WHEN Roulla Savvidou, 56, from Kythrea visited her childhood home on April 24, 2003, for the first time in 29 years, she could not believe her eyes when she saw the Turkish Cypriot family living there had hardly changed the furniture.
Prior to that the last time she had been there, she was just 17. Her family had packed their bags with only the clothes they could carry and rushed south to escape the advancing Turkish army.
The Turkish Cypriots, who were from Larnaca, moved in three months after the invasion.
“They were friendly. They let us in and gave me photos of my parents, some encyclopaedias, three books of Grivas, my grandmother’s old cups and my sister’s sports trophies,” said Savvidou.
“Afterwards, I went quite frequently initially, and then I started going only once a year when one of the churches in the village celebrated its name day. Now, it’s been three years since I’ve been.”
She took her elderly mother back to the family home at one point but the mother found the occasion too emotional.
Asked why she no longer crosses north, Savvidou replied that her cousin used to take her but he stopped.
“I won’t risk going alone in my car,” she said.
Would she go back to live? “Only if Kythrea comes under Greek Cypriot administration after a solution.” 
The 56-year-old said it felt like a foreign place to her. All the olive, orange and lemon trees of the village had dried out.
“I still see it as our home, our country, but under occupation. After the checkpoints opened, we thought they would find a solution, all those Turkish soldiers in Kythrea would leave, and we would move back. I feel disappointed now, but who’s to blame? Intransigent Turkey? Us? Everybody I think.”
Asked how she views Turkish Cypriots ten years after the checkpoints opened, she said: “I have no feelings about it, they are neither our enemies nor our friends.”
Elias Pantelides, a chartered accountant from Yialousa in the Karpas region remembers having mixed feelings when he returned with his family in 2003.
Despite making his children play a ‘name the occupied villages’ game over lunch to ensure they never forget their heritage and homeland, when he took them to see the Karpas peninsula, deep down, he felt they had no connection to it.
“It was a bit disappointing in that sense. You go, thinking you’ll meet the people you knew, and at the end of the day, you realise that life has gone, it’s finished.”
He spent his first night in the north post-1974 camping with his daughter by the sea on a plot of land belonging to his family and currently being used by a man who has known his family since the 1950s.
“Slowly, you start to feel, this is not my place anymore because I do not live there. Around six years ago, I asked a lady in Yialousa where she was from. She replied in Greek that she was from Yialousa. I said, ‘no you’re not’. She said she was born there and raised her two children there. 
“It was shocking how time flies. OK, I’ve got legal title to the place, but any way you see it, that lady was born in Yialousa and raised her kids there.”
Pantelides also finds that he returns less and less to the north.
“I’ve been all over the occupied part now, seen the whole lot. It’s now meaningless. I go and feel like I don’t know the place or the people.”
However, closing the checkpoints would be a negative development, he said.
“On a daily basis, it won’t impact on me too much but it would be a stupid, illogical political decision. Without the two communities mixing and exchanging ideas, how could we find a solution?” 

