonnes a year.

Q: What is the latest on Noble’s plans for appraisal drilling at Aphrodite?

A: We’re looking at the summer. Nothing has changed. But as far as how long the actual appraisal will take, I can’t give you anything more concrete. Drilling is not a precise science. You’re drilling at four, five thousand meters and may encounter all sorts of problems. It could take two months, three, it depends. One has to be careful not to set artificial dates. So provided Noble starts this summer, before September, they are sticking to their timetable and are fine.

Q: Obviously that depends on rig availability. Can we confirm that it’s going to be the Ensco 5006 drilling platform?

A: That is my understanding. The rig is currently on site at the Karish prospect in Israel for exploratory drilling, and as soon as it finishes it will come to us. So it is possible it may come in July, but let’s not put a definite date on that.

Q: How much gas is there in the Cypriot fields?

A: My estimation is that the six licensed blocks -- including Aphrodite and a possible smaller prospect in Block 12 - could hold anywhere from 30 tcf.

Q: Based on what?

A: Based on assessments by the Americans [US Geological Survey] to start with, as well as data from seismic surveys carried out in some of the blocks concerned. We’re talking about the Levantine Basin, which has certain geological characteristics which are likely to be similar in different areas. And lastly, based on the fact that in the part of the basin that we have already drilled, we have found - between us and the Israelis - 36 to 37 tcf of gas so far. Let me point out that we’ve have drilled between a third and a quarter of the basin. The USGC says the whole of the Levantine Basin contains a total of 122 tcf. So the math works, all the indications are that the Americans’ original estimates are probably on the mark. TheUSGS also estimated that our own Exclusive Economic Zone has about 60 tcf, and we have only leased about half of it. So 30 tcf is the expectation. But again, these are all conjectures; we’ve got to drill before we know what’s there.

It’s important to know how much gas is there so you can plan ahead. For instance, all the talk about a pipeline to Turkey... if there’s one pipeline from Aphrodite, OK, that might be feasible, but if you’ve got four to five times as much gas, then it’s not feasible.

Q: Because of the pipelines’ capacity?

A: Yes. Because of the water depths, the radius diameter of a gas pipeline is limited to 20 to 24 inches maximum. A pipeline like that is just about enough to carry the gas from Aphrodite. So if you another five such gas fields, you’ll need another five pipelines. Also, a pipeline going from here all the way to Greece poses huge technical problems, and finally, what, you’d end up with a spaghetti of pipelines winding up in Europe? I just don’t see that as being feasible, for both technical and commercial reasons. So that leaves us with an LNG plant at Vasilikos. To those who doubt that a plant is Vasilikos is viable, I tell them: “Of course it’s viable, it’s the only way to do it.”

Q: So Cyprus will export by ship.

A: Correct. We have to complete the gas sales first because no one will give us money to build the plant unless they know that we’ve sold the gas. The priority is building the LNG plant, I can’t stress this enough. That has to be the basis. Other projects such as building an electricity subsea line to Israel or a methanol plant on the island are welcome, but that comes later, once we’ve ensured we have enough gas. Also, the LNG market is constantly changing. There exists now a window of opportunity to sell. If we wait for another year, we don’t know how the LNG market is going to shape out.

Q: So who would come and invest in the LNG plant?

A: I wouldn’t like to get into specifics, this decision is up to the government. There are people who may want to come and build the plant with us and merely charge a tolling fee to the owners of the gas and to the buyers of LNG. Think of the plant as toll station, where you pay a fee to move the gas from one place to another [abroad]. That’s the most usual method. That’s why it’s important to limit the number of interfaces, so that the whole LNG project is ideally built as a whole, not piecemeal. If you have too many interfaces, the project becomes expensive and as a result the LNG is expensive and you can’t sell it. So you’ve got to figure out whether the final cost of the project will yield competitive LNG prices on the market. I say again, this is no time to experiment, because we may miss the boat.

Q: Have you concluded an MoU with Noble?

A: We reached an MoU with Noble, but haven’t signed it yet because of the elections here and all the aftermath. Noble had put forth a proposal to develop the whole project with us, all the way from the offshore facilities to the export of LNG (including the plant). But that has been put on hold until the newly-instated government here decides its policy. An MoU with Noble still needs to be followed by a final project agreement.

Q: How are talks with ENI and Total progressing?

A: Well, in this doom and gloom, people are saying that the banks are collapsing, investors are getting out, and so forth. What I can assure you is that during the last few weeks we had high-level meetings with ENI and KOGAS in Milan, and with Noble here in Nicosia and in Tel Aviv, and on March 21 with Total. And they are all determined to press ahead. They’re not even thinking about the financial crisis; they see it as an issue for Cyprus, not for them. They have work to do, they are very aggressive and are getting on with it. To them, it’s business as usual.

ENI plans to start exploratory drilling in 2015. If they do find gas, they would then be able to add trains to the existing LNG plant, and could begin exporting perhaps a year later than Noble which has a head-start.

These companies are completely determined and committed. The Turkish threats do not affect them at all. As you may or not know, just before Noble commenced exploratory drilling in Aphrodite, they were approached by Turkish officials who asked them to stop their operations. This took place in Tel Aviv. But Noble’s response was: sorry, but we have an obligation with the Cyprus government and we’re pressing on.

Q: Is it true that Total will be searching for oil?

A: It’s part of their planning. The blocks licensed to Total (blocks 10 and 11) are located between the EEZs of Cyprus and Egypt, they lie more or less on the Nile Delta basin, and Total think that one of the fields contains oil at the top. So Total are organising their surveys with that in mind. Also, any oil that is found can be immediately commercialised. The oil would be extracted from the platform and onto ships. One of these platforms could take about three years to become operational. They have to do surveys, then drill, then assess the information, design the subsea facilities and the platform (FPSO - floating production, storage and offloading vessel). 

Q: What is a production-sharing agreement?

A: A proportion of the gas produced (about two-thirds) actually belongs to us, and we can do anything we want with it. Israel has gone a different path: they tax Noble and Delek on their profits.

Charles Ellinas chairman of KRETYK the state hydrocarbons company

PUBLIC SHOCK about the tough terms of the international bailout is turning into anger as millions of euros remain locked in the banks under capital control regulations.

Anxiety is being deepened by confusion over how the hastily-imposed rules should operate.

Hundreds of bank workers protested outside parliament on Thursday, worried that they could lose much of their pension savings under the terms of the bailout deal which stipulates that some depositors will part of the rescue's cost if their accounts hold more than 100,000 euros.

"I am disappointed and angry," said Iacovos Louca, 53, who works at Popular Bank, which is being wound down under the 10 billion euro deal with the EU and International Monetary Fund. "The politicians are out of touch with our problems and the big guys, who had the information, managed to take their money abroad."

One company in Nicosia which has several offices abroad has been caught in limbo as the central bank now has to approve  transfers out of Cyprus over 25,000 euros. As part of the company's payroll is managed from the island, payments to employees abroad are being delayed because of the vetting process and currency controls to avoid a bank run.

"We have held clients' money for certain pre-paid jobs, and we have a cash flow issue now," the owner of the services company said, on condition of anonymity. "We have to make payments of more than 1 million euros on behalf of our clients, and now we can only use 100,000."

Lack of clear answers on where their money may end up is fuelling public frustration.

Andrew Georgiou, a 55-year-old British consultant who moved to Cyprus a year ago with the earnings from the sale of his home in London, says all four accounts he holds with Popular - even a sterling account containing just 22 pence - are blocked.

These totalled 97,000 euros and under the bailout deal, deposits under 100,000 are fully insured. Nevertheless, Georgiou is now unable to access any funds.

Georgiou, who is of Cypriot descent, said Popular Bank had justified its action on the grounds that he was also considered a beneficiary to an account held by his 78-year-old father. It also covered money held in a trust for medical expenses.

"I wrote to the central bank and they came back saying that it was not their competence, so whose competence is it?" said Georgiou. "Nobody is explaining where anyone should go with a problem."

