Cyprus Mail
Cyprus

Government passes foreclosures’ buck on to AG

President Anastasiades has sent six bills to the attorney-general for review

By Angelos Anastasiou

IN THE wake of Saturday’s House plenary session that voted the controversial foreclosures bill into law, but along with several complementary bills watering down its effectiveness, Monday saw the government scrambling to study the bills and deciding to refer the contentious ones to the attorney general.

On Sunday, a conciliatory President Nicos Anastasiades thanked the parliamentary parties for the “responsible stance” they adopted in passing the foreclosures bill, and announced he would be launching a “campaign of intensive talks with key European leaders” in order to obtain their views before deciding whether to veto the bills introduced and passed by opposition parties. The bills restrict the sweeping powers granted to lenders with regard to their ability to foreclose properties used as collateral in non-performing loans.

As of late on Monday, the European Commission would neither confirm nor deny that Anastasiades had been in contact with its president, Jose Barroso.

But such contacts may allude to insufficient negotiation with the Troika in the run-up to the House vote, which Finance Minister Harris Georgiades had conducted and ostensibly exhausted, culminating in a letter from the

Troika presented to deputies two days before the vote, containing a list of proposals given the nod and others deemed unacceptable.

Unnamed sources cited by the Cyprus News Agency said that, after the House session on Saturday, Troika officials were most sceptical about three bills passed in order to countenance the foreclosures law’s philosophy.

The first allows distressed borrowers with non-performing housing loans up to €350,000 to apply for court-ordered protection against foreclosure, while the second stipulates that foreclosing properties would relieve borrowers of any further obligation, even if the property’s auctioned value does not cover the outstanding loan.

The third law mandates the extension of the defaulting period allowed before foreclosing properties from 90 to 120 days.

Given that passing the foreclosures legislation was deemed by the Troika a “prior action” to releasing the next tranche of financial aid to Cyprus, it is understood that if these provisions stand, the Troika may consider the foreclosures law inadequately effectual and decide against releasing the money.

Despite calls from opposition parties to refrain from vetoing bills that “protect vulnerable borrowers”, the government appears to have been left with no good options, since even a presidential veto would engage the supreme court, which would then be called on to break the impasse.

Thus, it remains to be seen whether the prospect of a supreme court future ruling upholding the laws could be enough to derail Cyprus’ impeccable record of positive reviews with regard to its economic adjustment programme.

That is, unless a prior arrangement can be agreed with Cyprus’ international lenders. The same sources cited by the Cyprus News Agency have expressed the view that the Troika may decide to approve the tranche of financial aid to Cyprus but demand that the laws found to be in contradiction of the foreclosures framework’s philosophy be revoked by Cyprus’ next quarterly progress review.

This would allow the government some valuable breathing space, but would also place it at the mercy of opposition in parliament, which at present shows no will to cooperate on the contentious legislation.

“What we ask of the government now is to respect the majority’s decisions,” said opposition AKEL’s leader Andros Kyprianou. “I want to make clear that, should the president veto, a political crisis will emerge. We will not remain idle. We will seek and find ways of protecting the public.”

On Monday, Anastasiades called a meeting at the presidential palace with Finance Minister Harris Georgiades, government spokesman Nikos Christodoulides, Attorney-general Costas Clerides and his deputy, Rikkos Erotokritou, in order to study the content of the laws.

After the meeting, it emerged that the government would be attempting to dodge having to veto popular bills that protect borrowers’ rights by dropping the hot potato in the AG’s lap for a constitutionality review.

“During the meeting it was decided that the majority of bills and proposals, eight in all and including the basic foreclosures bill, will be signed into law by the president,” Christodoulides said. “The remaining six bills voted by the parliament will be submitted to the legal services to examine their compatibility with the constitution of Cyprus and the EU’s acquis communautaire.”

“Before coming to any final decisions with regard to the six bills, the president will await the Troika’s position,” he added.

A Eurogroup session on Friday is scheduled to decide on the release of a €350 million tranche of financial aid from the EU, while the International Monetary Fund’s contribution – a further €86 million – will be decided on September 26.

But the working group that is tasked with advising the Eurogroup on the progress of Cyprus’ adjustment programme has not yet received the formal text of the foreclosures legislation as voted by the Cypriot parliament, a senior Eurozone official told the Cyprus News Agency.

Asked whether Friday’s Eurogroup session in Milan will approve the release of the aid money, the official linked any decision to the law’s provisions.

“If we don’t have the law, there can’t be a decision,” he said, noting that the draft laws have not been received yet. “However, if we receive the information today [Monday] or tomorrow [Tuesday] and we judge that the terms of the agreement are adhered to, then the working group will advise the ministers to release the tranche.”

This was corroborated late on Monday by a European Commission spokesperson, who told the Cyprus Mail that the commission “will only be able to make an assessment of the legislation adopted concerning foreclosures once [it has] received all the final legal texts.”

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