Refugee Roulla Savvidou visiting her family home in Kythrea

CYPRUS MARKS the tenth anniversary since the opening of the checkpoints on Tuesday, which ended 29 years of physical separation between the two communities, adding another milestone to the long history of continued division on the island.
On April 23, 2003 Turkish Cypriot authorities overcame Turkish military reluctance and opened the sealed gates between the two communities, allowing thousands of Greek Cypriots and Turkish Cypriots to pass each other in long queues and cross to see the ‘other’ side for the first time in three decades.
Emotional accounts of refugees on both sides returning to their homes and being welcomed by the current inhabitants with open arms and courteous hospitality were beamed and printed by media around the world.
The warnings of the late Rauf Denktash that there would be bloodshed on the streets when Greek Cypriots and Turkish Cypriots mix again proved entirely groundless.
A few years on, one commentator noted that you could find more trouble at a Saturday afternoon football match than from the crossings.
Despite the euphoria which followed the surprise opening, a year and a day later, the mood changed significantly with the overwhelming rejection of the Annan plan by the Greek Cypriots and deep sense of disappointment by the Turkish Cypriots.
Now, 3,650 days after the opening, the initial enthusiasm has seemingly dissipated with many going about their business as if the checkpoints were always open and others as if they had never opened at all.
Ambling along Nicosia’s rejuvenated Ledra Street, the Turkish language can be heard in equal measure to Greek, with both fighting for a place among the multitude of other languages spoken among the hordes of ice-cream eaters.
People no longer double take when they see a car displaying the number plates of the ‘other’ side on any road from Ayia Napa to Kyrenia.
Teenagers who do not remember the physical separation of the two communities that so defined the anguish and sorrow of their parents and grandparents for decades, and who consider the seven crossing points across the Green Line as commonplace as the internet.
However, not everyone in Cyprus has crossed the buffer zone since 2003, nor do many continue to cross regularly.
According to Charis Psaltis, assistant professor of social and developmental psychology at the University of Cyprus, there have been approximately eight million crossings by Greek Cypriots and 14 million by Turkish Cypriots over the last ten years.
The initial massive flows of Cypriots from both communities crossing over have gradually decreased and stabilised. To this day, one third of Greek Cypriots have never crossed to the other side.
Around 40 per cent of Turkish Cypriots now regularly visit the Greek Cypriot community, primarily for shopping, notes Psaltis, while Greek Cypriots who make frequent visits north represent between 10 and 15 per cent of their community.
A long-time expert and author of numerous books on Cyprus, James Ker-Lindsay of the London School of Economics, likens the spirit of April 23, 2003 to the tearing down of the Berlin Wall in 1989.
“That day will go down as one of the most special days in my life. I remember the announcement went out that they’ll open the Green Line, and nobody really knew what it meant.
“We went down to the Ledra Palace crossing, saw my brothers in-law going across and just followed them without even a passport. We just walked through. It was utter chaos, surreal.”
He clearly remembers one Greek Cypriot man, married into a prominent political family, standing on the corner of the Cyta roundabout near the Ledra Palace handing out £10 notes to Turkish Cypriots to go have a cup of coffee.
Another who crossed north came back shocked and pleased, though perhaps not for the most admirable reasons, telling friends he couldn’t believe prostitutes were “a third of the price over there”.
Returning refugees were invited into their homes by the current inhabitants for coffee, who returned personal items that had been saved for decades.
“It was incredible. You don’t often get moments like that. Whatever Denktash’s reasons, all of Europe welcomed the move and yet the Cypriot government came out with the most churlish remarks, saying he was only doing what should have been done,” said Ker-Lindsay.
The government was not the only one caught unawares and on the wrong side of history. One journalist working for a British newspaper recounted going to the quaint Greek Cypriot village of Karmi in the north, where many British nationals settled after 1974.
When approached by the journalist, one British woman came out of the house she was occupying and said she had found a Greek Cypriot woman wondering around ‘her’ garden, picking lemons from ‘her’ tree.
“Do these people have no respect for other people’s property?” she asked without a hint of irony.
According to Ker-Lindsay, the Cypriot students he meets in the UK are evenly split between those who crossed and those who didn’t cross.
“There are young students who don’t remember the option didn’t exist before. Some students look embarrassed when they say they don’t cross, but they are perfectly within their rights. The ability to cross over has become a matter of personal choice.”
Before the openings, he remembers attending a bicommunal darts tournament organised by the UN at the Hilton hotel in the 1990s.
“The Turkish Cypriots threw their first round matches so they could hop into taxis and dart off to Limassol and even Paphos. I took three to Larnaca in my tiny Peugeot,” said Ker-Lindsay.
After spending years immersed in the memory and nostalgia of home, the impact of returning for a temporary visit only was perhaps too much for many Cypriots.
“One has to wonder if the openings gave Greek Cypriots the chance to see what the north is like, and made them think: ‘It’s gone, it’s not really home for us anymore. It’s still our island, but it’s different.’ I think it affected the way they saw reunification,” he said.
One clear message that can be taken from the openings is that economic interaction is key to normalising relations, he argued.
“The best benefit of opening the checkpoints has been economic interaction… It may be minimal but it shows interaction and cordial relations can happen. Greek Cypriots and Turkish Cypriots don’t have to be best friends, but there is no reason why they can’t coexist,” he said.
Head of the bicommunal cultural heritage committee Takis Hadjidemetriou is adamant that Cypriots have proven they can live together.
“Of course the situation is much better with the opening of the checkpoints,” he said.
Just last Sunday, 120 Greek Cypriots went to Diorios (a former mixed village in the Kyrenia district, west of Myrtou) and were welcomed by the Turkish Cypriots there. Together they cleaned up the local church, while the Greek Cypriots held a service without obtaining permits.
“They had a lovely time,” he said, adding that many villages have taken advantage of the openings to enhance ties between former and present inhabitants. 
“When the checkpoints opened, we could have grabbed the opportunity to solve the Cyprus problem but we didn’t, so people are solving it on an individual basis.
“If the Cyprus problem is solved, there is a good foundation for Turkish Cypriots and Greek Cypriots to work together,” said Hadjidemetriou.
“We have people who are willing to accept certain things, but their leaderships operate with slogans, chauvinism and nationalism.”
Former UN adviser on economic matters Fiona Mullen said the high hopes and exhilaration felt after the checkpoints opened rapidly turned into disappointment by 2004.
Ten years on, she questions whether interaction has increased the level of trust between the two sides, noting that trade along the Green Line has proved frustrating to most, with many reluctant to engage without higher up political approval.
“I think it’s an exaggeration to say people live happily side by side, more like shop happily side by side. The positive is that the expected violence did not happen. Instead, we see a lot of mutual indifference.”
Mullen argued that interaction is mainly taking place either between hardcore peaceniks or specific social groups. 
“Intercommunal relations are always related to what the big political leaders are doing. If we didn’t have the sudden economic crisis, we might have hoped something would change, but it’s hard to expect that now.”
However, according to Psaltis, the news is not all bad, at least from an academic perspective.
According to research on intergroup relations, the more contact that takes place between Greek Cypriots and Turkish Cypriots, the less prejudice and more trust each side has for the other. 
“The models of contact we tested apply to both pro-reconciliation people and non-reconciliation people. Contact reduces prejudice more for reconciliation people but we still find significant and positive effects of contact for non-reconciliation people.
“We find especially high and positive effects of contact for elementary, secondary school and university students who usually do not have contact,” said Psaltis.
“In our recent study, we found that 35 per cent of Turkish Cypriots have at least one Greek Cypriot friend while the corresponding figure for Greek Cypriots is 15 per cent,” he added.
And in recent years, these figures are on an upward trend, though they rarely get discussed in public. There is much discussion on the group of Greek Cypriots who visit casinos in the north, but these represent a tiny fraction of the community, he added. 
“Finally, perhaps the most important finding from a political perspective is that the positive effects of contact increase the desire for coexistence and reunification with the other community and this applies to both communities.
“Therefore, the argument that the checkpoints should be closed because they consolidate the faits accomplis on the ground is completely contrary to the research data not only in Cyprus but also around the world.”
Psaltis called on the political leadership to support and increase the quantity and quality of contact between the two communities. 
Asked how the research factors in with the low figures of Greek Cypriots crossing north, he said: “There is no contradiction. The more contact people have the less prejudiced they become but not many Greek Cypriots have contact, this is the problem.”
Regarding a perceived sense of indifference and lack of enthusiasm over intercommunal relations, he agreed that a lot of Greek Cypriots crossed in the beginning to see their homes and then slowly stopped because they don’t see the sense in going back to a place they can’t call their own anymore.
“But this concerns crossing to the north. They can still have contact with Turkish Cypriots in the south when the Turkish Cypriots cross to go shopping.”

Thousands of people crossed the checkpoint when it first opened

APOEL coach Ivan Jovanovic was delighted with his side’s 1-0 victory over AEK in the championship playoffs at the GSZ Stadium in Larnaca on Sunday afternoon which opened up a commanding eight-point lead over Anorthosis at the top of the table.

“AEK were better than us today, they moved the ball really well and controlled the match,” said Jovanovic. “I can understand that my players felt a lot of pressure since the match was of great importance to us. In the end we managed to get a great victory and this result may now help us approach the remaining three matches slightly more relaxed,” he added.

Mario Sergio scored the only goal of the match directly from a free kick in the 63rd minute, but the defender will miss Saturday’s reverse fixture through a suspension as he was shown his fourth yellow card of the campaign early in the second half.

“We are very close to mathematically secure the title, but there are four excellent teams in the championship playoffs group and everything is still possible since details decide winners in almost every single match,” Jovanovic concluded.

AEK’s coach Ran Ben Shimon said he was proud of his players: “We did everything right, but in order to win you also need to score goals. We are going through rough times and we need to regroup with three more matches remaining. We will give everything we have in those matches in order to try and secure European football for our club next season.”

APOEL lead the championship playoff group with 70 points, eight points ahead of Anorthosis in second place. Omonia are currently third with 60 points, while AEK are fourth with 58. The top three spots guarantee European presence in 2013-2014.

Elsewhere on Sunday afternoon, in Group 3, Olympiakos topped Ethnikos Achnas 4-2 in Nicosia, while three first half goals, including Bernardo Vasconcelos’ brace, provided Alki with a comfortable 3-1 victory over Nea Salamina away from home. Vasconcelos proved to be vital for Alki this season as his scoring tally is now five goals in the playoffs alone, and is now the league’s top scorer with 16 goals.