As a result, Georgiou has been told he and his father could eventually be entitled only to a combined 40,000 euros despite the 100,000 euro guarantee, a fraction of their savings in Popular. "Absolutely nothing adds up," he said. "They told us it was 140,000 last week."

Georgiou and others like him are in for a long wait to figure out what went wrong. Three judges appointed to look into the island's financial collapse started work on Thursday.

With an extensive remit ranging from the business sense of Cypriot banks hoarding a mass of Greek government bonds while others were selling them and the prudence of government fiscal policies, the judges will need a small army of consultants.

Many, in the meantime, resigned to years of hardship. Iraklis Paraskeva, 53, has three children to support, now studying in Greece. "I am going to find myself in the street with no future, only debts. But we will fight to the end. We have nothing left to lose."

millions of euros remain locked in the banks under capital control regulations

MEDICAL experts are expecting a rapid increase in cases of depression and anxiety disorders as the extent of the economic crisis begins to register and impact on peoples’ lives.

The economic uncertainty, wage cuts and job losses of the last 18 months will now snowball as the effects of the tough conditions set by international lenders for a bailout are felt indiscriminately across society.

Psychologists all foresee an increase in depression, anxiety disorders, alcohol abuse and psychosomatic disorders - insomnia, fatigue and gastrointestinal illnesses - and even attempted suicides. 

Severe, clinical depression is a biological illness and needs to be treated professionally, but those who might be suffering from milder forms are urged not to view what has happened as a tragedy, but rather as an opportunity to reform.

“The constant bombarding of talks about this crisis makes us focus on all this negativity, rendering us more vulnerable to any kind of illness,” said psychologist Dr Antonios Raftis. He likened the crisis and its burst of negativity with a river whose dividing channels have been blocked and the surge of the water downstream is such that it overflows and destroys its surroundings.

All psychologists agree that worrying constantly is unhelpful. “We cannot control life. What we can do is accept the facts and see how we can best deal with the situation,” said Dr Achilleas Koukkides, likening the crisis to a parent (the government and politicians) who has now betrayed us. 

“This spreads fear and instability,” he said. 

Cypriots are likely to feel particularly badly hit because social status has played such an important part in people’s lives for so long. According to Dr Jacqueline Widmer Kalochoritis, this will be even more apparent for the younger generation who have grown up believing wealth and luxury is their birth right. 

“The older generations are more prepared for this crisis,” she said, “because they have experienced difficult situations in the past and know how to struggle. But the younger generation will potentially be the biggest victims of the crisis because they don’t know what it is like to fight.” 

Men too will suffer, according to Widmer Kalochoritis, because in Western cultures men are still socialised to base their worth on their careers, income and wealth, and “losing that means losing their footing”.

But psychologists are eager to urge people to view the crisis as an opening to new possibilities for redefining who you are, without letting society and cultural values tell you what car to drive, what job to do, what house to live in. 

Recent research indicates that the difference in the level of happiness between people who have suffered traumatic experiences and people who have, for example, won the lottery is actually statistically zero.

Widmer Kalochorits explained that people nowadays focus such a large part of their lives on their careers that everything else gains less significance. “Once that is pulled away,” she said, “as has happened with this crisis, people are forced to pay more attention to the other facets of their personality, of who they are.”

In this, focusing on relationships, marriage, family and friends are essential to maintaining some semblance of a positive attitude.

“These are the people who will support, boost and soothe you and this is the time more than ever to tend to these relationships,” said Widmer Kalochoritis. “Depression, feelings of helplessness and hopelessness, may provoke a greater tendency for isolation, but we must realise that the biggest protective factor for all this is our social support.” 

Psychologists all recommend distractions - going for walks, picnics, social gatherings. But also exercise as this helps reduce stress hormones and increases feel-good levels, enabling you to feel more in control. The routine also gives a structure to your day.

Above all, it is about attitude. “We should see the glass as half-full and not half-empty,” said Raftis, “because the former is easier to refill and hence recover from this crisis.”

People suffering from depression need someone to validate their feelings of despair and fear, but simultaneously, they need someone to force them to change said Widmer Kalochoritis.

 “Everybody has unexpected resources, that they have successfully used in past situations, and there is always something that can be done,” she said. “What blocks us is the pervasive hopelessness brought about by depression. We need to change our attitude to force ourselves to pull through and sometimes an absence of choice can be helpful for promoting change.” 

The crisis has entered our lives as a shockwave, but that doesn’t necessarily mean it has to bring with it the misery, the doom and gloom many expect. It can also be a chance for people to redefine, rediscover and reinvent themselves.

Government psychological support 

THE HEALTH ministry announced on Thursday the launch of a round-the-clock psychological support hotline to help those dealing with anxiety and depression because of the financial crisis.

The ministry is doing away with waiting lists, and has said that people will be referred to a specialist immediately.

From tomorrow, a hotline will be available round-the-clock. Officials will provide immediate psychological support, try to contain stress and depression and refer callers to support centres.  

For the hotline call 22-603263 if you are in Nicosia, Larnaca or Famagusta. For Paphos and Limassol call 25-801107/106.

Psychologists expect cases of depression and anxiety to rise rapidly

Both President Nicos Anastasiades and the EU's economy commissioner Olli Rehn have recently referred to 1974 to remind Cypriots of their resilience and how they once overcame adversity to perform an economic miracle, the thinking being that surely they could do it again. 

The sheer scale of the current setback has yet to be felt, but politicians obviously feel the crisis is worthy of comparison to the Greek-inspired coup and Turkish invasion, when almost 40 per cent of the island came under occupation, a third of the country's population was displaced and most of the infrastructure for agriculture and tourism was lost. 

The Sunday Mail spoke to refugees, economists and former politicians to see if the comparison can really stick. The result was mixed though the general consensus is: apples and oranges. 

Businessman and former DISY deputy Dinos Lordos lost everything in 1974 when he was forced to flee Famagusta. He went on to rebuild his business empire, investing in property, construction and hotels. 

“It is a totally different situation and cannot be compared. In ‘74, we had a complete national disaster. It was much worse. People died. We didn’t know where our friends and relatives were, who was alive and who dead.

“As refugees, we didn’t know where we could stay. In winter, there were queues for clothes. Around 120,000 people lived in camps. Many migrated. They went to Europe and the Arab countries, and came back educated and with technical know-how. Today, it’s much easier,” he said. 

Lordos argued Cypriots were a lot more to blame for the current disaster. 

“We made bad investments as a state and created this financial monster, which was beyond our size and capabilities. We couldn’t support it.” 

The government expanded the deficit and the banks made massive mistakes and both would have continued doing so if the crisis did not hit, he added.  

Cyprus needs time to get out of the mess, but also to change the way things are done, he said. 

Asked whether Cyprus is worse off now because it doesn’t have the international sympathy and aid that poured into Cyprus after the war, or a burgeoning tourism sector to pin hopes on, Lordos was emphatic.

“It’s wrong to assume it’s worse now. We have sympathy today as well, though it’s not tangible. Even while we had aid from Greece, the US and others in 1974, we still had people in camps for many years. It took years to build all those new homes.” 

One factor that worked in Cyprus’ favour at the time was that it had its own currency which it could manipulate while foreign governments turned a blind eye. 

“The Bank of Cyprus was more bankrupt then than it is now. We printed more Cyprus pounds and confidence returned quickly. But the scale of disaster today cannot be compared. Let’s not exaggerate, it’s horrible but it’s only money,” he said.

“Sure, it’s a major disaster for any country, but we have our infrastructure in tact, our assets, cars, tractors, households, hotels. In 1974, all our hotels were in Famagusta and Kyrenia. 

“What we need now is to create jobs. That should be the number one objective of the government and the unions.” 

The successful businessmen was critical of both, noting that the unions in ‘74 agreed to reduce all salaries and benefits, compared to now. 

He called on the government to improve the regulatory environment, curb bureaucracy and encourage businesses to move forward, not fill them with insecurity about the potential for more mistakes in decision-making.

He referred specifically to the fiasco over title deeds in which 130,000 homeowners still don’t have legal ownership of their homes, even though they may have paid in full because their title deeds are held by banks as collateral for building developers’ mortgages.

