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| Cyprus under creditor scrutiny as it begins EU presidency | Cyprus under creditor scrutiny as it begins EU presidency |
| (9 days later) | |
| Two days after formally assuming the EU's rotating presidency, Cyprus found its public expenses being trawled through on Tuesday as potential creditors from the European Union, European Central Bank and IMF began assessing the damage the island has sustained as a result of exposure to Greece. | Two days after formally assuming the EU's rotating presidency, Cyprus found its public expenses being trawled through on Tuesday as potential creditors from the European Union, European Central Bank and IMF began assessing the damage the island has sustained as a result of exposure to Greece. |
| Monitors representing the "troika" of creditors met officials from the Central Bank and finance ministry at the start of a three-day visit aimed at assessing how much the bloc's most easterly state may require to repair an economy whose banks have been hit by the crisis in Athens. | Monitors representing the "troika" of creditors met officials from the Central Bank and finance ministry at the start of a three-day visit aimed at assessing how much the bloc's most easterly state may require to repair an economy whose banks have been hit by the crisis in Athens. |
| Cyprus's request for emergency aid has cast a pall over its presidency of the union with some members remarking on the irony of a "bankrupt" country being put in charge of policy making at the height of Europe's debt crisis. Nicosia has spent an estimated €62m (£50m) preparing to host the six-month bonanza. | Cyprus's request for emergency aid has cast a pall over its presidency of the union with some members remarking on the irony of a "bankrupt" country being put in charge of policy making at the height of Europe's debt crisis. Nicosia has spent an estimated €62m (£50m) preparing to host the six-month bonanza. |
| Criticism was rebutted by Cypriot officials who said the island would use its stewardship to emphasise the need to promote "inclusive growth and job creation" as a way of building a "better Europe". | Criticism was rebutted by Cypriot officials who said the island would use its stewardship to emphasise the need to promote "inclusive growth and job creation" as a way of building a "better Europe". |
| In an interview with the Guardian, the minister of foreign affairs, Erato Kozakou-Marcoullis, said: "Right after Cyprus, Ireland which has been under the [rescue] mechanism for the past two years, will be taking over the presidency. I don't think [resorting to the rescue fund] has anything to do with the efficiency of a country to preside over European council meetings." | In an interview with the Guardian, the minister of foreign affairs, Erato Kozakou-Marcoullis, said: "Right after Cyprus, Ireland which has been under the [rescue] mechanism for the past two years, will be taking over the presidency. I don't think [resorting to the rescue fund] has anything to do with the efficiency of a country to preside over European council meetings." |
| The decision to seek the financial lifeline has caused ructions with the island's communist president, Demetris Christofias, adding to local embarrassment by insisting his government is considering seeking help outside the EU in the form of loans from Russia and China. | The decision to seek the financial lifeline has caused ructions with the island's communist president, Demetris Christofias, adding to local embarrassment by insisting his government is considering seeking help outside the EU in the form of loans from Russia and China. |
| Since the request was made last week, there has been speculation that as much as €10bn – more than half the size of Cyprus's €17.3bn economy – may be needed in emergency aid. In addition to rescue funds to help support local banks, which have suffered immense losses on restructured bonds and non-performing loans in Greece, there is a growing acceptance that Nicosia will require further aid to service a debt that has doubled in the past four years. | Since the request was made last week, there has been speculation that as much as €10bn – more than half the size of Cyprus's €17.3bn economy – may be needed in emergency aid. In addition to rescue funds to help support local banks, which have suffered immense losses on restructured bonds and non-performing loans in Greece, there is a growing acceptance that Nicosia will require further aid to service a debt that has doubled in the past four years. |
| The spotlight on state finances has revealed a public sector whose profligacy puts even Greece's in the shade, with the civil service accounting for 31% of the island's annual state expenditure. | The spotlight on state finances has revealed a public sector whose profligacy puts even Greece's in the shade, with the civil service accounting for 31% of the island's annual state expenditure. |
