Korneliou admitted that his country, a eurozone member, had problems with its banking sector. But he appeared to put Cyprus in a bracket with Spain, which has not yet applied for EU help.
Asked if his country was going to ask for a bailout, he said: “Yes, this is a possibility, but we should wait and see what happens in Spain. In the case of Cyprus, we face also a lot of problems in the banking sector because of their exposure to the Greek market. And we need to see whether we are able to recapitalise our banks. If not, bailout would be a possibility. But we are not there yet. We have to wait a couple of days.”
He said he hoped that any bailout would not affect Nicosia's handling of the EU presidency, "because this is something that is not related, but of course we will have to see what happens on the 1st of July”.
Christos Christofides, deputy government spokesman, was quoted in the Cypriot media saying there was "a serious possibility" that Cyprus would have to use the European Stability Mechanism (ESM) to support the Cyprus banking system.
The Cypriot Ambassador to the EU was also asked about the situation in Greece, which holds crucial elections on 17 June that may derail the EU/IMF bailout package. The bottom line, he replied, was that Greece will stay in the eurozone and in the European Union.
“What will happen in Greece will affect all of us. And we want Greece to be part of this group and I think they can make it,” Korneliou said.
On the Cyprus Presidency programme, the diplomat indicated that the country would have a limited number of priorities, that will be officially revealed in a few days. This is the first time Cyprus has steered the EU, since joining the Union in 2004.
The Ambassador said that under the current difficult economic circumstance, the Cyprus Presidency would not push for “more Europe” or “less Europe”, but a “better Europe” that is “more relevant to its citizens and the world".
Cyprus wants to keep its priority agenda modest, EurActiv understands. While the long-term EU budget for 2014-2020 tops the priority list, Nicosia understands that such a major issue will be handled primarily by European Council President Herman Van Rompuy.
In principle, an agreement on the next long-term budget is desirable before the end of the year, but there is no official target date.
“We should ensure that [EU] money will be put where it is needed and where there is added value,” the diplomat said.
Cyprus is also keen to deliver on the EU common asylum policy, which the Commission hopes to turn the page on, before 2013. Nicosia sees itself affected by migration flows. But the ambassador conceded that the economic crisis was not helping member states to solve difficulties, such as burden-sharing with asylum-seekers.
The re-launch of Commission plans for an Integrated EU maritime policy is another clear priority for Cyprus. As Nicosia sees it, a coherent approach could help, for example, off-shore wind farms to co-exist with shipping, which in turn could affect ports. A high-level conference on maritime policy is planned in Cyprus in October, with the participation of Commission President José Manuel Barroso, a big supporter of the project.
Opening to Turkey: It takes two to tango
The Ambassador also had the EU's neighbourhood policy and enlargement in his sights.
He warned of an “Arab winter” if the EU failed to follow-up on the Arab Spring and, surprisingly, mentioned Turkey’s accession process, despite conflicting views with Ankara on the Cyprus issue, which have stalled talks.
“Enlargement has been a very successful transformative tool," the Ambassador said. "I think there is a momentum there. We need to maintain that momentum and we should not allow the economic crisis to stop us from using this transformative tool in bringing closer the countries of the Western Balkans, Iceland, but also Turkey”.
The EU's enlargement negotiation process with Turkey will be a hot potato for Cyrpus as Ankara has warned it could freeze relations with the Cyprus Presidency or even with the EU, over the unsolved problem of the islands’ reunification (see background).
Even so, the ambassador seemed confident about his country's chances of advancing talks with Turkey. Korneliou responded to a question from EurActiv, by saying that during its presidency, the Republic of Cyprus would not promote its national positions and behave as a “honest broker”.
“What I said, I mean it. If Turkey delivers, we are going to deliver," the diplomat emphasised. "The bilateral issue we have with Turkey will not be part of our presidency. Turkey doesn't want anything to do with the Cyprus Presidency. Turkey decided this policy. It’s very unfortunate."
He continued: “We should not forget that geography does not change. A more European Turkey will be in the interest not only of Cyprus, it will be in the interest of the European Union, it will be in the interest of Turkey. But we should play by the rules of the game. Big members such as Germany play by the rule of the game. Turkey should do the same”.
Asked about Turkey's efforts to obtain visa-free travel for its nationals in the borderless Schengen space, the Ambassador indicated that this country had first to take appropriate steps to improve its bid. Reportedly, Turkey has opened its borders to several countries with which the EU has a visa regime. As a result, Greece is flooded with illegal immigrants from third countries, arriving from Turkey.
"It takes two to tango," he said.