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03 October 2012

Reuters: Cypriot president rejects bailout with privatisations

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Cyprus will not accept a bailout from international lenders if it involves privatisations and social welfare cuts, President Demetris Christofias said, with the indebted government that holds the rotating EU presidency set to propose alternative savings.

Christofias said he would never sign a bailout deal which called for the sell-off of profitable state-owned enterprises, or which would abolish inflation-linked salary increments. It was the first time Christofias explicitly ruled out lending proposals as they presently stand, though officials have frequently said they considered the proposals non-binding and "building blocks" towards a deal.

A draft economic adjustment programme prepared by the European Commission, the European Central Bank and the International Monetary Fund and submitted to Cyprus in July called, among other things, for ending wage indexation and embarking on a privatisation programme.

Cypriot officials have frequently been critical of the bailout conditions imposed on Greece, and the island's ruling communist party has said an exit from the eurozone could even be considered if their terms were too harsh. "This neo-liberal method of dealing with the crisis is bankrupt," Christofias said, referring to Greece. "It’s a vicious cycle, a Sisyphean task."

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© Reuters

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