Kostas Kaiafas’ Alki now need only one more victory from the remaining three matches to secure their top flight status for the upcoming season as they lead the group with 32 points. On the other hand, Nea Salamina trail the group leaders by eight points, but still have a realistic chance to avoid the drop as Ethnikos Achnas are in third place with 26 points and Olympiakos in second, with 28.

THE United Nations (UN) is very sympathetic towards the struggle the Cypriot people now face, UN Special Advisor on Cyprus Alexander Downer said yesterday after a meeting with President Nicos Anastasiades at the Presidential Palace.

Downer said he hopes to announce a dinner between President Anastasiades and Turkish Cypriot leader Dervis Eroglu after his meeting with the latter today. Downer will head to Greece on Thursday to meet Greek Foreign Minister Demetris Avramopoulos before travelling to Turkey on Monday to meet Turkish Foreign Minister Ahmet Davutoglu. “I will go into those meetings well armed,” Downer said. 

Speaking about the current economic crisis, Downer said that everyone must be hopeful and patient although the UN was not in a position to judge the Troika’s decisions. “There is no doubt that negotiations (for the Cyprus problem) could move faster if it wasn’t for the current circumstances,” he added, although he declined to say that negotiations had been postponed.

Downer and Anastasiades were accompanied by the President’s new black terrier puppy Leo, a present from his daughter Elsa.

Downer, Leo and Anastasiades at the Presidential Palace yesterday

ON THE morning of April 23, 2003 Nicosia was inundated with thousands of people waiting in disbelief and anticipation as news spread the crossing point at the UN-controlled Ledra Palace Hotel was to be opened. 

It meant those on the island could venture to the ‘other’ side for the first time in three decades and for some, the first time in their lives.

Ten years on, the events of that day and the decisions surrounding it, can still be viewed as the most momentous and life changing for many Cypriots, since the division of the island.

But what was the feeling among those around Nicosia’s Ledra Street checkpoint yesterday? 

For 34-year-old Nicosia Municipality employee Spyros Hadjipsaltis it was irritating to see Turkish people living in houses which belonged to Greek-Cypriots. “It’s sad to see the desecration of churches in the occupied north seeing as we make it a point to preserve Turkish mosques on this side,” he said. 

Hadjipsaltis said he has visited the occupied areas on many occasions although he has not spent a penny, visiting only to see the sites.

An overwhelming feeling of curiosity was the reason 53-year-old Chryso Kaveli and her 44-year-old sister Elena crossed over to the north. “The over-riding feeling when we crossed over was one of anger at seeing our land occupied by others,” they said. Accompanied by their friend, 52-year-old Lia Charalambous, the trio said they still feel the occupied areas belong to the Greek-Cypriots. “We went over to see our villages of Yialousa and Ashia which is still our land but we don’t make a habit of crossing over because it’s too painful to see,” they added.

Despite having many Turkish-Cypriot friends, 19-year-old student, Arthur Potter has never been across since the checkpoints opened. “Everything I need is on this side of the island so I don’t see the need to cross,” he said. “My friends have invited me to go to their houses in the occupied areas but I politely declined,” he added.

The visit to Kyrenia and Morphou to see his mother’s and father’s homes was an emotional trip for 29-year-old dentist, Nicos. “It felt very strange crossing over, like I was no longer in my country,” he said. He added that he had only crossed over twice, once to see his mother’s village and once to see his father’s, both out of curiosity.

Although he had asked someone to visit his and his brother’s home in Morphou, 80-year-old pensioner Andreas Efstathiou stated that he has not crossed over and never will. “I don’t have anything against the Turkish-Cypriots, it’s the settlers from Turkey I have a problem with,” he said. “Before the invasion we had good relations with the Turkish-Cypriots but I find it humiliating that my compatriots visit casinos and the airport in the north,” he concluded.

Today also sees the nine-year anniversary of when the UN solution blueprint, the Annan plan was rejected by 75 per cent of Greek Cypriots.

“The anniversary of the referendum, in the shadow of unprecedented economic crisis in our country and under the weight of unsustainable measures imposed by the Troika, sends the message that the Greek-Cypriot people have the courage and determination to continue to fight in defence of the law, dignity and history and to continue the struggle to succeed again by bringing about progress, economic growth and prosperity,” a statement from the Tassos Papadopoulos Study Centre said.

Looking not buying - Spyros Hadjipsaltis

CORRUPTION is Cyprus is growing, residents polled for years by an independent body dedicated to fighting it said yesterday.

Almost everyone or 91 per cent of those polled said last year that corruption was a major problem, up from 70 per cent in 2010, the survey by Transparency International Cyprus (TIC) said. TIC polled 953 people across Cyprus between September and December 2012, and across gender, age, employment and the unemployed.

Some 85 per cent thought there was corruption in national institutions last year, up from 60 per cent in 2010. People also grew more fatalistic and from about 50 per cent who thought corruption was inevitable and would always be present in 2010, 73 per cent thought so last year. And more and more people blamed politicians (93 per cent), the police (93 per cent), and local authorities and officials at both regional and local level (93 per cent), saying last year that they thought these sub-groups exchanged bribes and abused their position for personal gain.

But Cypriots are becoming increasingly cynical and intolerant of corruption, TIC’s polls showed. 

Whereas in 2010 some 58 per cent of those asked thought business and politics were closely linked, in 2012 the figure rose to 80 per cent. People also thought that public money was not spent in a transparent manner (from 56 per cent in 2010 to 81 per cent last year); that there was no real punishment for corruption (from 67 per cent in 2010 to 87 per cent last year); and that authorities often fail to apply the law (from 61 per cent in 2010 to 85 per cent last year). 

Can this change? Yes “but the government needs to sanction changes,” said head of TIC and academic Maria Krambia-Kapardis. 

“The main barrier in fighting corruption in Cyprus is the nonexistence of: a) a national strategic anti-corruption action plan and (b) an authority solely responsible for investigating, prosecuting, and preventing corruption.” 

She said one suggestion was to limit immunity of members of parliament, elected officials, the President and his Cabinet to while they are on active duty. “Not if they’re speeding on the highway and are caught,” Kapardis said. Deputies have previously refused to lift their immunity – used by some to avoid paying for traffic fines – citing the need to take on authority as needed. The Greens’ MP, Giorgos Perdikis, was not convinced and said that “the odd traffic warden” would not endanger their freedom of speech.

Other proposals include not allowing ministers and public agents to take on interests in private ventures for three years following their term’s end and forcing lobbyists to publicly disclose their interests. In addition, all deputies and ministers disclose their assets and any conflict of interests that should prevent them from participating in discussions in which they have a stake. 

