Papadopoulos campaign appoints advisor who proposed ditching the euro (Update-3)

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(Adds Akel comment in fourteenth paragraph)

By Stelios Orphanides

The recruitment by presidential candidate Nicholas Papadopoulos of economist Stelios Platis, who six years ago parted ways with President Nicos Anastasiades and tabled the idea of leaving the euro in 2013, has exposed the Diko chairman to criticism from ruling Disy.

Platis, who on Thursday criticised the Anastasiades government over its handling of the fiscal and banking crisis in March 2013, the subsequent economic contraction, and the increase of unemployment, said that he felt insulted for being called a proponent of returning the the pound.

“These are lies,” he said in an interview with state radio CyBC on Friday, in reference to a statement issued by Disy the previous day criticising him for proposing looking for solutions that did not include the troika of international lenders four years ago.

“They suggest that I have taken a specific position by proposing Cyprus’ exit from the euro area which I have never proposed,” Platis said. “This is not a way to do politics”.

Cyprus adopted the euro in 2008 when Papadopoulos’s father Tassos Papadopoulos was president.

Disy said Platis had suggested leaving the euro and had rejected the first Eurogroup decision in March 2013, which provided for a special levy on deposits, 6.6 per cent on those below €100,000, and 9.9 per cent on those in excess of that amount.

As a result of the subsequent rejection of that proposal, Cyprus had to seek a bailout based on terms which included the winding down of Laiki Bank, resulting in the loss of uninsured deposits. Bank of Cyprus, which absorbed Laiki’s operations, was asked to convert almost half of uninsured deposits into equity.

According to several videos available on Youtube, Platis proposed seeking solutions “outside” the constraints of the troika of the International Monetary Fund (IMF), the European Commission and the European Central Bank which supervised and funded bailouts in the euro area.

In one video, dated April 2, 2013, Platis said in an interview to Mega TV that he proposed inter alia “practical analysis and preparation for our exit from the euro area”.

“It may not be our decision,” he said. “The decision for us to leave the euro area may not be ours; it may be taken by Germany, something we don’t know. The Eurogroup decisions refer to a possibility that they have decided the euro area would have to operate differently from now on.”

Days later, in a speech at the Thucydides Think Tank, the economist who had advised Anastasiades when he was leader of Disy, said there were pros and cons in “seeking solutions without the troika”.

In that case, the government could resort to financing from deposits by compensating depositors with bonds, he said, as after all, “in five years’ time, the euro may not even exist”.

In another case, he also suggested that “all the country’s available wealth,” should serve as collateral to guarantee deposits and described the first Eurogroup proposal as “equally disastrous” as an exit from the euro area.

Disy, who placed Platis on its ballot in the 2011 parliament elections, also accused him of representing Akel at “official meetings,” which back also openly favoured a return to the Cyprus pound.

Akel’s lawmaker Stefanos Stefanou denied this saying that Stavros Evagorou represented the communist party in those meetings.

Finance Minister Harris Georgiades dismissed the Limassol-based economist’s criticism of the government’s handling of the crisis, suggesting it was triggered by personal motives.

Georgiades, who was commenting in an emailed statement, said that Platis “no matter how hard he may try, he cannot undo the fact that responsible decisions, the decisive contribution of productive forces and the middle class. helped create again a prospect and hope”.

“No personal ambition should compromise this course of recovery,” Georgiades said. Appointed by Anastasiades in April 2013, Georgiades is credited with overseeing the consolidation of public finances and the restoration of market access.

A spokesperson for the Papadopoulos campaign said Platis never proposed ditching the euro and referred to Platis to elaborate on his positions four years ago.

“What I proposed was to practically prepare for the event they threw us out against our will,” Platis said on Friday. “Is this a proposal to leave the euro?”

On Thursday, Platis said that as a result of the “haircut” on deposits, the economy lost 9.8 per cent of its nominal output, roughly €1.9bn, adding that recent growth will not help recover lost ground.

Cystat date does not support this allegation. Cyprus’s economic output contracted 6.9 per cent in nominal terms in 2013 to €18.1bn and 6 per cent in real terms, which is the actual metric used to measure economic

He also criticised the current labour market situation suggesting that the recent drop in unemployment was the product of emigration, a claim partially supported by Cystat data.

While the number of Cypriot gainfully employed dropped by 5,204 in 2016 compared to 2012, the drop was steeper among foreign EU citizens and third country nationals whose number dropped by 8,797 and 8,166 respectively, mainly on a reduction in the number of housemaids and construction workers.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Philippos

    Oh Dear! Daddyopoulos must be turning in his grave, for it was he who rushed us into the EURO zone in 2008. “Behave Sonny, do as Daddy wanted, or you WILL get a smack”

  • Paranam Kid

    If Cyprus ditches the Euro it will sink to the bottom of the Med, and there will be nobody interested in diving to recover it.

  • Mist

    Setting the scene for Greek exit with tagalong Cyprus. Lions share of tourist business will be non EU anyway UK, Russia & Israel. Banking again Non EU, shipping likewise.

  • Disenchanted

    The government’s proposal to tax deposits was turned down by everyone in parliament who voted. DYSI itself abstained. How can they criticise Platis for taking the same stance as them?

    The government’s proposal to tax deposits was against the wishes of Eurogroup and the IMF because Europe is committed to protecting guaranteed deposits (those below 100000 euros). It also made no sense to tax depositors in healthy banks. The government of Anastasiades wanted to tax small savers even in healthy banks in order to protect Russian oligarchs who stashed their millions in the bank of Cyprus and Laiki. It’s no coincidence that when they were bailed in the top ten shareholders were all Russian oligarchs, many with political connections.

    Platis is wrong to think the bail-in could have been avoided. There were losses of around 6 billion euros that somehow had to be covered, the banks were too big to save.