“There are 130,000 houses that cannot be transferred to their rightful owners. They need to get on with it, create a temporary legal environment so they can be transferred. Create the conditions so that those who lost the most in deposits now get put ahead in line to receive a loan, providing they have a good business proposition. 

“They need to reduce interest rates to let the economy breathe and guide it to new industries so we snatch triumph from the mouth of the lion,” he said.  

A prominent figure in Cypriot politics who did not wish to be named agreed that the proposed comparison does not work. 

“It’s simplistic to say if we survived then, we can survive now. It was a different situation, different conditions. The only common element is that both are a crisis. Just because we succeeded then, it doesn’t mean we can now unless we do what should be done.”

He added that the handling of the current crisis highlighted the shortcomings of politicians who are “not up to the game”. 

“They don’t want to realise we live in different world now and stop being populist,” he added. 

Lecturer of economics and economic history Alex Apostolides warned against comparing “two very different kinds of disasters”. 

While the economy was butchered after the invasion as it ate up all the country’s capital, the unintended consequence was to take farmers out of the fields and into factories and hotels, increasing their productivity.  

“The first shoe factories where found in refugee tents. We had a huge, poor labour force ready to offer cheap labour. We became the China of the Middle East.

“In the current case, the crisis has arbitrarily killed banking and made the economy go from a very modern economy to a cash economy while rapidly reducing the ability of money to circulate quickly, which in turn reduces GDP income.”

At the same time, he argues, the government does not have many guns in its arsenal to fight the crisis. It cannot give money or land to invest in tourism as it did after the war. 

The money from the €10bn troika bailout will go to paying back what the government has already received. 

“Here, we have a combination of a banking crisis, a government borrowing too much, and the Greek haircut which blew up part of our economy. It’s worse now.” 

According to Apostolides, the solution is to liberalise the economy fully, open up closed professions, sort out the title deeds fiasco, shrink the public sector, let the private sector take over and aim to put Cyprus in the list of top ten countries for doing business around the world. 

“Did you know that there is no pharmacy in the Mall (in Nicosia) because the rules state that pharmacies have to be built using bricks and that 51 per cent of the pharmacy has to be owned by the pharmacist which is why you don’t see Boots in Cyprus?”  

He added: “The government cannot be the driver here. There are a lot of people who are keen, but need direction. We need to invest in young people and skills and find ways to invest in start-ups. We didn’t have venture capitalists before because it was more profitable to put money in banks.”

Former foreign and commerce minister Nicos Rolandis also agrees that the Turkish invasion was a “much more serious event”, as was its impact. Businesses lost all their tangible assets, the country lost its airport. 

However, recovery was made easier by the crisis in Lebanon in the mid-1970s which saw thousands of monied Lebanese move to Limassol. 

He notes that society has changed a lot since then. “Society in those years was quite different. There was not so much consumerism as there is today. So people will not adapt easily to the situation as we could adapt back then because their expectations are much higher.

“Also, today we don’t have capital to invest, and if we do, it’s not easy to decide how to invest and take chances in a very fragile economy,” he said. 

Rolandis argued there was room for growth in tourism as current levels have dropped from the heyday when he was minister and Cyprus recorded 2.7 million tourists generating €2.2bn. 

The former minister notes that continuing to offer financial services to foreigners would be very difficult as the country has lost its credibility. 

The only silver lining, said the former minister, is the prospect of exploiting Cyprus’ natural gas reserves though this won’t be possible for another six to seven years. 

However, it will take a massive investment surpassing Cyprus’ €10bn bailout, and depend greatly on projected sale prices for 2020-2040

“My last point is the geopolitical factor. Turkey. And this is quite serious. Most leaders don’t want to take this factor into account. It’s wrong. Look what happened to us in 1974 when we ignored Turkey.”  

Rolandis said the solution of the Cyprus problem and transportation of gas via Turkey to Europe was the best way to move forward and enjoy the benefits of the island’s hydrocarbon reserves. 

Professor of finance Stavros Zenios agrees one cannot compare the suffering from a war and dislocation to now but argues that the economic indicators are very comparable. 

“Look at the economic impact. We lost something like 25 per cent of our wealth with the stroke of a pen,” he said referring to the €5.8bn bail-in Cypriot depositors had to come up with. 

“It puts at risk between 9-25 per cent of the country’s GDP. Of course this kind of impact is of the same order of magnitude as what happened in ‘74.”

The only other country which suffered such an economic impact from political developments is Finland with the collapse of the Soviet Union, and it recovered within three years, he said.  

Regarding Cyprus’ prospects, Zenios argued: “This could be a slow death like a frog in a slowly boiling pan that does not jump out. But I’d like to think and already see signs of Cypriot society re-energising itself and rediscovering the values of ‘74 which helped us get out of that mess.”

It’s about shifting the economy to other directions, using Cyprus’ highly educated workforce, favourable tax regime, professional services. 

“If we clean up our banks, and have an aggressive campaign we could still be a business centre, though not a banking centre,” he said. 

And like after the invasion, Cypriots should be prepared to do jobs that they previously thought were dirty. 

“We should stop exporting currency by looking for cheap labour. We should become entrepreneurs and provide cheap labour.”

The professor was optimistic that Cypriots’ historically stoic response to trouble would see them through the tough times ahead. 

“I’m worried about the political system though, and whether they realise we’re in this together. There is an attitude of playing the blame game.”

Zenios called on politicians to let the committee of inquiry do its work and get on with a strategy to fix the economy, improve competitiveness and create jobs as a first priority, not worry about salaries and benefits. 

“If there is a hole in the boat, don’t worry about who’s getting wet, fix the hole.”

Economist and Sapienta director Fiona Mullen concurred with Zenios that the economic impact of the current crisis will resonate with ‘74. 

Like then, Mullen forecasts a three-year drop in GDP levels of around 15 per cent in the first two years, then a decrease of 5 per cent, taking Cyprus back to its levels at the turn of the millennium. 

“There appears to be the same kind of shock to the psychology as well, in confidence, and to the normal functioning of the economy. What we don’t have now like we did in ‘74 is the big bounce back. One of the reasons was that we had to build a lot of houses in a hurry. This accelerated the shift from agriculture and light manufacturing to services.

“It came at a time when the Cyprus economy was already shifting from one model to another. Now, we got rid of one model and are not quite sure how to build another one,” she said. 

“The only way to get something similar now is to start introducing some of the ideas going round for completely changing Cyprus’ growth model, introduce venture capital, make the most of solar panels instead of a quick buck from Russia.” 

In terms of Cyprus making money out of its natural reserves, Mullen argued that Cyprus needed both Turkey and Israel’s cooperation. 

Despite previously highlighting the savings that could be made by sending gas to Turkey via a pipeline, Mullen acknowledged that after the latest experience, “Cyprus will never want to be dependent on any big power again”. 

To get Turkey on board, perhaps Cyprus could use its gas to produce and send electricity to the energy-hungry country, she said.

Nicosia now, a very different place from 1974 (NicosiaSkylines)

Refugee camp after the Turkish invasion

Antiquities theft  

TWO MEN, aged 26 and 65 were arrested late Friday in connection with a case of antiquities theft. According to a police spokesman a 26-year Syrian man had three amphorae  in his possession which he was planning to sell for €900. He told police he had stolen them from a house in Limassol which belongs to the 65-year Greek-Cypriot who was also arrested on suspicion of possessing them illegally. 

Police found two more amphorae at the man’s house. All five items were taken to an archaeologist who determined they dated from the early and mid Bronze Age and fell under the Antiquities Act. The 26-year-old was held for questioning while the 65-year-old was written up and released until a later date.

Woman mugged 

A 78-YEAR-OLD woman was beaten and robbed during the early hours yesterday in Limassol, police said. Police received a report around 2.40am that the woman was found in her home by a neighbour, with head and hand injuries. She was taken to Limassol General Hospital where she was kept for observation. After receiving an eye-witness report, police are investigating the possibility that two people entered the 78-year-old’s home and after attacking her and beating her, stole her jewellery. The value of the stolen goods has yet to be estimated. Limassol CID is looking into the case.

