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Michael Sarris: 'Abandoned' by Europe

The former Cypriot finance minister claims the IMF and EU bullied him into accepting an unprecedented bailout proposal.

Last Modified: 29 Jul 2013 13:44
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Four months after Cyprus was bailed out by the European Union (EU) the country is back in the news. 

International lenders are now reviewing how the island is meeting the conditions of its $13bn bailout. The deal was struck with international lenders last March to pull Cyprus away from the brink of financial meltdown, but in return the nation had to wind down an insolvent bank and impose losses on big deposits in a second bank.

You feel violated, you feel a terrible injustice being done to you, you feel abandoned by your partners with none of the European ministers speaking up. But then you say I swallow that very bitter feeling, I go home, I take a deal that is not good but it's much better than the alternative that could have unravelled.

Michael Sarris, former finance minister of Cyprus

The government hopes to get a good report card and thereby receive even more money in September.

Finance Minister Harris Georgiades has expressed optimism that international creditors will give his country a positive evaluation. He says Cyprus is trying to restore its banking sector to health.

However, according to Cyprus' President Nicos Anastasiades, the rescue is not working. In fact, he said, the agreement has ended up hurting more than expected. So much so that the country is entering a new crisis.

In return for $13bn from the troika - European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) - bank customers had to give up a portion of their money. It had never been done before and was called a 'bail in'.

On the night the agreement was clinched in March, Michael Sarris, the then finance minister, tried to put on a happy face:

"Tonight is a good night for Cyprus and eurozone. A long period of uncertainty and insecurity surrounding the Cyprus economy has ended. I believe we have averted literally the possibility of bankruptcy and we have assured the prospects for generations to come," said Sarris at the time.

But behind the facade, Michael Sarris now tells Al Jazeera that he felt abused and bullied by the Europeans.

"It was a classic case of take it or leave it .... We were put in front of an extremely cruel dilemma, either you accept what we are telling you or we are going to pull the plug and you are not going to have any banks anyhow, you are not going to have any liquidity assistance from the central bank so you are going into bankruptcy basically.”

So what went wrong in Cyprus? Was the agreement flawed from the beginning? And who is really pulling the strings? What is it really like to negotiate when your country is facing the abyss?

The former finance minister of Cyprus explains on Talk to Al Jazeera.

Talk to Al Jazeera can be seen each week at the following times GMT: Saturday: 0430; Sunday: 0830, 1930; and Monday: 1430.  

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