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Georgiades: cost of a non-solution in Cyprus cannot be ignored

Finance Minister Harris Georgiades at Sunday's DISY event

Finance Minister Harris Georgiades said on Sunday it was wrong to be concerned about only the potential cost of the Cyprus solution while ignoring the cost of a non-solution.

The minister in an interview with Simerini, Georgiades said he was not sure that the notion that a solution would bring more austerity and a new memorandum was the prevailing view.

“My perception is that there is appreciation and expectation that reunification will bring new opportunities, new investments and new jobs. And this is the view that I share,” he said.

“Second, I think it is wrong to be concerned about only the potential cost of the solution and ignoring the cost of non-solution. Unless we come to a very strange and perverse conclusion that the solution and the reunification of our country is not economically advantageous.”

Georgiades said that reunited Cyprus, free of Turkish occupation and with the implementation of the EU acquis across the whole island would be “a developmental leap”.

Apart from the opportunities at local level, there would be opportunities at a regional level, he said. Turkish Cypriots would benefit from EU membership and for Greek Cypriots the opening of the huge Turkish market would create new opportunities for tourism, shipping and business services.

“And everyone will of course benefit from stabilisation and security,” the minister added.

A prerequisite, would have to be a credible arrangement for the management of public finance, effective supervision of the banking system and a financial and administrative framework which is friendly and supportive to entrepreneurship and investment.

Asked about the cost of creating one federal government and two separate administrations complete with public services, Georgiades said: “Today there are two structures, two public administrations and two police departments. Those of the Republic are of course legitimate and internationally recognised and those of pseudo state operate outside legality but being but outlawed does not mean the public service and the police in the puppet regime does not mean that today there is not already an economic cost. The important thing is to have strict and clear rules for economic governance, which comply with European rules, both for [constituent] states and the federation.”

As far as unfair competition from the north was concerned, Georgiades said though there are casinos, hotels and universities in the north operating without any controls, he said that with reunification this would be resolved as they would have to comply with EU rules.

“This will bring economic opportunities,” he said. “Of course the solution first and foremost is important for national reasons, and reasons of security and the survival in our homeland. But I think there will be opportunities for all. it will certainly not be a zero-sum game,” said Georgiades.

Georgiades said discussions were ongoing with International Monetary Fund and the World Bank which are cooperating with technocrats in Cyprus to work out an economic solution.

“There is a very large volume of issues that need to be sorted out,” the minister said.

Later on Sunday, speaking at a DISY event on the lessons from the financial crises in Greece and Cyprus, Georgiades said although the economy was on the road to recovery the effects of the crisis were still being felt, But, he said the financial system had stabilised, Cyprus had returned to the markets and a second memorandum would not be needed.

The biggest lesson to be learned from the crisis, he added, was that procrastination and timidity in taking action were a recipe for disaster. “To hide the problem under the carpet or to push it aside is irresponsible,” he said.

Criticising the previous government’s policy, the finance minister referred to “reckless recruitment” in the public service and similar handling of social benefits, which had been been irresponsible. He also said banks should have managed people’s money more responsibly.

“Populism, denial and slogans lead nowhere,” he said. “What is needed is pragmatism, realism and bold decisions and we need to keep that in mind now that Cyprus must manage its second chance,” he added, referring to the island’s exit from the bailout.

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