Brawl prevented 

POLICE in Larnaca prevented serious trouble from kicking off on Friday outside a clubhouse. A police spokesman said that members of the force were outside a clubhouse in Larnaca on Friday at 9.30pm after being tipped-off that around 50  people had gathered there. The crowd dispersed quickly after police arrived. Officers found nine Molotov cocktails and four cylindrical firecrackers in the clubhouse’s surrounding area. Larnaca CID is continuing its investigations.

OFFICIALS at the Central Bank will work through the weekend to come-up with a final percentage for the levy on uninsured deposits of over €100,000 at Bank of Cyprus, it was reported yesterday.

An announcement is expected tomorrow. The decision is dependant on calculations regarding the offset of loans against deposits according to head of internal audit at the Central Bank, Yiangos Demetriou. He expressed the belief that once measures were  put in place it would breathe life back into the market and to trading.

Most reports suggest depositors with over €100,000 with the bank will take a hit of 60 per cent. 

Meanwhile reported rumours of a ‘haircut’ on deposits in cooperative institutions were labelled the work of irresponsible parties by President Nicos Anastasiades yesterday. 

“During these critical hours, responsibility is demanded from everyone and what happened on Friday is the work of irresponsible people,” he said at one-day conference celebrating Archbishop Makarios as the political leader of the EOKA struggle. 

Massive lines of people formed outside cooperative banks across the country on Friday with customers seeking ways to either get their money out or divide their fixed deposit accounts into smaller ones of under €100,000. This was following the circulation of text messages claiming the government was about to impose a haircut on cooperative bank deposits.  

Head of the Cooperative Central Bank Erotocritos Chlorakiotis reassured the public again yesterday that deposits at the cooperative credit institutions were safe, insisting that the rumours of a haircut were completely “unfounded”. 

House President Yiannakis Omirou yesterday sought to ensure that the Memorandum of Understanding (MoU) deal reached with the troika earlier in the week would be presented to Parliament for ratification.

He said the MoU would be submitted to the parliaments of six eurozone countries. They include, Germany, France, Holland, Finland, Slovakia and Belgium. Getting around having to present it to the Cyprus parliament would be unthinkable, he said.

Omirou said it could be argued that in paragraph one of Article 169 of the constitution it states that international agreements of a financial and trading nature with international organisations could be approved by the cabinet alone but he said he did not believe the MoU was an ordinary financial or trading agreement. “No government and no President is authorised to make foundational commitments of such importance without consulting the House,” he added.

President Nicos Anastasiades with Archbishop Chrysostomos II at a conference for Makarios

ANDREAS Vegnopoulos has been taking Cypriots for a ride ever since 2006 when he arrived in Kyproulla promising to turn Laiki Bank into a banking colossus that would make all its shareholders mega-wealthy and Kyproulla the banking centre of the Middle East.

Almost seven years later, Laiki has not even survived as a banking midget, the silver-tongued, Athens, used-bank salesman leading it to bankruptcy before it had a chance to grow up into the regional colossus he had promised its naive Cypriot shareholders. 

And the guy is still taking us for a ride today - like his great friend the village idiot he is marketing his blamelessness - issuing statements blaming everyone except himself for Laiki’s bankruptcy, threatening libel actions against his few critics and seeking sympathy by claiming he was a wronged victim of slander and mud-slinging. 

Vgen should be thanking the Lord instead of moaning, because after all the pain and misery he has caused Kyproulla, his victims should have been firing ballistic missiles at him not just dirt and demanding to drink blood. 

The weird thing is that hardly any Cypriot has turned against Vgen. who took over our second biggest bank, by giving its shareholders hugely overpriced shares in his Greek banks, made a big personal fortune out of the deal, invested Laiki billions in worthless Greek bonds and then completely bankrupted Laiki with billions of debts to cover the dodgy deals his Greece-based banks were making, like giving unsecured, low interest loans for investments in share-support scams.

We Cypriots are normally out on the streets protesting or taking legal action for the most trivial reasons, which makes you wonder why Vgen’s mega-contribution to the economy’s collapse has been ignored. He can’t have the whole population in his pocket.     

THE AKEL mob has always offered protection to Vgen when it was in power and he was always welcome to the presidential palace. 

We do not know what a ruthless banker could have done to earn mafia-type protection from idealistic communists but offering big amounts of money to the Party could have had something to do with it. The commies may have made the banking crisis at the centre of their blame-shifting, propaganda campaign, they may have talked about the greedy bankers, but Vgen was never mentioned, as if he had nothing to do with it.

The comrades had the nerve to recruit the help of the dodgy banker, in their unrelenting war against the former Governor Orphanides, who according to AKEL was more to blame for Laiki’s insolvency than the man who actually caused it. They even cited comments made against Orph by the virtuous Vgen as proof that the Governor’s supervision was inadequate.

So inadequate that comrade Tof had once called Orph, to ask him to bend the banking rules for Vgen’s sake. If Orph had not ignored the presidential request his supervision would have been more adequate  

THE RELEASE on Thursday of the findings of the Alvarez and Marsal (A&M) investigation into the causes of the banking crisis showed how the commies were offering protection to the banker, via their apparatchiks at the Central Bank.

While AKEL and the Central Bank Governor, Professor Panicos were claiming that an in-depth investigation would be carried out to establish who was to blame for the crisis in the banking sector, in the end, Laiki was not investigated properly at the request of the Central Bank, an admission made in the report by A & M. The report said: 

“The Mandate originally anticipated a robust investigation of the need for CPB (Cyprus Popular Bank) to have required State-aid and the rights offering by which the State became the 84% equity-holder. This was to have addressed the shifting of CPB Greek liabilities to the Cypriot balance sheet. We were advised early in the investigative process, that the CEO of CPB, Andreas Philippou, discussed with Senior Director at the CBC (Cyprus Central Bank), litigation being brought by the State-owned CPB against Greece and the concern that an internal CBC of the same would impact or jeopardise any potential recovery. This began an internal dialogue that resulted in a narrowing of the CPB investigation. As a result, the investigation in respect of MPB (Marfin Popular Bank) was limited to the Laiki conversion and only from the perspective of the CBC’s supervision of this conversion.”

This paragraph reveals AKEL’s protection of Vgen and how it used its apparatchiks at the Central Bank to ensure his scams at MPB (this was how the bank was known during Vgen’s reign) were covered up, by not being investigated. 

So the investigation of the banking crisis, ordered by the AKEL apparatchik masquerading as an independent state official, Governor Panicos focused almost exclusively on the Bank of Cyprus, which was in a much better financial position than Laiki – it was not insolvent and it had not taken €9 billion in ELA.

THE INVESTIGATION, in respect to MPB, Professor Panicos wanted “was limited to the Laiki conversion and only from the perspective of the CBC’s supervision of this conversion,” wrote A&M. 

The A&M technocrats must have thought Panicos had a screw loose paying the firm millions for an investigation and then asking them not to bother investigating one of the two banks. He did not have a screw loose, but as an independent state official was merely following the AKEL diktats.

The cunning commies, in their war against Orph, had made a big issue out of the fact that he had allowed Laiki to convert its loss-making Greece-based subsidiary Marfin Egnatia into a branch. This merger meant that all liabilities were transferred to Laiki and Marfin Egnatia came under the authority of Cyprus’ Central Bank which would be responsible for covering its capital needs.

Vgen’s AKEL henchmen had been arguing that if Orph had not allowed the merger, Laiki would not have lumbered itself with the big losses of Marfin Egnatia which was also drawing billions of emergency liquidity from Laiki via our Central Bank. 

Again, the comrades blamed Orph, for supposedly allowing this to happen, but not Vgen who took the decision, taking billions for his bank in Greece and leaving Kyproulla to pick up the ELA bill. 

