Bail-in and stance on Turkey fuel euroscepticism in Cyprus


The bank deposits haircut and the EU’s ambiguous position on Turkey are to blame for the growing euroscepticism in Cyprus, according to Greek Cypriot MEPs who spoke to EURACTIV Greece in Nicosia.

A few months before the EU elections in May 2014, Cyprus is struggling to recover from the economic crisis with ECB policymaker Ewald Nowotny predicting growth in most eurozone countries in 2014, excluding for Cyprus.

Meanwhile, some officials raise doubts about the ability of the Youth Guarantee to combat the growing youth unemployment on the island. 

On 25 March, Cyprus clinched a last-ditch deal with international lenders to shut down its second largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians, in return for a €10-billion bailout.

Even though deposits up to €100,000 were finally protected, the Eurogroup’s  decisions have demolished the banking sector causing heavy losses in the economic activities of the Mediterranean island.

Bail-in shocked Cypriot society

Cypriot centre-left MEP Antigoni Papadopoulou told EURACTIV Greece that the Cypriots had not yet overcome the 'shock' of the bank deposits’ haircut. "They consider the Eurogroup’s decisions in March 2013 unjust,” she said.

Papadopoulou added that other countries faced a debt haircut, but in the case of Cyprus the unprecedented deposit haircut was "equivalent to theft of money, hitting breadwinners and not necessarily Russian oligarchs, as it was presented by a malicious propaganda in Europe”.

“The blow on our banking system was bad and weakened Cyprus as a financial centre,” she continued.

“I regret to see the increase of euroscepticism in our country," she explained, mentioning the results of a recent Eurobarometer, which showed a sharp increase (69%) of the citizens who believe that their country did not benefit from EU membership.

She added that there needed to be a number of awareness campaigns to push people to go to the ballot box at the May EU elections, as the turnout is expected to be extremely low due to a general contempt for politics and politicians.

Centre-right Cypriot MEP Eleni Theocharou shares the same standpoint.  

“Bank deposits’ haircut dramatically increased the percentage of people who turn against the EU”, Theocharous told EURACTIV Greece, adding that the decision came as a result of the poor governance of the previous president, Dimitris Christofias, as well as the greed of some bankers.

She added though that another reason was the weaknesses of the eurozone, which had a single market and currency without the necessary crisis management mechanisms.

“Thus it is logical, when a citizen who is not involved in the catastrophe […] and is asked to foot the bill, to feel disappointed and lose his trust towards a Europe which lacks solidarity and vision," she noted.

Nicosia angered with EU on Turkey’s accession

MEP Papadopoulou added that the disappointment of the Cypriot people was also visible in the unresolved problem with its occupied territory by Turkey and the European stance toward the issue.

On 5 November, Turkey and the European Union began a new round of membership talks, months after EU member states delayed them in protest over a Turkish crackdown on anti-government demonstrations.

>> Turkey, EU revive membership talks after three-year freeze

“Unfortunately, despite its intransigent attitude and continuous provocative statements against the Republic of Cyprus, Turkey continues the accession process undisturbed”, she said, referring to the recent statement by Turkish PM Recep Tayyip Erdogan that there was no country named Cyprus but rather a "local administration of south Cyprus".

Theocharous said that under the upcoming Greek presidency of the EU Council, Turkey should not be able to take any further steps towards EU integration without having formally recognised the Republic of Cyprus.

Youth Guarantee: A 'charity for youth'

Youth unemployment in Cyprus is currently the fastest growing in the EU, reaching 43%. The active labor force of young people on the island is almost 40,000, out of which 18,000 are jobless.

The Youth Guarantee, which aims to combat youth unemployment in the EU and is due to come into force on 1 January 2014, will cover only a limited number of young people, according to Andreas Christou, a high official in the Ministry of Labour and responsible for the initiative in Cyprus.

Christou, speaking at a conference about youth unemployment organised by the Cyprus Youth Council, said that the Ministry of Labour had held consultations on the implementation of the Youth Guarantee with various social partners including NGOs and youth organisations, as the member states needed to submit to the European Commission their national action plans for its implementation by the end of the year.

Despite the small size of its economy, Cyprus has reservations regarding the actual effectiveness of the initiative.

“Cyprus was the first country that raised reservations regarding the Youth Guarantee. We were concerned that the Youth Guarantee was not associated with the creation of new jobs. We still are. We are afraid that it will end up being a charity programme for the youth.

“You can train a young person to do a particular job, you can subsidy his employment but eventually if the economy is unable to produce new jobs, what we will actually do is to recycle the unemployment”, he said.

He continued saying that one of the priorities of Youth Guarantee recommendation was entrepreneurship as a means of creating new jobs.

“But there is a fallacy,” he said.

“If you push a 25-year old person to establish a business I am not sure if he will be willing to do it in these difficult times. First of all, he doesn’t have the experience and even if he had it, we are asking him to start a business in an economic climate which is difficult even for the most experienced," he said. 

“In Cyprus we cannot talk about traditional Euroscepticism as we know in other countries, like UK. In Cyprus, the public has a feeling of disappointment due to the lack of solidarity from the EU partners ... Another issue is the problem with the occupied territory which seems to emerge again and tends to overshadow the upcoming EU elections”, Charilaos Bouzouras, press officer of European Commission Representation in Cypruiv told EURACTIV Greece.

“Nevertheless, the political class of Cyprus neither shows signals of serious doubt against the European project nor raises the issue of the exit from the EU. On the contrary, it seeks solutions within it”, he said.

Cyprus, which joined the EU in 2004 and became a eurozone member in 2008, held the EU presidency in the second half of 2012.

The entire island of Cyprus is officially EU territory, but the country is divided. Turkey, an EU candidate, does not recognise the Republic of Cyprus and has occupied the northern part of the island since 1974.

  • 1 January: Greek Presidency of the EU begins
  • May 2014: European elections

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