Cypriot president to seek easing of bailout terms

Cypriot President Nicos Anastasiades flew to Brussels on Wednesday saying he will ask the island's EU partners to ease harsh bailout terms. However, Anastasiades has taken great pain to assure EU leaders holding a two-day meeting on Thursday and Friday that Cyprus does not try to evade terms of a Eurogroup/International Monetary Fund bailout but only wants readjustment of provisions affecting its battered banking system. Under the 10-billion-euro (13-billion-U.S. dollar) bailout, Cyprus was forced to shut down its second largest lender, the Cyprus Popular Bank, or Laiki, and recapitalize the largest lender, Bank of Cyprus, by using depositors' money. "We will seek understanding by our partner toward our position... We are not seeking re-negotiation (of the bailout agreement) but an adjustment of certain measures which smother the economy," Anastasiades said. Anastasiades said he will seek a meeting with European Central Bank (ECB) President Mario Draghi, which controls restrictions on transactions imposed on banks operating in Cyprus following the haircut on deposits above 100,000 euros. In a letter to EU leaders earlier this month, Anastasiades asked for an end to bank restrictions, saying they create a liquidity problem which stifles efforts to restart the economy. He also criticized the haircut as ill-conceived and one-sided. Anastasiades' main concern is measures still in force which discourage bank deposits. These mainly affect Bank of Cyprus, which was forced to take in Laiki, along with a legacy 9.2-billion-euro liability resulting from emergency liquidity assistance at a time when the bank was crumpling because of gross mismanagement. In his letter, the president had suggested that part of this liability be converted into long-term bonds and transferred to a special vehicle. Anastastasiades' letter got the cold shoulder treatment by Eurogroup finance ministers last week, but European Council President Herman van Rompuy promised in a reply letter that he would put the issue to the EU heads of government.