This was why Professor Panicos asked that the investigation was limited to the Laiki conversion and “only from the perspective of the CBC’s supervision of this conversion.” The professor did not allow an investigation from the perspective of Vgen conning Laiki’s shareholders and authorities with the conversion, because it did not fit in with AKEL’s propaganda plans and its efforts to promote Vgen’s innocence.

I would not be surprised if Vgen did not have a direct input in the formulation of the A&M’s terms of reference, via his comrade protectors.

THIS WOULD also explain why last Monday Vgen issued a statement insisting he had done nothing wrong (it was April Fool’s Day) and urging the authorities to make public all investigative reports into the banking fiasco. 

He knew that the A&M investigative report would have nothing incriminating against him, as his protectors had explicitly ordered the investigators not to look into his scams.  

ALAS, the investigation did not come up with the desired results, A&M displaying more integrity than the officials who gave it the skewed terms of reference. Orph could not have stopped the merger, according to the report released on Thursday.

“The structure of the regulations and legislation is such that under the Mergers Directive the bank (Laiki) did not require any authorisation from the CBC, this resulted in the bank being able to transfer the assets and liabilities (of Marfin Egnatia) to Cyprus without approval of the CBC

“… it would appear that the current regulation and legislation does not provide sufficient support to the CBC where a Cypriot bank wishes to convert an existing foreign subsidiary into a branch.”

THE COMMIES must still be in control of the CyBC which on its main evening news on Thursday night declared “Clear responsibility of the Central Bank of Cyprus for the change of Marfin Egnatia from subsidiary to branch of Laiki Bank says Alvarez and Marsal report.”

Anyone who read the above to paragraphs would know that the A&M report said the exact opposite. But the CyBC listed all the problems of Marfin Egnatia, which the Central Bank knew about “but did nothing to stop the transfer of the subsidiary to Cyprus.”  The report then mentioned the two, above-mentioned paragraphs which made a mockery of its “clear responsibility” claim. 

APART from AKEL, the other organisation that has given its unwavering support to Vgen was ETYK, the bank employees union, whose self-important leader Loizos Hadjicostis had been one of the most vociferous supporters of the Greek banker. 

He even honoured Vgen in 2012, awarding him commemorative ETYK plaque during a special ceremony. Hadjicostis’ love of the man who caused the loss of more than 2,000 banking jobs and subjected the provident funds to a big haircut, could be attribute to the fact that he agreed to have a member of ETYK on his bank board.

He may also have made a big contribution to the union. The fact that Vgen also gave a job to Hadjicostis’ daughter would not have influenced the union boss’ because he is a man of integrity.

VGEN had also given a highly-paid job to the then son-in-law of former Governor of the Central Bank Tttooulis Ttoouli, who was in charge at the time the banker came to Kyproulla offering his overpriced Marfin Egnatia shares in order to take over Laiki.

The outspoken, bash-patriotic Ttooulis who has been appearing on TV and radio shows, telling us that we should take a stand against the nasty Europeans, was, like Hadjicostis, a loyal supporter of Vgen. This loyalty was repaid in 2007 when Ttooulis’ term as Governor was reaching its expiry date and Vgen wrote to the president asking him to renew it. 

Such was Vgen’s arrogance at the time that he felt he should choose his supervisor. But the Ethnarch, bless him, did not oblige.

OUR POLITICIANS have been making a lot of noise about the people and companies that moved money out of the Cyprus banks in the fortnight before the Eurogroup meeting, demanding that all names were released by the Central Bank. 

The implication was that the people and companies who had the sense to move money out in the first 15 days of March had insider information, from President Anastasiades or his inner circle. But did anyone really need insider information to move his money out of Laiki, a bank that had been insolvent for over a year, especially when all the eurozone big-wigs were publicly talking about a haircut of deposits?

Could it be that our deputies felt sore that they had not had the sense to move their money out of Laiki and B of C before March 15 and wanted to publicly humiliate those who had? Or were they suggesting that it would have been a patriotic act for someone to leave his money in Laiki, and lose everything above 100 grand? 

We did not hear any deputy asking how much money Vgen, who more than anyone should have paid for Laiki’s bankruptcy, had, patriotically, deposited in the bank? 

PERHAPS deputies were hoping to start a witch-hunt to deflect attention away from their resoundingly stupid ‘no’ to the levy on deposits that was a much better deal than the subsequent one reached on March 25. 

This attempt to persecute people, who had done nothing wrong apart from acting rationally to protect their money worked as the experience of the in-laws of President Nik’s daughter – Andys and Katia Loutsios – illustrated. Haravghi, the AKEL mouthpiece reported last Sunday that the Loutsios family had moved money out of Laiki a few days before the Eurogroup meeting, the implication being that the in-laws had been tipped off.

The couple issued a apologetic statement explaining that they had withdrawn €21 million, half going to the B of C and the other half to Barclays in London, for the purchase of a property; they had not been tipped off by the president-in-law. 

Such was the outcry against them that on Tuesday the maligned Mr and Mrs Loutsios felt obliged to announce that if the property purchase fell through they would bring back the €10.5 million from London, voluntarily haircut it and donate the haircut amount to a church charity that provides food to poor people.

The property purchase fell through, because the land opposite Kykkos monastery they were planning buying is no longer for sale, so the voluntary haircut is inevitable.  

Vegnopoulos: I didn't do anything wrong...honest

THE CHEAP rhetoric, demagoguery and populist policies that have blighted public life ever since the establishment of the Republic and take a big share of the blame for our desperate, current predicament are still going strong. The economy is sinking to new lows by the day, but our politicians are too busy engaging in the only thing they know – uttering platitudes, rabble-rousing, pandering to unions and demanding punishment of those responsible for the catastrophe. 

They, of course, are blameless. But it was not just AKEL which approved extortionate annual pay rises and outrageous benefits for public servants; it was not just AKEL that happily stood by while unions monopolistic semi-governmental organisations plundered the coffers for their members and passed the extra cost onto the hapless consumers; it was not AKEL that made Cyprus Airways employees the best-rewarded airline staff in the world. All the parties were in it together, bowing to every demand of the unions, for fear of losing votes, and bankrupting the state in the process. 

It was these very same pontificating politicians who never uttered a word about the insolvent Laiki Bank building a debt of €9.2 billion to ELA, even though they all knew about it. But they did not want to alienate the bank’s employees and lose votes. Now that the bank has collapsed and its debt passed on the Bank of Cyprus, they are outraged that this was allowed to happen. It was these same, wise after the event politicians, who made fiery speeches against the deposits levy, decided at the first Eurogroup meeting, and heroically rejected it, thus paving the way for the infinitely worse second deal.

But they still persist with the cheap and vacuous rhetoric that leads nowhere. For the last 10 days they been demanding that the Central Bank released the names of all those people and companies that had transferred money out of the Cyprus banks in the fortnight before the March 15 Eurogroup meeting. Apart from this being a perfectly lawful act, what purpose would the release of the name serve other than allow our politicians to engage in rabble-rousing and, perhaps, spark a witch-hunt.

In the last week we also witnessed the pandering to the bank employee unions, all the parties insisting that the provident funds that were deposited in Laiki Bank and Bank of Cyprus should be left intact. They do not mention that for this to happen, the haircut of uninsured B of C deposits would have to bigger – in fact AKEL had the audacity to complain that the troika wanted a 60 per cent bail in. But populists never care about the consequences of their despicable vote-buying antics, they just blame someone else.

Any hopes that Nicos Anastasiades’ government would have turned over a new page, setting a fresh political agenda far removed from the populism of the past proved nothing more than wishful thinking. On Tuesday, the government spokesman was boasting about the improvements made to the memorandum, most of which were the satisfaction of demands of public employees – 500 less job cuts, scrapping of the extra hour per week for teachers, and state healthcare at a tiny cost and extension of fiscal adjustment period. Pay cuts to finance the improvements would between 0.8 and 2 per cent. 

The SGO unions were also given something to cheer as the government managed to put back the deadline for privatisations by two years. A cash-strapped government with no funds for development would have brought the deadline forward, but that would not have had the approval of the unions or their accomplices, the parties. The private sector could close down and its employees left to starve as far as our political establishment is concerned, so long as the public workers are happy.

