Greece Offers Support To Cyprus After Bailout Rejection

Greek citizens and politicians on Wednesday praised the Cypriot parliament for standing up to its foreign lenders’ demands, with the government also set to lead a takeover of local units of Cypriot banks in order to shield the Greek economy from any repercussions, reported the Greek Reporter.

Greek citizens and politicians on Wednesday praised the Cypriot parliament for standing up to its foreign lenders’ demands, with the government also set to lead a takeover of local units of Cypriot banks in order to shield the Greek economy from any repercussions, reported the Greek Reporter.

Speaking to Reuters yesterday, after Cypriot MPs had resoundingly voted against the EU-IMF bailout deal (36-0), a senior Greek government official said that the Greek government was ready to conclude the transfer of Cypriot bank operations in the country to Greek banks in a few hours – after at least two of the country’s biggest lenders showed interest.

Government spokesman Simos Kedikoglou added that “Greece has supported and firmly supports Cyprus’s decisions,” while Finance Minister Yannis Stournaras said: “Greece is fully shielded. But Cyprus is not going to default.”

“Cypriot banks cannot remain closed for a long time; otherwise the Cypriot economy will be destroyed. A solution needs to be clinched within the next few hours, otherwise Greece will do what it must do,” Stournaras stressed, according to Xinhua.

[quote]”In case Cyprus will not present an alternative plan so that Cypriot banks will open again, Greece has a Plan B to minimize the impact. We are taking measures,” he added.[/quote]

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The three Cypriot banks with operations in Greece – Bank of Cyprus, Cyprus Popular Bank (CPB) and Hellenic Bank – have close to a 10 percent share of the local banking market based on loans and about 8 per cent of deposits. According to the Cyprus Mail, Greece’s Alpha Bank and Piraeus Bank were ready to take over their operations, particularly that of the Bank of Cyprus, which has a network of 181 branches in Greece.

“Overall, the situation is calm. We have had phone calls from clients of Cypriot banks asking us what interest rate we can offer if they move their money to our bank. But I don’t see any trend developing of withdrawals from Greek banks,” said the treasurer of a Greek bank.

Meanwhile, regular Greeks also rallied to Cyprus’s cause, urging their local politicians to replicate the island’s firmness in rejecting austerity measures.

“See what Cyprus did? We are proud of them,” said Fey Papadopoulou, 22, a university student, to Reuters. “They should be an example for our politicians, who have succumbed to every demand.”

[quote]”The Cypriots set an example to follow,” wrote left-leaning Eleftherotypia said in its leading editorial. “How can the Cypriots say ‘no’ and we can’t even reject a single property tax?”[/quote]

Nonetheless, it remains to be seen whether Greek Prime Minister Antonis Samaras can follow Cyprus’s example in future round of negotiations with the Troika of the EU, IMF and ECB. The Cyprus vote was the first time a European country has not bowed to the Troika’s wishes, while the Troika will return to Athens in early April to discuss the next instalment of Greece’s bailout allowance: a 2.8 billion euro ($3.6 billion) tranche due next month.

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According to the New York Times, talks had stalled in early March over public sector layoffs, which the Troika are demanding. Although Greece’s coalition government has pledged to make 25,000 civil service job cuts by 2014, it wishes to avoid compulsory redundancies; and has grown increasingly wary of harsher austerity measures.

[quote]”Cyprus said ‘No’ on our behalf too,” said Odysseas Panagiotou, a 45-year old Greek clerk. “It’s about time that our traitors – politicians – say a big ‘No’ to the troika demands.”[/quote]