If this legislation were in place in 1999, deputies would not have been allowed to change the law on taxing stock market profits. Though dozens of politicians made hefty profits, thousands of people who invested in bubble shares lost their life’s savings by 2000. But in 1999, only one deputy informed parliament about conflicting interests and abstained from voting. 

Examples abound of scandals and omissions, from using positions of power to benefit family members to charging the state thousands for cosmetic medical procedures or charging an inefficient state for overtime pay. 

“Corruption affects economic growth, foreign investment, public infrastructure, standard of living, quality of life, and has social and political repercussions,” Kapardis said adding that the current society’s legacy could be a republic “with minimum corruption and high ethical values”.

Go to www.transparencycyprus.org to find out more 

A NUMBER of “corrupt” public officials at the Land Registry Department have been dipping their hands into the honey jar, Interior Minister Socrates Hasikos said yesterday, adding that the ministry will not hesitate to pursue criminal investigations wherever necessary.

According to Hasikos, seven land registry officials are under criminal or disciplinary investigation in relation to allegations of corruption, bribery, embroilment, violation of personal data laws and depriving the state of revenue.

“It appears there is corruption, without wishing to taint all land registry employees. On the other hand, there are these exceptions where civil servants appear to have been frequently putting their hands in the honey jar,” he said.

“The ministry is in a position to identify these exceptions and we will not sit idle,” he added.

Hasikos told the Cyprus Mail two land registry officials have already been suspended and their files sent to the police to launch a criminal investigation into allegations of corruption and bribery. 

The two are allegedly involved in helping Greek Cypriots - for a fee - sell their properties in the occupied areas by applying to the Immoveable Property Commission (IPC) in the north. 

“It appears a ring is operating... particularly in the Larnaca district, where this illegality appears to be blossoming,” said the minister. 

He did not rule out others being involved. 

In a separate case reported by Phileleftheros yesterday, Hasikos confirmed that a disciplinary investigation is underway against four employees accused of filing 25,000 applications for information on property owned by 16,300 citizens across Cyprus. 

It appears the employees were filing fake applications for a data search at the land registry in order to retrieve information for hidden individuals in exchange for a fee. 

Hasikos said he did not rule out also sending this case to the police to launch a criminal investigation.  

The case involves potential violations of personal data laws, as well as actions which have deprived the state of revenue, since invoices were not issued and paid for the fake applications for data searches at the department.  

According to Phileleftheros, Auditor-general Chrystalla Georghadji uncovered the scam which allegedly took place between 2008 and 2012. 

Through a surprise visit to the land registry department by a member of her office, Georghadji found a number of officials had printed out thousands of data searches for immoveable property without being authorised to do so. It was not clear whose hands the information ended up in.  

In her report, Georghadji also had a dig at the land registry department for carrying out an “inadequate” investigation into the allegations.  

A seventh employee is also being investigated in relation to a separate case of alleged bribery regarding the sale of land, said Hasikos. 

Minister Socrates Hasikos says people have been putting their hands in the 'honey jar'

FORMER supreme court judge Panayiotis Kallis has resigned from the committee of inquiry tasked with probing the circumstances which led the economy and banking sector to the brink of collapse.

In a letter to the President and the justice minister, Kallis said he felt obliged to step down citing a possible conflict of interest with his sons’ law practice.

In the letter, Kallis explained that he could not in good conscience continue his work as his sons’ law firm has taken on clients challenging the ‘haircut’ on deposits at Laiki and Bank of Cyprus.

That in itself did not constitute a conflict of interest, Kallis explained. However, he subsequently discovered (on Monday) that some of his sons’ clients plan to argue in court that the haircut and the winding down of Laiki are the result of inadequate supervision/negligence by regulatory authorities such as the Central Bank and the lack of corrective fiscal measures on the part of the state.

Given that these very issues are included in the scope of the inquiry, Kallis said, it would be best that he quit:

“My continuing participation... would prove catalytic for the good standing of the committee’s findings. At the same time, the government would be accused that the committee’s report is infected with graft.”

Kallis is the second panel member to quit, following former supreme court judge Yiannakis Constantinides who resigned two weeks ago, citing health reasons.

Kallis’ replacement was yesterday confirmed as former Ombuswoman Iliana Nicolaou, set to be sworn in later this week.

In announcing his resignation, Kallis hit back at allegations that the three-man panel is being manipulated by the government.

He is not a person to be influenced or take orders from anyone, he said.

Kallis was responding to AKEL leader Andros Kyprianou, who a day earlier questioned the panel’s impartiality and said the inquiry is really a vehicle to lay the blame on the previous administration.

“No one is out of the crosshairs,” Kallis retorted. He said the panel will also look into the second Eurogroup of March 25 which decided the ‘bail-in’ of depositors and the resolution of the island’s second largest commercial lender. 

That decision was rubberstamped by the current DISY government, Kallis said, which shows that the investigation will spare no one.

The committee of inquiry meanwhile said yesterday it would have to reschedule due to Kallis’ withdrawal. The next hearing - initially set for today - will take place on Friday.

Under the relevant law, the panel is purely an investigative body, and its findings are not legally binding.

The inquiry is currently focusing on the fiscal aspect of the circumstances leading up to the ‘haircut’ decision. Informed sources told the Cyprus Mail that former finance ministers Charilaos Stavrakis, Kikis Kazamias and Vasos Shiarly have been summoned before the panel; Michalis Sarris will most likely be included in a future batch of witnesses.

Former ombudswoman Iliana Nicolaou is set to be sworn in as a committee member today

THE European Parliament is likely to back plans to impose losses on wealthier depositors in failed banks while shielding smaller savers, its lead negotiator on the rules said yesterday.

Talks are under way to finalise EU rules on crisis-hit banks following the Cyprus bailout, in which both large and small depositors were originally going to be hit before the plan was changed to charge only the former.

The European Parliament's backing is needed for any proposals to become law.

Gunnar Hokmark, a Swedish conservative in the European Parliament, said most categories of deposits would not be protected under proposals likely to be agreed.

"There is a very clear exception for all deposits below €100,000," Hokmark, who will lead negotiations with European Union member states, told a news conference.

Bigger depositors would only suffer losses once bondholders and shareholders had been hit.

The European Parliament has an equal say alongside countries when deciding who among a bank's creditors must bear the brunt of failures such as those in Cyprus' banking sector.

Hokmark, however, pledged to protect small depositors in EU legislation. "What happened in Cyprus shall not happen again if this legislation is involved," he said.

The initial EU-Cyprus plan, which would have imposed losses on smaller, insured depositors, prompted a large backlash both from depositors and financial markets.