Allowing the state sector to suck all state resources at a time when banks are illiquid and businesses have no cash is a bizarre way of ‘kick-starting’, in the government spokesman’s words, the economy. The government is using scarce funds to save jobs in the overstaffed state sector and in the private sector jobs are being lost by the thousands, while the political parties are criticising it for not doing enough to protect public employees.

We never learn from our mistakes, which is why a second memorandum is only a few months away. 

KEY PLAYERS from the tourism industry say they have good reason to feel bullish about a successful summer season, but some industry watchers say it is not the magic bullet it once was and cannot save the island like it did after 1974.

Proposed upgrades have boosted confidence, with both the government and international lenders suggesting that investment in tourism has the best shot of plugging the gap left by the near demise of the financial services industry.

If forecasts are to be believed, the financial sector will likely be halved, with brutal consequences for related industries such as wealth management, trusts, foreign exchange trading, fund administration and insurance.

Now, after playing second fiddle to finance for two decades, hopes again rest on the holiday trade, which was once the mainstay of the economy but are these hopes really justified? 

On paper the prospects for growth look promising - last year nearly 2.5 million people visited the island, boosting revenue from tourism up 10.2 per cent, with revenues of €1.927 million - which equates to about 10 per cent of GDP.  At the end of the nineties however that figure was closer to 20 per cent. 

However, few deny that since the bailout agreement a concerted effort is needed to tackle a whole raft of new headaches faced by tour operators, hoteliers and other related services.

One major concern is that many foreign travel companies have already paid hotels to reserve rooms, but the haircut on those uninsured deposits sitting in the Bank of Cyprus and Laiki raises serious questions about how hotels will function with a highly reduced cash-flow.

“It is a real concern,” says Zacharias Ioannides, the Chairman of the Cyprus Hoteliers Association. “It is something that we are working on and we are confident that there will be an amicable result to this.”

With government assurances that steps are being taken to address the issue, Ioannides anticipates that the banks and tourism sector will work closely to overcome any obstacles.

Not everyone is so confident. Unburdened from the shackles of high office, former finance minister Michalis Sarris said he understood the frustration expressed by tourism officials, but offered a blunt message that everyone must share the pain of the savings raid.

“I think with the tourism sector there will be problems, but they are manageable. I think the tourism sector has done well - it will do well in the coming year,” he told CyBC radio this week. 

“It’s not perfect, but I think under the circumstances, they also are paying something of their fair share of this problem,” he added.

Industry players say clarifications on the haircut on deposits need to come sooner rather than later, with Zacharias Manitaras from the Cyprus Chamber of Commerce and Industry insisting that tourism be insulated from the worst effects of crisis.

“Obviously the government should reimburse those in the tourism sector. As this is the biggest business we have - hotels and other related businesses cannot work without cash flow,” he added.

The Memorandum of Understanding (MoU) with the international lenders focuses on tourism as a cornerstone for future economic growth, now that the financial services sector has been destroyed.

“Since tourism is one of Cyprus` largest sectors and an important potential driver of future growth, a reinvigoration of the competitiveness of this sector is warranted,” The MoU document states.

Yet critics say that the MoU’s suggestions as to how growth in tourism could be achieved are simply rehashed ideas that were first touted decades ago.

The ‘massive improvements’ to the current tourism sector business model the MoU suggests include lengthening the tourist season, increasing occupancy rates of hotels and promoting domestic vacations, especially during the winter months.

Other ideas tout upgrading the island’s image by convincing discerning and affluent tourists that Cyprus has much more to offer than just sun, sea and nightlife and taking another crack at tapping into thematic niches such as sport, cultural, medical tourism and individual tourism. All of these measures have been promoted by the Cyprus Tourism Organisation (CTO) many times over the years with varying degrees of success.

Best-practices on upgrading the quality of services provided and improving the role of tourism-related infrastructure investment were also suggested,  all of which will require diversification, large scale investment - and ultimately may take years to come to fruition.

According to Noel Josephides, Managing Director of Cyprus and Greece specialists Sunvil Travel, who is an expert on the Cyprus-UK market, told the Sunday Mail the only way to make any inroads would be to bring in another one million arrivals. 

“Cyprus will need to bring in lot more volume and more volume means lower prices,” he said. “We are not going to get that volume at current prices. Prices must fall dramatically.”

Josephides also said Cyprus’ complacency towards the UK market over the past five years had led not only to a drop in arrivals from Britain from a peak of 1.6 million a decade ago to around one million now, but has resulted in the decimation of the structure which was in place in the UK to boost the numbers. 

“Tourism to Cyprus from the UK is now almost entirely in the hands of TUI and Thomas Cook. Cyprus also destroyed the UK market by paying no-frills carriers. They don’t fill hotels and are not necessarily cheap,’ he said.

As for hope of tourism saving the island like it did after 1974, Josephides said: “In 1974 there was no Turkey, no Tunisia, no Egypt nor Croatia in term of tourism. Now we have competition coming out of our ears. Tourism is not the magic bullet it once was.”

With economists also pointing to strong competition from Greece and Turkey, foreign investment and large scale upgrades seems an unlikely prospect, given the lack of confidence in the local economy.

“Just the uncertainty about the future tends to be a killer in terms of activity,” says ABN Amro’s Nick Kounis. “Who is going to invest in Cyprus now?”

Brushing the economic considerations aside, CTO chief Alecos Orountiotis insists that Cyprus continues to be an attractive destination. 

In an attempt to counter the potential fallout from weeks of negative foreign press headlines, Minister of Tourism George Lakkotrypis said he predicted an “exceptional touristic year,” adding that he had been in contact with major travel companies to reassure them about the future of the sector.

One lingering fear that has crept into news reports over the past fortnight is that Germans in particular will stay away, fearful of a hostile reception as a result of the savage austerity imposed in the EU-IMF bail-out.

Nonetheless, Sibylle Zeuch, Press officer at the Deutscher ReiseVerband, the leading lobby group of the German tourism sector believes that hotel and restaurant owners will welcome holidaymakers from Germany, despite resentment.

“At the moment they might wait a little bit before booking and see how the situation develops, this is what we experienced in Greece. If things start to return to normal they will surely go back because the product hasn’t changed,” Zeuch told the Sunday Mail.

Prior to the bailout crisis, the CTO launched an "aggressive" policy to promote Cyprus as a destination for Germans.

“In 2009 there were 130,000 visitors from Germany, in 2010 it was 140,000 and in 2011 it was 160,000. So it is becoming a more attractive destination for Germans, but 2012 saw 145,000 tourists - a bit less, but it doesn’t change that much,” says Zeuch.

Despite a dip for Easter holidays, forecasts suggest that the British market is expected to remain stable this year, with bookings recovering last week according to online travel agency Lastminute.com.

“The UK is by far the leading market to Cyprus, sending one million visitors a year. There is no reason for this to change. On the contrary, prices on the island will probably fall as recession bites,” says Ian Taylor from the London-based Travel Weekly magazine.

Taylor predicts the Russian market will suffer, despite an influx of Russian holidaymakers boosting tourist arrivals to a seven-year high in 2012, with a jump of 42 per cent.

“It’s hard to see Russians continuing to visit on the same scale,” he said.

But CTO official Marios Hannides said he had sent a message to tourist agents and partners in Russia that “they can continue to operate in Cyprus without any problems”.

Speaking last week he said that many Russian tourist agents had invested millions in Cyprus already on hotel maintenance and booking advances.

Some industry observers say tourism is not the magic bullet it was in 1974 when it saved the economy

THE CHURCH of Cyprus is ready to pay to restore the crumbling Apostolos Andreas monastery in the occupied Karpas peninsula, Archbishop Chrysostomos II said yesterday. 

The church is expected to put in the €2.5 million necessary for the first phase of a three-stage restoration process that is due to cost in total an estimated €6.0 million. 

The Primate said that the United Nations Development Programme (UNDP) was ready to go to tender to launch restoration works according to a study by Greece’s University of Patras. 