| As in Athens, public employees in Nicosia are well paid and enjoy extraordinary privileges ranging from allowances to generous pensions and use of free holiday homes. Perks have weighed heavily on an economy whose budget deficit reached 6.3% of gross domestic product last year, compared with the budget surplus of 3.5% recorded when Cyprus joined the single currency in 2008. | As in Athens, public employees in Nicosia are well paid and enjoy extraordinary privileges ranging from allowances to generous pensions and use of free holiday homes. Perks have weighed heavily on an economy whose budget deficit reached 6.3% of gross domestic product last year, compared with the budget surplus of 3.5% recorded when Cyprus joined the single currency in 2008. |
| With international support have come fears the island could be subject to the sort of tough austerity meted out to Greece. | With international support have come fears the island could be subject to the sort of tough austerity meted out to Greece. |
| Highlighting local angst, the Cypriot media has portrayed Delia Velculescu, who will head the IMF mission to the island, as an "iron lady" with a reputation for being "very tough" in terms of fiscal consolidation and the demands she makes on bailed out countries. | Highlighting local angst, the Cypriot media has portrayed Delia Velculescu, who will head the IMF mission to the island, as an "iron lady" with a reputation for being "very tough" in terms of fiscal consolidation and the demands she makes on bailed out countries. |
| "We are waiting to see what changes they will ask for," said Glafkos Hadjipetrou who heads Pasydy, the powerful union of civil servants. "All of our rights and benefits are the result of years of social dialogue. They cannot just be wiped away." | "We are waiting to see what changes they will ask for," said Glafkos Hadjipetrou who heads Pasydy, the powerful union of civil servants. "All of our rights and benefits are the result of years of social dialogue. They cannot just be wiped away." |
| Cypriot unionists watched the impact of belt-tightening measures in Greece with horror. Officials pledged to present "alarming" data on the toll austerity measures have had when the Greek prime minister, Antonis Samaras, meets visiting troika officials on Thursday. | Cypriot unionists watched the impact of belt-tightening measures in Greece with horror. Officials pledged to present "alarming" data on the toll austerity measures have had when the Greek prime minister, Antonis Samaras, meets visiting troika officials on Thursday. |
| "We will present information that is astounding. It is alarming in terms of the recession and unemployment, and it shows beyond any doubt that the current policy does not bring results. It brings the opposite results," said the government spokesman Simos Kedikoglou. | "We will present information that is astounding. It is alarming in terms of the recession and unemployment, and it shows beyond any doubt that the current policy does not bring results. It brings the opposite results," said the government spokesman Simos Kedikoglou. |
| Addressing a business conference in Athens, Greek politicians including the socialist leader Evangelos Venizelos – one of three party heads supporting the two-week old coalition government – reiterated the urgent need to renegotiate the EU-IMF sponsored loan deal propping up the crisis-hit economy. | Addressing a business conference in Athens, Greek politicians including the socialist leader Evangelos Venizelos – one of three party heads supporting the two-week old coalition government – reiterated the urgent need to renegotiate the EU-IMF sponsored loan deal propping up the crisis-hit economy. |
| In their current form the measures being asked of Greece in return for financial assistance were "hopelessly counter-productive", they insisted. | In their current form the measures being asked of Greece in return for financial assistance were "hopelessly counter-productive", they insisted. |
| Far from improving Athens' economic indicators, the pursuit of "growth through austerity" had exacerbated the woeful state of public finances with the country's economy expected to contract a further 6.7% by the end of 2012, worsening a recession that had held for an unprecedented five straight years. | Far from improving Athens' economic indicators, the pursuit of "growth through austerity" had exacerbated the woeful state of public finances with the country's economy expected to contract a further 6.7% by the end of 2012, worsening a recession that had held for an unprecedented five straight years. |
| "The economy is in turmoil and the situation has reached an untenable point" said the deputy finance minister, Christos Staikouras. | "The economy is in turmoil and the situation has reached an untenable point" said the deputy finance minister, Christos Staikouras. |
| He told the conference: "Our goal is to achieve the fiscal targets, along with growth. The climate [in Europe] is becoming more favourable for changes so long as we are consistent in implementing goals of the programme." | He told the conference: "Our goal is to achieve the fiscal targets, along with growth. The climate [in Europe] is becoming more favourable for changes so long as we are consistent in implementing goals of the programme." |
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