Business, Economics and Jobs

Cyprus says crisis averted


Anastasiades: Cyprus forced to become an "experiment."


Georges Gobet

BRUSSELS, Belgium — Cypriot President Nicos Anastasiades has said that despite its problems, his country has contained its debt crisis and averted the risk of a euro zone exit.

"The situation, despite the tragedy of it all, is contained," he told government officials. "We have no intention of leaving the euro."

However, he criticized other euro zone members for imposing strict bailout demands that put his country's future at risk by making "unprecedented demands that forced Cyprus to become an experiment."

Cyprus needs to raise $7.4 billion by itself to qualify for the $12.8 billion bailout.

Fears that the re-opening of Cypriot banks would lead to panic withdrawals and chaos were proved unfounded. Although there were long lines when banks opened Thursday for the first time in almost two weeks, there was no stampede.

By Friday, there was a semblance of normality as the banks returned to regular hours with fewer queues. In reality however, the situation remains far from normal. Strict restrictions remain in place, limiting withdrawals to 300 euros ($385), prohibiting the cashing of checks and preventing most transfers outside the country.
Depositors with more than 100,000 euros will see some of their savings exchanged for bank shares.

Cyprus has become the first euro zone country to enact capital controls to prevent a bank run that would cause credit institutions to collapse.

Having initially said the restrictions would remain in place for a week, the government now says they will be lifted over the course of next month. Few believe they will go so quickly.

Another island at the other end of Europe introduced similar "temporary" currency controls when it was it swamped by the financial crisis in 2008. Five years on, Iceland still has the restrictions, and there's little sign they'll be lifted soon.

More from GlobalPost: Cyprus: Another fine mess

In media and from Cypriots online, there was pride at the dignified manner citizens had responded to the crisis despite deep anger against both domestic politicians and bankers, and leaders of other EU countries.

“Those who waited in line did so with dignity, calm, patience, self-confidence and hope," said an editorial in the daily Politis. "Yesterday, the people queueing showed strength, kindness, and confidence. Cyprus is a beautiful island with a true people, who have never had a leadership that genuinely represents them and really fights for them."