Although some policymakers have sought to portray Cyprus and the losses suffered by depositors at two of its banks as a one-off, many analysts believe it marks a change in tack in how Europe deals with troubled banks, to spare taxpayers who have been on the hook for previous bailouts.

The European Commission has written the first draft of the law about how to share out losses when banks run into trouble, designed to prevent EU countries taking a variety of approaches to deal with struggling banks and bondholders.

It is now up to member countries and the parliament to decide whether and when savers should face losses, when a failing bank is being salvaged or shuttered.

THE SUPREME Court yesterday began hearing 53 applications filed against last month’s Eurogroup decision to resolve Laiki Bank and force losses on uninsured depositors at the Bank of Cyprus. 

The applications were filed by depositors who can expect to lose the entirety of their deposits over €100,000 at Laiki and between 40 to 60 per cent (potentially higher) of uninsured deposits at the Bank of Cyprus (BOC). 

The eurozone finance ministers’ decision on March 25 provides for the restructuring of Cyprus’ two main banks, through the resolution of Laiki Bank and the recapitalisation of the Bank of Cyprus, resulting in a massive write off (haircut) of Cypriot and foreign bank deposits.

Since the controversial Eurogroup decision for a ‘bail-in’ of depositors at the two banks, uninsured deposits in both banks (over €100,000) have been frozen to resolve Laiki’s debts and recapitalise the BOC, with BOC depositors only allowed access to 10 per cent of their deposits so far. 

It transpired during yesterday’s hearing that the effort by the plaintiffs’ lawyers to group their clients’ cases together failed, meaning that the Supreme Court will hear each of the 53 applications separately. 

Regarding a request by the plaintiffs’ lawyers to postpone the hearing so they could access information requested of the Legal Service, Attorney-general Petros Clerides - representing the state - argued against a postponement, saying the resolution and recapitalisation of the two banks was a precondition for Cyprus to receive as a loan €10 billion from the troika. 

Meanwhile, the data requested by the lawyers could not be given to the plaintiffs’ since the Central Bank had classified it as confidential, preventing even the Legal Service from having access to it. 

The process will continue today and tomorrow. 

Supreme Court President Petros Artemi yesterday excused himself from the proceedings, noting that he will soon enter into early retirement and will not be able to see out the hearings. He has been replaced as chair of the full bench of the top court by Judge Demetrios Hadjihambis. 

CURRENCY controls are expected to be lifted within the next few weeks, definitely within the next six months, finance minister Haris Georgiades has said.

Georgiades said he anticipated the controls, imposed after a chaotic bailout last month and which led to a lockdown of the banking system for 15 days would be eased in "days or weeks".

Asked during a Reuters interview published yesterday whether measures would be eased in two, or six months, Georgiades said: "Definitely not six months. I am optimistic we shall be able to proceed much sooner." 

Capital controls were imposed at the end of March to prevent a flight of funds from a banking system flush with cash from Russian and European businesses, but also from many overseas Cypriots.

Now islanders are on a cash withdrawal limit of €300 a day and have a €2,000 ceiling on what they can take abroad, while businesses cannot make transfers exceeding €20,000 overseas unless they are vetted by the central bank.

Firms have complained the restrictions are stifling, while Russia has warned it will only restructure its own loan to the island if its interests are protected.

Cyprus received a 2.5 billion euro five-year loan from Russia in late 2011. Russia had previously said it was ready to restructure the terms by extending the credit and cutting interest to 2.5 per cent from an earlier 4.5 per cent.

"I am pretty confident these necessary but temporary measures will not be needed in the next days or weeks," Georgiades said.

He also said the sale of the island’s gold reserves is not being given priority under the international bailout agreed this month and the government is still exploring all options to meet its side of the deal.

Cyprus' agreement to sell €400 million worth of gold reserves was one of several shockwaves progress towards a bailout sent through European financial markets earlier this month.

The amount is small but the precedent of a eurozone central bank being pushed to dispose of some of its reserves helped drive the biggest fall in gold prices in 30 years. Investors worry central banks in some of the eurozone's struggling larger economies could eventually be pushed to follow Cyprus' example.

But while Georgiades said the gold sale was one of several commitments to the island's international lenders, he said it was not an issue which took priority.

"We shall do whatever it takes, we shall meet all fiscal targets. I am sure we shall succeed in gathering the amounts which remain our responsibility in order to avoid any need to come back with a new (adjustment) programme," Georgiades said.

Asked whether the sale would be reconsidered if the amount elsewhere, Georgiades said: "So long as we are able to meet the financial element of our commitments I think all possibilities should be explored and they will be explored”.

Finance minister Haris Georgiades says controls will definitely be lifted within six months

ONLY ONE of the original three members of the committee set up to investigate the causes of the collapse of the economy is still in his place – Giorgos Pikis. The other two members of the line-up sworn in on April 2, have since resigned - Yiannakis Constantinides a week later for health reasons and Panayiotis Kallis on Monday because of what he described as a conflict of interest. His sons’ law office had taken legal action against the Bank of Cyprus that was related to the terms of reference of the investigative committee.

In his letter of resignation to the president, Kallis had pointed out that he felt he “did not have the right to investigate behaviour, actions and omissions that constitute issues of legal dispute in a suit filed by members of my family.” Commendable as his decision may be, he should have thought of the matter before he agreed to sit on the committee instead of quitting three weeks after his appointment. His sons had taken legal action against the Bank of Cyprus at the end of March, and although this had not raised the issue of conflict of interest, there was always the possibility of subsequent action that would - which was the case.

A second resignation, three weeks after the establishment of the investigative committee, does not inspire public confidence. If anything, it undermines the investigation, suggesting that this is not a very serious undertaking by the government, which, quite clearly, made unwise choices. The three retired judges chosen may have had impeccable credentials but they were all of advanced years and it was questionable whether they had a deep understanding of the workings of the economy and the banking system. This, after all, is an investigation into the actions or omissions that led to the economy’s collapse which requires more knowledge of economics than of the law. Yet the government has decided to replace Kallis with a retired judge who has also served as ombudswoman.

The government’s unwise choices have helped AKEL’s orchestrated efforts to discredit the committee and question its legitimacy. The resignation of Kallis on the same day that AKEL chief Andros Kyprianou alleged the government was ‘directing’ the committee would have given some credibility to the communist misinformation campaign. This was an idle claim, not supported by any evidence, but designed to undermine the committee by implying that the investigation was rigged. How strange that the government is, inadvertently, helping AKEL’s propaganda campaign to achieve its objective.

INSURANCE companies yesterday sought to downplay the possible impact on policy holders as a result of the deposits haircut.

