Cyprus Mail
Cyprus

Opposition seeks new deal on MoU

DIKO leader Nicolas Papadopoulos believes that certain of the provisions of the MoU are problematic and must be changed

By Elias Hazou

THE HOUSE finance committee decided on Monday to table for discussion the possibility of renegotiating the memorandum of understanding (MoU) between Cyprus and its international lenders.

Backing the proposal at a closed-doors session of the committee were AKEL, DIKO, EDEK, the European Party and the Greens. Ruling DISY and the Citizens Alliance did not support the proposal.

The majority of the opposition parties want to summon the finance minister and government officials before the committee to assess progress so far in implementing the MoU, but also to discuss “the need to take stock of, and renegotiate, the memorandum and the loan agreement of the Republic of Cyprus”.

“For 19 months now, we are implementing the memorandum and it has been demonstrated that certain of its provisions are problematic and must be changed,” DIKO leader Nicholas Papadopoulos told reporters after the committee meeting.

“During this time the government has renegotiated and revised the memorandum with regard to basic aspects, such as the National Health Scheme, local administration reform and the banking sector. These changes have been for the worse,” Papadopoulos said.

Amid the depression, unemployment continues to rise and small businesses are closing one after another, he added.

For his part, AKEL’s Yiannos Lamaris accused the government of “outdoing” the troika when it came to austerity policies.

“This is a policy that leads to no economic growth in a time of austerity, it is a dead-end, disastrous policy,” he said.

The administration is being criticised for failing to forcefully negotiate with international creditors, even kowtowing to the troika’s demands. In particular, the government has taken a great deal of flak over bank foreclosures as well as the pending privatisation of state-controlled enterprises.

In turn government officials – and despite poor economic data – have been suggesting that Cyprus may be able to exit the memorandum sooner than scheduled.

Lamaris said the parties’ aim is to exercise checks and balances on the government, rather than supplant the administration as the troika’s interlocutor.

“And – why not – we intend to force the government to do what it has failed to do thus far, namely, to negotiate in the country’s best interest, even at this late hour,” he added.
Some of these same parties – such as DIKO – had back in March 2013 voted in favour of the €10bn loan agreement, a condition of which was the winding down of Laiki Bank and a ‘bail-in’ of depositors at Bank of Cyprus.

Strictly speaking, in March last year the House ratified the loan agreement, but not the MoU per se, which is an agreement subsequently struck between the government and the troika of lenders. The two however are inextricably linked.

That vote had passed with the slimmest of margins (29 to 27), with DISY, DIKO and European Party leader and MP Demetris Syllouris voting for it; AKEL, EDEK, the Greens, independent MP Zacharias Koulias and European Party MP Nicos Koutsou were against.

Sources close to DISY told the Mail that although certain modifications to the MoU are possible, drastic revisions are out of the question.
“It’s just a show they’re putting on,” the sources commented.

The troika itself has recently demonstrated the consequences of straying from the terms of the memorandum, by withholding the next tranche of the bailout after parliament passed a slew of foreclosures-related bills that seemed to contradict the essence of the MoU.

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