Cyprus Mail
Business Cyprus

Local media in hot water with German embassy over ‘destroying Cyprus’ headlines

By Elias Hazou

THE GERMAN embassy in Nicosia has hit back at local media reports that Berlin was out to destroy Cyprus as a financial services centre via an agreement to bail-in depositors.
In a statement yesterday, the embassy said the reports – drawn from remarks made by former finance minister Michalis Sarris – were false.

Testifying before a panel last week, Sarris had said that certain quarters in the EU had wanted to destroy Cyprus as a financial centre.

On its website ticker, the Cyprus News Agency (CNA) had then quoted Sarris as saying the Germans were out to destroy Cyprus.

Sarris had in fact named neither Germany nor any other nation as seeking to destroy the island.

His exact quote was: “Some quarters had in mind the destruction of Cyprus as a financial centre.”

The CNA copy was reproduced by other media outlets. Some also adopted the sensational CNA headline, which read: “Sarris: ‘Germany wanted to destroy us’.” Yet in their articles, most of the outlets went on to quote Sarris accurately, in what amounted to a discrepancy between the headline and the text.

During the same testimony, Sarris did say that Germany had sought a drastic haircut on banking deposits, adding that “they [the Germans] wondered how such a small country, like Cyprus, with no industrial output, could have such prosperity,” he had said.

These and his earlier comments were in some cases spliced together, giving the impression that Sarris had explicitly accused the Germans of seeking the destruction of Cyprus, when he had not.

CNA had also hinted that Sarris fingered the Germans as seeking a levy on insured deposits during the March 15-16 meeting of the Eurogroup. But in his testimony, Sarris referred to Cyprus’ international lenders in general, without naming names.

In its statement, the German embassy also denied that its government had pushed for a haircut on small depositors as well. Rather, it said, “This was a clear desire of the President of the Republic of Cyprus in order to contain the burden on banking deposits exceeding €100,000.”

At the first Eurogroup in March, eurozone finance ministers hammered out an agreement for Cyprus to tax deposits above €100,000 at 9.9 per cent and those under €100,000 at 6.75 per cent, in order to recapitalise its two largest banks.

The deal, reached over a weekend of grinding talks, was later rejected by the parliament here. In a loaded comment, the German embassy hinted also that Cyprus ought not to blame outsiders for the state of its banking sector.

“The reasons for the situation of the Cypriot banks rest in Cyprus. The business strategy of the Cypriot banks was risky and unsustainable. Neither the eurozone nor Germany had imposed on Cyprus such a business strategy [for] the Cypriot banks,” the statement read.

The government here maintains that it was ambushed with the proposal to bail-in depositors, and that the idea of taxing small savers belonged to Cyprus’ EU partners.

Both these claims have become part of the official narrative.

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