Under a decree issued by the Central Bank, insurance companies are no longer exempt from a deposit haircut at the Bank of Cyprus (BoC) and the old Laiki.

Authorities had initially excluded various entities from the write-down but were forced to rethink after it became obvious that it would increase the losses on depositors who must chip in to recapitalise stricken BoC.

Several previously exempted categories will now incur a 27.5 per cent loss on their deposits over €100,000. 

These include charities licensed by the finance ministry, and private schools registered with the education ministry.

But insurance companies will be hit with a 27.5 per cent hair cut on all deposits (from the first euro) as they are bound by different legislation.

To recoup losses, the companies might be tempted to raise premiums; but industry players are understandably wary of calling it one way or the other.

“There are so many different types of policies out there, and insurance companies’ money is invested in other assets other than deposits, such as real estate and so forth,” said Stefi Drakou, head of the Insurance Association of Cyprus (IAC).

“Plus, companies keep some of their money in foreign banks. It’s hard to determine how far they will be affected... it’s not one size to fit all,” she told the Mail.

Drakou said the previous decree exempting insurance companies from the haircut was the correct one, because it contained the hit to the banks.

“Now losses may spread to the whole of the financial sector, of which we are part,” she said.

Conventional wisdom has it that life insurance policies run the most risk of being impacted, since payments are made over a long period of time and usually come out of people’s savings. Less so for general insurance (or non-life insurance policies) such as automobile and homeowner policies.

IAC data for 2011 shows that the top five life insurance companies had premiums worth a combined €315m. Laiki Cyprialife’s market penetration stood at 29.1 per cent, followed by Eurolife 27.7 per cent, Universal Life 14.0 per cent, Metlife-Alico 6.9 per cent, and Prime 6.5 per cent.

Andreas Pirishis, vice-president of Atlantic Insurance (deals with general insurance) said the company took  a “very minor hit” in bank deposits but this would not in the least affect either their solvency or robustness.

Another source in the insurance industry, wishing to remain anonymous, said she did not expect companies to increase their insurance premiums: “I really don’t think this is a good time for that”.

A day earlier, Universal Life, one of the largest insurance companies, said the haircut will have little effect on its investment funds.

The losses will not exceed 0.1 per cent, the company said, adding that it will cover the cost through its own capital.

Under the Central Bank's decree, insurance companies are no longer exempt from a deposit haircut at the Bank of Cyprus (BoC) and the old Laiki

FORMER Ombudswoman Iliana Nicolaou was sworn in yesterday at the Presidential Palace, before President Nicos Anastasiades, replacing Panayiotis Kallis on the committee of inquiry into the economy, after he resigned on Tuesday.

Speaking to Nicolaou, Anastasiades said, “I would like to thank you for your willingness to participate in the committee of inquiry which has been set up to investigate the acts or omissions of persons who were authorised to manage Cyprus’ economy or its banking system”. 

The President went on to clarify that the government neither intended nor aimed at “punishing political life”. Through investigating the circumstances that led to the island’s “economic tragedy”, Anastasiades added that no-one was immune from scrutiny. He said that any possible criminal liabilities were the responsibility of an independent judiciary panel and not the government.

“The government has provided the committee of inquiry with wide-ranging terms of reference and it is your sole responsibility to complete the project with sound judgement and ethical integrity,” Anastasiades said,  addressing Nicolaou. 

“I am convinced that thanks to your experience as a qualified lawyer, but also your service as Ombudswoman, with integrity and honesty, that you will contribute to the successful mission of the Committee as soon as possible,” he concluded.

Iliana Nicolaou poses for the cameras yesterday (Christos Theodorides)

OFFICIALs from the Cyprus Tourism Organisation (CTO) met with the heads of the Dutch Association of Travel Agents along with journalists from the country’s three biggest newspapers yesterday in an attempt to attract tourists from Holland.

Speaking after the meeting, head of the CTO Alecos Oroundiotis said that the meeting took place as the organisation is making attempts to reverse the negative image the island is suffering from in light of recent  economic developments. 

He added that both sides took part in a very constructive meeting regarding the arrival of Dutch tourists and promoting Cyprus in the Dutch tourist market.

“We were assured by everyone that they found Cyprus a very attractive destination that should not be envious of any other tourist destination as our Dutch colleagues have not found any problems here,” he said.

Oroundiotis added that an agreement had been put in place with the head of the Dutch Association of Travel Agents, Frank Oostdam, to hold their next conference in Cyprus.

“This indicates once more the trust shown to Cyprus by Dutch travel agents and we are sure this support will continue in the future,” Oroundiotis said. 

“The Dutch market is one of the best in central Europe,” he added. 

In 2011, 45,000 tourists came to Cyprus from Holland according to Oroundiotis who added that 2012 was not a great year regarding Dutch tourism, with arrivals being limited to just 35,000. “The Dutch market has plenty of potential and we hope to surpass in the future, the amount of tourists from Holland that we have had in the past,” he said.

Asked whether any incentives would be given to travel agents working abroad to attract tourism to the island, the head of the CTO said that efforts were being made, although unfortunately the organisation was working with a lower budget in 2013.

“Of course this affects all of our efforts but we will do our best to reverse the situation,” he said.

Oostdam told reporters that a very interesting discussion had taken place with officials from the CTO. He revealed that the number of tourists from Holland had decreased by 25 per cent in comparison to previous years and said that it was in everyone’s interests to find a way to attract Dutch tourists to the island.

“I believe the Cyprus government needs to give funding to promote the island as a tourist destination in Holland and in that way help Dutch travel agents,” he said.

He expressed the Association’s support towards the Cypriot people and gave assurances that an increase in Dutch tourists to the island would benefit both the Association and Cyprus.

“I am sure the situation will improve,” he concluded.

Senior executives from international leisure travel group TUI Travel PLC, will be in Cyprus today to meet with government officials and representatives from the tourism industry. They will be headed by deputy chief executive, Johan Lundgren.

According to a TUI statement, the aim of the group’s visit is to reaffirm their trust in the island’s tourism industry and the wider business environment after recent events.

They will be present at an official dinner this evening hosted by the government in the presence of Commerce and Industry Minister, Giorgos Lakkotrypis and other officials from the tourism industry.

“Despite recent developments in the economy, Cyprus remains a very attractive tourist destination that has all manner of high quality services that any visitor might require,” Lundgren said.

“Tourism can be a powerful weapon against the recession and can also spearhead the effort to restart the country's economy,” he added.

TUI is one of the leading tourism organisations in the world and has 141 aircraft and 1,800 retail stores across Europe.

TUI’s customers spend around €120 million annually in Cyprus, with the average expenditure per tourist coming to about €65 per day.

