Could there be political strings attached to our euro entry?

THE IMPLICATIONS of Cyprus reunification have been raised as a factor in its suitability for joining the eurozone, the Financial Times (FT) reported yesterday.

The FT report came a day after EU Economic and Monetary Affairs Commissioner Joaquin Almunia was said to have recommended that Cyprus is given the green light to join the eurozone from next year.

In an article out of Brussels, based on comments by the Greek Finance Minister, the FT said the European Central Bank (ECB) would next week publish its assessment of Cyprus’s bid to join the single currency from January 1.

“The European Commission is due to issue a separate report: both are expected to give a green light for membership,” said the FT.

However the newspaper quoted Greek Finance Minister George Alogoskoufis as saying he expected the ECB “to raise concerns about the implications for Cyprus if the richer, Greek part of the island reunites with the poorer Turkish north”.

“The question of what would be the fiscal implications of the reunification of the island was raised by the ECB,” said Alogoskoufis.

It was not the first time speculation has arisen over whether political considerations would be taken into account when it came to eurozone entry especially as Brussels is pressuring Cyprus over the pending regulation for direct trade between the EU and the Turkish Cypriots.
Last month German Finance Minister Peer Steinbr?ck suggested there were “political implications” involved in eurzone entry for Cyprus but later the German embassy in Nicosia said the decision would be made on economic criteria.

Reports from Brussels on Thursday said Almunia has already recommended that Cyprus be given the green light next week as it had fulfilled all of the necessary economic criteria. The ECB will also submit its assessment, which will also be presented to EU finance ministers on June 5.

Final approval will then be sought from the European Council towards the end of June. It remains to be seen whether political factors will taint that part of the process.

“There would be no legal base for this and it would be a very bad precedent for the eurozone,” the FT quoted Alogoskoufis as saying.
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The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.