Cyprus president looks to dump central bank chief

AP News
Posted: Sep 19, 2013 9:51 AM
Cyprus president looks to dump central bank chief

NICOSIA, Cyprus (AP) — The president of bailed-out Cyprus has launched a stinging attack on the country's central bank chief and served notice that he would begin proceedings to have him ousted for not doing his job properly.

President Nicos Anastasiades said his "patience has run out" with central bank governor Panicos Demetriades, and that he is considering taking the matter to the Supreme Court after gathering evidence he claims backs up his accusation.

The feud between the center-right Anastasiades and Demetriades — an appointee of the country's previous, communist-rooted president — boiled over Thursday after months of tensions.

It has simmered since March when Cyprus clinched a multibillion euro financial rescue deal from international creditors that crushed its banking sector and forced uninsured depositors to take a huge hit on their savings.

It also comes at a crucial time for the small Mediterranean island nation of less than a million people. Cyprus is trying to convince the world that it's open for business despite restrictions on bank withdrawals and transfers imposed to prevent runs on banks. Authorities say they want to fully lift restrictions in the first few months of next year.

"My patience is now at a point where I can no longer simply bear witness to such inaction or the inadequate discharging of duties that only causes harm to the country," Anastasiades said in an interview with local MEGA channel late Wednesday. "The economy and the country's needs won't depend on anyone's whims. "It saddens me to make such severe remarks publicly but enough is enough."

Anastasiades accused Demetriades of dragging his feet on the vetting of new appointees to the board of largest lender Bank of Cyprus and of taking too many trips abroad. The president indicated he had many more undisclosed gripes.

Deputy government spokesman Victoras Papadopoulos told state broadcaster CyBC Thursday there were at least a couple of occasions at crucial junctures during bailout negotiations when Demetriades was on holiday.

Papadopoulos said the government would act after consulting with the European Central Bank, which sets monetary policy for the 17-eurozone and is the overseer of financial stability across the region, including Cyprus.

Demetriades shot back, saying in a statement that there's an attempt to undermine him and to stymie the central bank's independence. He defended his trips to ECB headquarters in Frankfurt as absolutely necessary for Cyprus and never incorporated vacation time.

Regarding the board member vetting process, Demetriades said the process had to be conducted carefully to "avoid the mistakes of the past."

Most political parties voiced support for Demetriades' ouster. But firing a central bank governor won't be easy, Cyprus' new Attorney General Costas Clerides told state broadcaster CyBC Thursday, given EU laws and the unprecedented nature of the situation.