Through its programmes, TUI Travel brings more than 365,000 tourists during the summer season and 81,000 tourists in winter to the island.

It cooperates with 65 tourism companies in Cyprus, which include more than 300 hotels.

A 17-year-old school pupil has been left to fend for himself after his father was deported from Cyprus following nine years living in the country. 

Turkish national Sabahattin Sakizci, 45, was arrested and deported two weeks ago on the grounds that he was illegally resident on the island, despite living here since 2004. 

He came to Cyprus in 2004 with his Turkish Cypriot wife, Meryem Sakizci, 43 and their son.

Taking advantage of the government’s decision to fund Turkish Cypriots’ education so long as they live in the government-controlled areas, the family moved to Nicosia and enrolled their son at a private primary school in the capital for three years.  

When of age, the son continued his secondary education at a different private school in the capital. However, given his parentage being mixed, half Turkish, half Turkish Cypriot, Sakizci said his son became the target of taunts from other Turkish Cypriot pupils there. 

The family tried to move him to a public school in Turkey but the school would not recognise his education in Cyprus and tried to move him down two classes. 

Instead, after the summer, the family re-enrolled him in the same private school in Nicosia. 

The taunts continued, said Sakizci, so the parents decided to enrol him the following year in a private school in Turkey. The son spent one year in Turkey but was not happy there. 

So, he returned to Cyprus where the parents enrolled him in another private school in the capital, one of the most expensive in the country, where he resumed his education. 

He is now in his third year there, and needs one more year to graduate. 

The problem is he is currently living alone in a flat in central Nicosia, preparing for exams. 

According to Sakizci, his mother Meryem has a job in Turkey as an associate professor at a university. Effectively, she never lived with the father and son permanently, only spending summer holidays and other breaks with the family.

The father, meanwhile, works in the north as a sales manager. In essence, neither parent is contributing direct taxes to the state, a factor which may have influenced the authorities’ decision to deny him temporary residence here. 

Sakizci applied for a temporary residence permit three times. The first two times, he secured a ‘pink’ slip from the migration authorities but on his third application, he received no reply. 

According to the 45-year-old, he spent five to six years waiting for a reply. Every time he went to migration asking about his application, he was told, “Your case is under examination”. 

He believes the authorities delayed responding because he told them he planned to apply for citizenship after getting a third pink slip. 

Last month, while he was at work, police visited his flat where his son was staying. When he tried to cross over in the evening, police told him he was on the stop list because he didn’t have a pink slip. Officially, he hasn’t had one in years. 

Sakizci was able to cross anyway and talk with immigration police who removed him from the stop list.  “I have to be there in the mornings for my son and in the evenings after work, I stay with him,” he said. 

On April 5, a Friday, he received a letter saying he was illegally resident on the island and had to leave. 

The following Monday he went to the migration department where he spoke to an official who said they would find a solution. As he was driving away, he said he felt anxious about the situation and turned back to talk again with someone at the department. 

This time, a policeman spotted him and arrested him. He was handcuffed and taken to Block 10 at the Nicosia Prisons. 

Sakizci was told he would have to wait a week until his deportation could be arranged. Instead, he found the money and bought a ticket to Athens himself. From there, he went to Turkey and has since returned to the occupied areas.  

Now, he sleeps at his workplace, north of the buffer zone, while his son is alone in the flat. “I don’t want to make a political issue out of it, I just want to go see my son,” he told the Cyprus Mail. 

“I have no problems with Cypriot people. They have been great with me. It’s just migration that is causing problems,” he added. 

Migration department head Anny Shakallis said yesterday Sakizci was deported because he was deemed to be living here illegally.  

His pink slip application was rejected because it did not fulfill the necessary criteria. Asked to clarify, she said a third country national who is a family member of a Cypriot national needs to be living with the Cypriot national to be eligible for a residence permit. 

“His wife does not live anywhere on the island,” said Shakallis. 

Also, he has to present evidence of adequate financial resources. It doesn’t matter where these resources come from as long as he can prove he has access to the funds through a Cypriot-based bank, ie, in the government-controlled areas. 

Asked about the teenager living alone, the migration head said the teenager is a Cypriot national and can stay where he likes.

Without professing direct knowledge of the case, she said: “He is of a certain age where it must have been considered OK for him to stay here without his parents. The son will be referred to the welfare services, if this has not already happened, so they can keep a check on his living conditions.” 

THE DEFENCE ministry is calling on people to step up their efforts to give blood so that a viable bone marrow donor can be found for five-year-old leukaemia sufferer George Philippides from Paphos.

Vassos Vassiliou, whose son Andreas, also suffered from leukaemia in 2000 but was cured after a donor was found, took the initiative along with the defence ministry to have his son speak to the press yesterday in calling for more volunteers to give blood. 

“It is our chance to show that despite the current financial crisis we can stand on our feet and help little George,” Andreas Vassiliou said. “When I heard about the case I was moved to make a plea to the public because I know what he is going through,” he added.

Defence Minister, Fotis Fotiou called on people to act now to help save the little boy’s life and hailed Andreas for currently serving in the army when he could have asked for an exemption.

“I would like to thank Andreas and his father who took the initiative to organise this press conference to help inform people about giving blood so we can find a viable bone marrow donor for little George,” Fotiou said.

“The more people give blood, the more chance there is to find a suitable donor for our little boy,” his uncle, Marios Philippides said.

People who want to donate blood to be tested must be 18 to 45 years old. Donors from Nicosia can visit the Karaiskakio foundation from 8am to 4pm on weekdays or the Engomi blood bank from 8am to 6pm on weekdays and 8am to 2pm on Saturdays.  People in other towns can visit the city blood banks from 8am to 2pm on weekdays.

For further information contact the Karaiskakio foundation on 22772700.

Andreas Vassiliou (right) received a bone marrow transplant when he was a child issued a plea yesterday along with Defence Minister Fotis Fotiou (left) (PIO)

A 66-YEAR-old man burnt to death yesterday while his son, 44, was in critical condition after the truck they were in was engulfed in flames on a rural road in Nicosia.

Gavril Yerolemou died at around 1.30pm when the truck driven by his son, Yerolemos, was engulfed in flames while on the Nicosia to Palehori road near the Ergates industrial estate.

It is believed the fire started in the engine and spread quickly to the bales of hay the pair were carrying in the truck.

Yerolemos managed to get out of the vehicle while his father was trapped inside.

Eyewitnesses spoke of the injured son’s desperate effort to save his burning father.

He was trying to save him, shouting “my dad, my dad,” said a driver who had stopped to offer help with a small extinguisher.

“When I got close it was no longer possible. We shouted to him to get back to save himself if nothing else. His father burnt inside. We did whatever we could,” the driver said.

