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Thursday, May 9, 2013
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Rehn: Cyprus was too slow in acting Indecisiveness and delays led to a worsening of the situation By Poly Pantelides
C
YPRUS was censured by top EU officials yesterday for its footdragging over a bailout from as early as November 2011 when the first warnings were issued, to the clinching of a deal some 16 months later, a timeframe, which had only made things worse, they said. European Commissioner for Economic and Monetary Affairs, and vice president of the European Commission, Olli Rehn were briefing members of the European Parliament (MEPs) at the committee on economic and monetary affairs. Rehn said the Commission warned Cyprus about its accumulating problems early on. Warnings and policy guidance to tackle the banking problems and consequent fiscal and macroeconomic imbalances were included in the reports and Country-Specific Recommendations under the first European Semester in June 2011, he said. In November 2011, the Commission has communicated to the Cypriot authorities that a financial assistance programme would be unavoidable, unless the persistent economic problems were immediately addressed. Eventually, Cyprus asked for financial assistance, but only in June 2012, said Rehn. “It is unfortunate that it took Cyprus more than half a year to accept the gravity of the situation and the unsustainability of its business model. And it is similarly unfortunate that it took Cyprus another nine months to reach
an agreement with the Eurogroup,” he said. Rehn said the Commission had worked hard for a more gradual adjustment of the Cypriot banking system and real economy, while aiming to ensure debt sustainability and adequate financing. “However, indecisiveness, delays and a very firm financial constraint severely limited the options available,” he added. “By March [2013], the economic situation had deteriorated so badly that the scenario of the more gradual economic adjustment was not on the cards any more. Especially, the state of the banks worsened rapidly.” He said the banking problems were aggravated by poor practices of risk management, and that lacking adequate oversight, the largest Cypriot banks built up excessive risk exposures. “In Cyprus, and I speak with some experience of years of crisis management, we saw the usual pattern of a country in front of an impossible situation and leading to a programme,” Rehn said. “First there is a sense of denial, which leads to delays. Then there is a draining of funding.” But while Cyprus managed to buy time by securing a loan from Russia in 2011, the authorities did not use it to implement structural reforms, Rehn added. “By the time the government finally asked for a bailout in June last year, the people of Cyprus were forced to face “a very painful process of negotiations with even more limited
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Olli Rehn, the European Commissioner in charge of Economic and Monetary Affairs, awaits the start of the session of the Committee on Economic and Monetary Affairs at the European Parliament where Cyprus was being discussed yesterday
Benefits of sun may outweigh risks, say scientists THE health benefits of exposing skin to sunlight may far outweigh the risk of developing skin cancer, according to scientists. Edinburgh University research suggests sunlight helps reduce blood pressure, cutting heart attack and stroke risks and even prolonging life, the BBC reported. UV rays were found to release a compound that lowers blood pressure. Researchers said more studies would be carried out to determine if it is time to reconsider advice on skin exposure. Heart disease and stroke linked to high blood pressure are estimated to lead to about 80 times more deaths than those
from skin cancer in the UK. Production of the pressure-reducing compound, nitric oxide, is separate from the body’s manufacturing of vitamin D, which rises after exposure to sunshine.
HUMAN HEALTH Researchers said that until now vitamin D production had been considered the sole benefit of the sun to human health. During the research, dermatologists studied the blood pressure of 24 volunteers under UV and heat lamps. In one session, the volunteers were exposed to both UV rays and the heat of
the lamps. In the other, the UV rays were blocked so that only the heat affected the skin. The results showed that blood pressure dropped significantly for an hour after exposure to UV rays, but not after the heat-only sessions. Scientists said that this suggested it was the sun’s UV rays that brought health benefits. The volunteers’ vitamin D levels remained unaffected in both sessions. Dr Richard Weller, a senior lecturer in dermatology at Edinburgh University, said: “We suspect that the benefits to heart health of sunlight will outweigh the risk of skin cancer.”