NICOSIA, Cyprus (AP) — Officials responsible for the near-collapse of Cyprus' banks that pushed the island to seek an international bailout must face justice, the country's president said Tuesday.
Dimitris Christofias said that Cyprus wouldn't have needed to resort to a bailout from the "troika" of the European Commission, the European Central Bank and the International Monetary Fund if lenders hadn't lost billions on bad Greek debt and loans and Central Bank oversight at the time those decisions were being made wasn't so poor.
"It is my position that the investigations conducted regarding the banking system should be vigorously pursued to the end and based on their results, blame should be apportioned and the culprits punished," Christofias said in a televised address. "The Government and I personally will do everything in our power to see that truth and justice will prevail."
Christofias said that stricter supervision and tighter control of banks is essential to prevent a repeat of what many see as "criminal mistakes and abuses." He said the banking crisis brought to the surface "structural weaknesses and distortions" to the Cypriot economy accumulated over many decades that wouldn't have been enough on their own to force the government to seek out international aid.
He said proof of this is the fact that as much as €10 billion ($13 billion) will be needed to shore up banks while only a fraction of that is required to cover budget deficits over the bailout deal's four-year implementation period.
Cyprus has struck a preliminary bailout accord with the troika that Jean-Claude Juncker, the head of the finance ministers from the 17 euro countries, said will either be formally approved either on Dec. 13 or Jan. 21 when the group is next scheduled to meet.
Still needed to formalize the accord is the exact amount of cash that Cypriot banks will need to replenish their depleted capital reserves. Cypriot officials say a preliminary figure will be known on Dec. 7. The formal sum is expected by mid-January.
Christofias said his government "tried our utmost" to avoid tapping the EU bailout fund in light of the "painful experiences" of other countries that sought similar help. He said attempts to find alternative sources of funding failed.
Unable to borrow from international markets because of its junk credit rating, Cyprus tried and failed to secure an additional €5 billion ($6.55 billion) loan from Russia, after getting a €2.5 billion ($3.27 billion) one last year.
Christofias said once the decision to seek EU bailout money was made, the government pursued "assertive" negotiating tactics lasting over four months that succeeded in safeguarding the government's say over how to spend future revenues from new-found offshore natural gas reserves, preventing selling off profitable state-owned firms and avoiding scrapping inflation-indexed pay raises and a bonus, year-end salary.
He urged people to pull together to overcome difficult years ahead amid steep pay cuts and tax increases, likening the period to the aftermath of the war in 1974 when Turkey invaded after coup by supporters of union with Greece and split the country along ethnic lines.
"Then in only a few years we rebuilt our country and restored our economy...We can now, soon, bring into effect another economic miracle," said Christofias.