Yerolemos was rushed to Nicosia general hospital in critical condition.

He was placed on a ventilator and being treated for burns.

Eyewitness Makarios Christodoulou also tried to help.

I tried to do whatever I could to help but it was in vain. “I couldn’t do anything,” he told reporters.

The fire was put out by the fire service while experts later inspected the destroyed truck in search of the cause of the blaze.

Investigators at the scene of the accident yesterday (Christos Theodorides)

CYPRUS IS on track to get €3 billion by the end of June after the Board of Governors of the European Stability Mechanism (ESM) yesterday decided to show “solidarity” and grant, in principle, financial assistance to the troubled island. 

Following the Eurogroup’s decisions taken on March 25, 2013, Cyprus will receive assistance of up to €10 billion over the next three years. 

Repayment of the loan will begin in ten years time and have a maximum maturity of 20 years and an average of 15 years while the interest paid will be calculated based on the funding costs of the ESM, likely to be between 2 and 3 per cent. 

The ESM is expected to provide approximately €9 billion, subject to approval by its Board of Directors, and the International Monetary Fund (IMF) is to contribute around €1 billion, subject to approval by its Executive Board.

“By providing loans of up to €9 billion the euro area member states are showing solidarity with Cyprus,” Jeroen Dijsselbloem, Chairman of the ESM’s Board of Governors and Eurogroup President said. 

“The implementation of the conditions attached to the assistance should ensure that Cyprus can build its economy on a sustainable basis,” he said. 

Klaus Regling, the ESM’s Managing Director, said: “This is the first fully fledged macro-economic adjustment programme financed by the ESM.”

So far the ESM has financed the programme for financial sector reform in Spain to the tune of €41 billion. 

“Even after this second assistance programme the ESM will be able to fully play its role as the euro area’s effective firewall as it will still have about 90 per cent of its total lending capacity of €500 billion,” he added. 

The ESM was set up last October to preserve the financial stability of Europe’s single currency by providing direct financial assistance to euro area Member States in difficulty.

It was preceded by the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM).

The EFSF and EFSM continue to handle money disbursements and programme monitoring of previously approved bailout loans to Ireland, Portugal and Greece.  

Greece alone has secured around €200 billion in bailout funds so far from the two previous instruments. 

Cyprus is not only the first fully fledged macro-economic bailout financed by the ESM, it is also the first country forced to contribute to its rescue package with a “bail-in” of over €10 billion by uninsured depositors of the island’s two biggest banks. A further estimated €3 billion will come from privatisations, state gold sale and fiscal adjustments. 

Laiki Bank and Bank of Cyprus (BOC) were the worst hit by last year’s writedown of Greek sovereign debt, suffering €4.5 billion losses, equivalent to around 25 per cent of Cyprus’ GDP. 

The initial Eurogroup decision had foreseen a ‘bail-in’ of depositors in all banks in Cyprus, big and small. 

This was reversed after parliament rejected the proposal and the Eurogroup decided on March 25 to wind down Laiki and recapitalise BOC while lumping the latter with Laiki’s over €9 billion debt to the European Central Bank. 

While the ESM’s mandate includes providing loans to eurozone countries in financial difficulties or to finance the recapitalisations of banks, in Cyprus’ case, no portion of the €10 billion can be used to recapitalise the Bank of Cyprus or Laiki whose losses are considered too big to be covered by the EU.  

Instead, €3.4 billion of the funds will be used to cover Cyprus’ fiscal needs, €4.1 billion to redeem its medium and long-term debt, and €2.5 billion for the recapitalisation of banks apart from Bank of Cyprus and Laiki. 

Despite containing buffers for possible upward adjustments, the above figures regarding the state’s fiscal needs and banks’ recapitalisation needs are merely estimates. The true figures will depend to a large extent on how many depositors try to take their money out of Cypriot banks once capital controls are lifted and the impact of the crisis on state revenue and expenditure.  

The first disbursement of ESM financial assistance to Cyprus, around €2 billion, is expected in mid-May 2013, to pay maturing government debt while a further €1 billion will come before the end of June. Each tranche will be disbursed roughly every quarter after that. 

The ESM can tweak the size of each tranche disbursed based on the current needs of Cyprus at each stage and its adherence to pledged reforms. 

The country will be subject to quarterly reviews of its needs and implementation of an extensive programme of policy reforms including restoring the soundness of the Cypriot banking sector, continuing the process of fiscal consolidation, and implementing structural reforms to foster competitiveness and sustainable growth. 

Cyprus is expected to receive around half of the full bailout money within 2013. 

The aim is for Cyprus to return to international markets for loans after the three-year programme ends in 2016. 

It remains to be seen whether Cyprus will go cap in hand in three years time, seeking further bailout funds and whether the ESM will consider extending a hand. 

THE CENTRAL Bank (CBC) is trying to create conditions under which banks could reduce their interest rates on deposits, which could eventually lead to a cut in borrowing rates, the regulator said yesterday.

“The CBC recognises that under the current circumstances … there is an urgent need for a reduction in deposit rates, which in turn will lead to lower borrowing rates,” CBC spokeswoman Aliki Stylianou said.

The CBC has proposed that a lender would have to keep additional equity when its rate on deposits exceeds Euribor (Euro Interbank Offered Rate) plus 300 basis points.

Stylianou said banks pass the cost of high deposit rates onto borrowing rates with negative effects.

It causes an increase in non-performing loans, which then affects the lenders’ capital, Stylianou said.

The scheme will apply to deposits made or renewed from May 1 onwards.

Hellenic Bank struck a note of caution over the CBC’s proposal, which had been based on a similar scheme implemented in Portugal.

Marios Clerides, Hellenic’s director of risk management, said the two countries had different conditions.

“Portugal does not have restrictions on the export and import of capital,” Clerides said.

The executive, whose bank was downgraded by Fitch ratings agency because of the capital controls, said they must be lifted soon.

“We also feel they must be lifted because they hurt us as an organisation without being to blame,” Clerides said.

Fitch said it downgraded Hellenic’s long- and short-term Issuer Default Ratings (IDRs) to 'Restricted Default' from 'B' and removed them from Rating Watch Negative on prolongation of capital controls, which included deposit withdrawal restrictions set by the Cypriot banking regulator.

Clerides said a number of restrictions ought to be lifted to see how the system responded.

Depending on that, the remaining controls should be lifted as soon as possible, he added.

“What’s dangerous is to lift restrictions and then reinstate them. You need to do it right,” he said.

Capital controls had been imposed at the end of March following a chaotic bailout, which led to a lockdown of the banking system for 15 days.

They were put in place to prevent a flight of funds from a banking system flush with cash from Russian and European businesses, but also from many overseas Cypriots.