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Our View: Who’s telling the truth when it comes to bail-in idea

Olli Rehn

BY COINCIDENCE yesterday, as President Nicos Anastasiades was testifying about the deposit haircut before the panel of inquiry on the economy in its last session, a statement was published attributed to EU Commissioner for Economic and Monetary Affairs Olli Rehn on the same topic.

The accounts were wildly different of course as this issue goes back to the all-night Eurogroup session on the night of March 15 and early hours of March 16.

Nearly six months later, both sides are sticking to their stories that the other was the one responsible for coming up with the idea for the biggest bank robbery in history. Who do we believe?

Yesterday, in response to question from a Cypriot MEP, Rehn stated that the bail-in of uninsured deposits was “a unilateral commitment of the Cypriot authorities”.

This is a story EU leaders have stuck to since the word was out on March 16 that both insured and uninsured depositors would be hit, which caused a bank run in Cyprus and huge concerns across the rest of the world that a precedent was being set.

Meanwhile, over at the inquiry panel yesterday, as well as being inanely asked whether he had explained to the Europeans that Cyprus was a semi-occupied country, Anastasiades was also questioned about the haircut.

He also stuck to his story that it was all the idea of the Eurogroup and that no matter what other options Cyprus put on the table at the time, they had been rejected

“The truth is that anything proposed was done on the initiative of the Eurogroup directorate and adopted by the majority of the members,” Anastasiades said.

Even if the Cypriot government had suggested the haircut of insured deposits, “since they claimed it was illegal, why did they accept it?” he added.

The proposal was eventually rejected by parliament here so the only remaining move was to hit uninsured depositors harder.

Despite the repeated protestations coming out of Brussels in the ensuing days after March 16 that it was Cyprus’ idea to bail-in all depositors, and that the Eurogroup was opposed to a haircut on insured deposits, logic dictates that this is untrue.

At the time Cyprus had no negotiating power, or to bottom line it: beggars can’t be choosers. If it was illegal, as Brussels says, to tap insured depositors, why did they let Anastasiades walk out the door with that proposal in his pocket?

Ultimately Cyprus may have arrived at the sorry state it is in through its own fault over the long term, but EU officials are just as untrustworthy. They wanted a bail-in precedent and Cyprus was the opportunity despite statements to the contrary by Olli Rehn. So to answer the question who do we believe?

In this instance, Anastasiades.

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