The Archbishop said the Church was ready to pay in as soon as the project was ready to begin. 

“The whole process will take place through the United Nations, and the blueprints adopted by the UNDP, and no one will be able to bypass,” Chrysostomos said.

After years of failing to reach consensus on the restoration of the site, of great religious importance to Greek Orthodox pilgrims, the Turkish Cypriot side announced earlier this year they were going ahead with the restoration on their own. 

The Primate had previously said he would rather let the monastery collapse than undersign any agreement that did not explicitly state that the site belonged to the Church of Cyprus. 

But after the Turkish Cypriot move, the UN announced in late January that the project was going ahead on a “multi-donor partnership” allowing more than one donor to fund the project. The UNDP has signed separate protocol agreements with the Church of Cyprus and Turkish Cypriot EVKAF religious foundation EVKAF.

A MEETING was held yesterday at the justice ministry aimed at creating new measures to prevent the many incidents of violence and hooliganism witnessed at football matches.

Justice Minister, Ionas Nicolaou, in a statement called on everyone involved to cooperate and crack down on the recent increase in violence at various football grounds. He stressed that hooliganism and violence did not reflect the Cypriot culture.

Events on Saturday, before, during and after the Omonia – APOEL match in Nicosia and the Anorthosis – AEK match in Larnaca when 15 people were arrested and others injured were the worst in recent times, he added.

Nicolaou said that he spoke with the top brass of the police force and they have decided on increased measures to be taken during football matches. New measures will deal with controlling fans and what they carry into the stadium, increasing police manpower at games and taking stronger action against wrongdoers. 

The minister stressed it was essential that organised fan clubs and the clubs themselves cooperated with police in helping them check fans as they travel from stadium to stadium but also as they enter grounds.

“We understand the problems that exist due to the economic crisis but at the same time you cannot ignore your responsibility regarding spectators’ safety as they enter and leave stadiums,” he said.

“I would like to call on everyone involved, the clubs, organised fan groups, stadium managers and every single fan that goes to a stadium to cooperate with the police so we can deal with these problems that should not reflect our culture,” he added.

Justice Minister Ionas Nicolaou with police brass at yesterday's meeting on hooliganism

THE Friends Hospice in Paphos has been forced to scale down its operation due to the deepening economic crisis.

The hospice is currently the only operational hospice in Paphos and is situated in a dedicated wing of the Evangelismos hospital. Since opening in 2006, the facility has expanded and now consists of a seven-bed unit which is solely run by donations, money raised by the shops and fundraising events.

According to a hospice spokesman, running a multi-bed facility is no longer an option. He said: “We can’t continue as we are as we just can’t bring in the €500,000 which is needed to operate the hospice every year.”

“Sadly, the special wing in the hospice will be ‘mothballed’- but we will operate two beds providing hospice and palliative care in the main part of the Evangelismos hospital. To run an entire wing with electricity and so on is something we can’t afford to do at the moment.”

Although nursing levels have been reduced, five of the six nurses have been kept on. The clinical manager and five carers were also let go.

Chris Jones, the President of the Friends Hospice foundation said: “We will continue to offer palliative care to patients in the area. Many solutions to the economic situation were considered; however, in the current difficult financial climate, this was the only practical response we could take in order to continue providing hospice care.”

The hospice is run solely on donations, money raised by its charity shops, and through fundraising events. Around 500 people have been cared for at the hospice. Figures show an average occupancy of 70 per cent with most patients being Cypriot.

The two-bed facility will be able to take admissions immediately and there are hopes that if the economic climate changes, the hospice will be able to return to its own dedicated ward.

“The time had come to be realistic; we were hanging on by our fingernails. At least this way we can continue to help those in need of this specialist care,” said Jones.

Many of the paid staff members who have had to be let go have said they would continue to work for the hospice on a voluntary basis.

The Friends Hospice has charity shops situated in Kato Paphos, Chlorokas, Polis and Pissouri. To volunteer at a shop or to donate goods contact the Friends Hospice support group chairwoman, Julia on 99 177 479. 

www.paphoshospice.org

NOBLE Energy will begin appraisal drilling in its Block 12 offshore licence most likely in June, its CEO Charles Davidson said yesterday.

It was the first time the Houston-based company committed to anything close to a firm date for follow-up prospecting after initial drilling back in late 2011.

“Cyprus is very important to Noble Energy...we are committed to move forward with our Cyprus discovery,” the Noble boss said during a press briefing on the sidelines of the Eastern Mediterranean Gas Conference held in Nicosia.

In the eastern Mediterranean, Noble’s priorities in the region lie in Cyprus and the Tamar and Leviathan prospects in Israel, Davidson said, driving the point home.

The Noble boss, who earlier in the day held talks with President Nicos Anastasiades, said the company needed a commercial framework agreement with the government in order to press forward.

Globally, the US company plans to invest some $3.9bn (€3bn) in projects around the world this year.

Appraisal drilling at the Aphrodite well would likely start in June, as soon as the rig - currently deployed in Israel’s Karish field - is freed up, Davidson said.

Actual drilling may last anywhere from 75 to 90 days, after which it would take two to three more months to assess the data and come up with a more accurate assessment of how much gas the well holds.

“We’ll get a better handle on the extent of the reservoir,” Noble’s CEO said.

Initial drilling at the site determined the field has a gross mean average of 7 trillion cubic feet (tcf) of natural gas with an estimated gross resource range of 5 to 8 trillion.

In industry jargon, those figures were based on P75, or 75 per cent probability. Davidson explained that means there’s a 25 per cent chance of the gas being lower than 5 tfc, the lower end of the estimate, and a 25 per cent probability exceeding the higher end of 8 tcf.

Follow-up drilling will further narrow down the range, allowing Noble to figure out how to proceed next, said Davidson, adding: “In our business, 1 tcf makes a lot of difference.”

“The way I view LNG projects is, the bigger, the better...scale is your friend. It makes it that much easier to convince customers who’re interested in buying for 25 years.”

On monetising the Cyprus finds, Noble believes the best option is an LNG project. Unlike a pipeline, an LNG plant offers flexibility of markets.

“We need to be thinking globally,” as Davidson put it.

It would take four years to build the LNG facility for exports, he said, “but we can shave a year off that for domestic deliveries to the Cyprus market.”

“We need a strategic partner, as for example what we’ve done with Woodside in Israel, and we’re currently exploring that.”

Noble require a partner with experience in marketing the gas, and are waiting on the government to declare LNG as official policy.

Assuming the reserves are commercially viable, that would allow Noble to make a final investment decision. Under the terms of the production-sharing agreement with the government, Noble must declare commerciality within three months after the appraisal.

Davidson chose his words carefully when asked what would happen in the event of a Turkish-Israeli deal, given that the bulk of the gas Noble has discovered in the Eastern Mediterranean (30 out of 37 tcf) lies in Israeli waters. Quizzed on whether Noble might then give priority to the Israeli prospects, Davidson said the company’s projects in Cyprus and Israel were not in competition with one another.

“Obviously we will be working closely with the governments in each project...it’s a joint process,” he said.

Davidson offered a similar response when asked how Noble’s plans might be affected should the Israelis move to build their own LNG plant, but added: “We’re hoping for co-operation between the two countries.”

At any rate, Davidson said, Cyprus has a head-start on the LNG project, having already chosen the site for the plant.

Still, it’s understood that Noble regards the Aphrodite prospect as a worthwhile investment in its own right, provided the field holds as much gas as expected.

The Noble boss dismissed the notion that Noble was dragging its feet on Cyprus, noting that the exploratory drilling was carried out not long ago.

Davidson was flanked by many of Noble’s top brass: Terry Gerhart, Vice President - International for Noble Energy; Keith Elliott, Noble’s vice president of operations and engineering services, who will be taking over Gerhart’s position; John Tomic, operations director in Cyprus; and Barry Shelden, Appalachia Business Unit Manager at Noble Energy.

DEBT-STRICKEN Cyprus is pinning its hopes for economic recovery on the potentially vast reserves of offshore natural gas, President Nicos Anastasiades said yesterday.

“Taking into consideration the difficulties that we now face due to the economic crisis, the prudent exploitation of the domestic hydrocarbon resources has been set as the cornerstone of our policy.

“In fact, the energy sector of Cyprus shapes up today as the key towards the achievement of our goals for economic resurgence and growth and the creation of new jobs,” the President said in an address to the Eastern Mediterranean Gas Conference.

Hosted by Gulf Publishing Company and with Noble Energy as the lead sponsor, the conference in Nicosia (it wraps up today) brings together big industry players, including ConocoPhillips, Total E&P Research & Technology USA, Woodside Energy Ltd, GL Noble Denton, Mitsui Oil Exploration Co. Ltd and Technip.

Also yesterday, Anastasiades met with Noble CEO and chairman Charles Davidson to discuss the subject of natural gas.

No statements were made after the meeting; but the government spokesman later said Noble has reaffirmed its commitment to developing its gas finds as soon as possible.

The President was informed that Noble plans to carry out appraisal drilling at the Aphrodite prospect in June, the spokesman said.

“Once the confirmation drilling is completed, we shall have a clearer picture with regard to the extent of the reservoir,” Christos Stylianides added.

“The company has reaffirmed its pledge to develop the [gas] reserves in the best possible manner. Also discussed were the [LNG] terminal and the company’s participation in it, as well as the participation of other companies and partners, with a view to making the most of the sale of the reserves within Cyprus’ Exclusive Economic Zone.”

The Noble boss meanwhile is set to fly out to Israel this week to mark the start of gas flow from the Tamar field.

According to Israeli media, Davidson’s visit is also intended to help persuade the Israeli government to allow gas exports. Tel Aviv is shortly due to decide whether to approve a commission’s recommendations for gas exports.

The Cypriot ministers of foreign affairs and trade are currently in Israel for talks on energy cooperation, including on a unitisation agreement regarding the gas-sharing and exploitation of reserves that fall on the maritime boundary between the two nations.

Their trip is ahead of a state visit to Israel by the President scheduled for next month.

President Nicos Anastasiades hosts a delegation from Noble Energy yesterday

ATTORNEY-general (AG) Petros Clerides used his position to suspend prosecution for his son, Christodoulos Clerides, who was caught driving over the alcohol limit in a car that had not passed an MOT and for which he did not have up-to-date road tax.

But the AG has said he has done nothing wrong by helping out his son who was 32 at the time, because he would have done the same for someone else’s child.

Police filed a case against Christodoulos Clerides – a lawyer and the AG’s son – on June 11, 2011 and the AG informed Nicosia District Court in November 2011 that the Republic was suspending prosecution, Greek newspaper To Ethnos reported on Sunday. 

Petros Clerides was asked to comment on the move on Sigma TV’s show 60 Minutes (60 Lepta) on Monday night, hours after he hung up on the Cyprus Mail when asked about the Greek report. Although he did not go into many details on the TV show, and his interviewer did not press him on the issue, Clerides did confirm the report was true.

His son Christodoulos Clerides did not respond to a number of requests to comment on Monday either.

“I acted in good conscience and with full transparency,” Clerides senior told Sigma. He said it would have been “very easy” for him to sweep the charges under the carpet and prevent them from reaching the court, but that instead he did everything officially.

 “I don’t feel shame or anything else for what I’ve done. I’ve done it for many children and it would not be justifiable exempting my child simply because he was my own child,” Clerides said. 

“So you are saying that it was exactly the opposite (of showing partiality). You handled the case in a way similar to handling many others,” Clerides’ interviewer said, helping the AG justify himself.

“In exactly the same way,” Clerides said... twice for emphasis. He continued: “…for an offence that is not even an offence today because it is regulated through on-the-spot fines… and would bear no consequences for my child even if (the case) had gone to court,” Clerides said. “These offences do not get registered on (someone’s criminal) record. You pay a small fine and that would be it”.

So suggestions that he got his son “or anyone else” off the hook from “heavy consequences” were “sensationalist” reports, Clerides said.

Parliament passed the law regulating drink driving offences through on-the-spot fines in June last year, over half a year after Clerides suspended prosecution on his son’s case. 

The Cyprus Bar Association’s Code of Ethics states that “lawyers have an obligation to follow existing legislations”.  The Bar Association’s disciplinary board is headed by the Attorney-general.

Sigma TV’s caption just referred to the AG’s statement of a “driving offence that would have borne no consequences” and the interviewer did not ask Clerides what consequences could have arisen for his son’s career if found guilty of a drink driving offence.

Article 113 of the constitution grants the Attorney-general or members of his office acting on his instructions the right to suspend any prosecution against anyone in Cyprus “exercisable at (the AG’s) discretion in the public interest”.

“So this is not something you handled behind closed doors without the knowledge of your subordinates,” Clerides’ interviewer said on Sigma. “No, I wrote the letter myself, it was registered, sent to the police and filed in records. There was nothing that showed that I tried to hide in this case.”

“So it was lawful and morally right?” the interviewer said. 

“The AG decides alone on all issues,” Clerides said while the TV caption read, “I handled the case with full transparency”.

AG has the legal right to suspend prosecutions

SUPREME Court judge Andreas Kramvis, who is due to retire next month, will be replacing Yiannakis Constantinides, the outgoing member of a committee of inquiry into the responsibilities of Cyprus’ financial debacle, government spokesman Christos Stylianides said. 

“The President of the Republic accepted (yesterday) the resignation submitted in writing… by Yiannakis Constantinides for health reasons,” Stylianides said.

Constantinides resigned less than a week after being sworn in as an investigator.  President Nicos Anastasiades has appointed Kramvis to replace him, the spokesman added. 

The other two members are a former Supreme Court judge and former member of the International Court of Justice in The Hague, Giorgos Pikis who also heads the investigation, and former Supreme Court judge Panayiotis Kallis. 

The committee is expected to investigate why the country came to the brink of bankruptcy.

Kramvis was born in 1945, studied Law at Athens University, started practising law in Cyprus in 1972 and was appointed District Judge in 1982. He was appointed Justice of the Supreme Court of Cyprus in 1997.

THE president cancelled the controversial appointment of Spyros Stavrinakis to the post of deputy Central Bank of Cyprus (CBC) governor, the government spokesman said yesterday.

“Spyros Stavrinakis’ act of appointment to the position of deputy CBC governor has been rescinded and the appointment in question is terminated,” Christos Stylianides said. 

Stavrinakis, a senior CBC director, was appointed deputy governor by former president Demetris Christofias 13 days before the February 17 presidential elections, which the latter did not contest.

Christofias claimed the appointment was necessary due to the Central Bank’s increasing obligations, rejecting suggestions that it was politically motivated.

The position is reserved in the constitution for Turkish Cypriots and had been vacant for the past 50 years.

The appointment was made possible by invoking the Law of Necessity, passed after the Turkish Cypriots abandoned parliament and their positions in the government in the 1960s, basically to enable the state to function properly even if certain acts conflicted with the constitution.

Article 118 of the Constitution, drafted in 1960, states: “The President and Vice-President of the Republic shall jointly appoint two capable and suitable persons as Governor and deputy Governor of the Bank of Issue, in compliance with the rule that the Governor and deputy Governor shall not hail from the same community.”

The article goes on to say that the same applies in the event the Bank of Issue is converted to a Central Bank.

The deputy attorney-general and deputy auditor-general positions have also been filled in the past using the same law.

The government said the emergency conditions cited by the Law of Necessity to justify its use “essentially do not exist” thus the appointment could be rescinded.

President Nicos Anastasiades had said he would revoke the appointment if elected.

Stavrinakis, who had been sidelined by the previous governor, Athanasios Orphanides, was upgraded as soon as the current CBC Governor, Panicos Demetriades, took over last year. 

Former ruling party AKEL described the government’s decision as irresponsible, wondering if it had taken into consideration the amount of work the CBC currently has to deal with. “In such a critical moment for the Cypriot economy, the government chose to act irresponsibly, simply to serve its expediencies,” AKEL said.