:00:00. > :00:12.road. Bail was set at $2,500. Now on BBC News it's time for
:00:13. > :00:17.HARDtalk. Work and HARDtalk. When Harris
:00:18. > :00:20.Georgiades became finance minister of Cyprus in 2013 some said he had
:00:21. > :00:23.been handed a poisoned chalice. He has had to preside over tough
:00:24. > :00:25.austerity measures that are driving up poverty levels in the country.
:00:26. > :00:28.The economy is shrinking, unemployment will perhaps reach 20%
:00:29. > :00:35.this year and wages are being slashed. These were the tough
:00:36. > :00:38.conditions of a ten billion euro bailout granted last year with the
:00:39. > :00:42.troika of the European Central Bank, the EU and the IMF to avoid a
:00:43. > :00:47.collapse of the banking system in Cyprus. So why then does the finance
:00:48. > :00:50.minister believe that the economy is proving more resilient than
:00:51. > :01:24.expected? Is he being too optimistic?
:01:25. > :01:30.Harris Georgiades, welcome to HARDtalk. Thank you. It is nearly a
:01:31. > :01:47.year since you were appointed finance minister. Were you handed a
:01:48. > :01:53.poisoned chalice? The economy was left in a grave situation. We
:01:54. > :01:59.received it as a newly elected Parliament. We received the crisis
:02:00. > :02:06.of unimaginable proportions. Unfortunately, I think those grave
:02:07. > :02:17.dangers are already behind us. Maybe I do sound overly optimistic, I am
:02:18. > :02:23.not. I think I am being realistic. So, those grave dangers are behind
:02:24. > :02:31.you? Some estimates say unemployment could reach more than 20%. You have
:02:32. > :02:35.negative growth, -5% for this year. The health public wages and others
:02:36. > :02:45.being slashed by as much as 25%. -- you have. Are you being too
:02:46. > :02:52.optimistic? We are facing the risk of a total collapse in the economy.
:02:53. > :03:06.The collapse of the banking system. Exit from the eurozone, even from
:03:07. > :03:13.the EU, somewhat speculating. Those dangers, we have overcome them. A
:03:14. > :03:19.few weeks ago, the IMF will today whole range of indicators. All they
:03:20. > :03:26.said was that you were facing a slump over the next ten years. You
:03:27. > :03:38.will be facing a decade of these conditions. I do not think so. The
:03:39. > :03:45.IMF itself has revised its assumptions upwards. I hope I am
:03:46. > :03:53.being very honest. Revised upward? They said it would be negative
:03:54. > :04:02.growth of -7%. They have brought that up. They said -9, it is now
:04:03. > :04:14.-6%. I am not saying it is a good performance, obviously. The economy
:04:15. > :04:21.was seen as in great danger. We had the threat of a total collapse.
:04:22. > :04:32.Since then, we have stabilised the situation. Some difficulties remain,
:04:33. > :04:38.like unemployment. It is not really a new situation. It is very
:04:39. > :04:44.important. We saw the protests over austerity measures. The IMF has said
:04:45. > :04:55.that political support for the troika's programme is diminishing.
:04:56. > :04:59.97% of the Cypriots economy, people thought that the economy was in bad
:05:00. > :05:16.shape. They said it was headed in the wrong direction. You are saying
:05:17. > :05:23.it is getting better. You spoke of unrest, there is none of it. In
:05:24. > :05:31.Cyprus, we have not seen anything like the Labour action we have seen
:05:32. > :05:42.elsewhere. There was not a day of strike. The capital is very
:05:43. > :05:46.understanding of the situation. The population say the country is headed
:05:47. > :05:48.in the wrong direction. It would not sound as though they have a huge
:05:49. > :05:59.amount of confidence in what you were doing. We are trying not to
:06:00. > :06:06.look at the polls. Since you are speaking about the polls, we are
:06:07. > :06:14.doing well. The government and government policy are doing well
:06:15. > :06:23.with the public. We have been able to get legislation relating to the
:06:24. > :06:34.foreign programme through Parliament. We have had no delays.
:06:35. > :06:49.Already, I think we are able to see results. Do not take my word, we
:06:50. > :07:02.have had the first upgrade. You are in a terrible mess. Overexposure to
:07:03. > :07:09.Greek debt in banks. We have had the first upgrade from a ratings
:07:10. > :07:21.agency, standard and Poor 's, in the past three years. We have been
:07:22. > :07:25.receiving downgrades for years. So you have moved up to be minus? You
:07:26. > :07:33.feel that you are moving up. It is what led the finance minister in
:07:34. > :07:38.France to say that Cyprus is a casino economy on the brink of
:07:39. > :07:43.bankruptcy. Do you accept that your problems were of your own making?
:07:44. > :07:58.Not you specifically, but the authorities. The problems are local,
:07:59. > :08:03.I have two admit that. Other European leaders said things about
:08:04. > :08:14.the economy. I will make honest admissions. The problems of the
:08:15. > :08:21.Syrian economy -- Cypriots economy are the result of our own decisions,
:08:22. > :08:34.our own failures. As far as public finances are concerned, and also
:08:35. > :08:39.banking. We are acknowledging that the problems, it allows us to take
:08:40. > :08:43.control of the situation and explain to the public that we are fixing the
:08:44. > :08:51.problems. When the finance minister at the time said that it is always
:08:52. > :08:57.striking that a country with a relatively small population attracts
:08:58. > :09:04.high bank deposits from foreign investors. This model is bankrupt.
:09:05. > :09:13.We did have an oversized banking system. The smaller the economy, the
:09:14. > :09:25.banking system will be larger compared to the population. If the
:09:26. > :09:30.two Iceland and Ireland. We already have a much smaller banking system.
:09:31. > :09:38.Already, it is a better banking system. Better regulated. Better
:09:39. > :09:44.regulated you say. I have to put it to you. These high levels of Russian
:09:45. > :09:49.deposits, Russian money. There were some kind of money laundering going
:09:50. > :09:56.on. This is what was being said. Russian authorities say all the
:09:57. > :10:05.money they put in Cyprus was clean. Part of the ruling coalition in 2012
:10:06. > :10:12.cents, we can not use taxpayer money to guarantee the deposits of illegal
:10:13. > :10:18.Russian money in Cypriots banks. Was the money-laundering in Cypriots
:10:19. > :10:29.banks? We want to clear a man once and for all. We are going to audit.
:10:30. > :10:36.Both by the European institutions, and an independent firm they were
:10:37. > :10:43.looking to how we are implementing regulation. They will offer opinion.
:10:44. > :10:52.It is an opinion that was represented at Europe. It is not
:10:53. > :10:56.verified. However, many shortcomings, and there are
:10:57. > :11:03.shortcomings when it comes to money laundering, are beyond us. It does
:11:04. > :11:11.exist. It is a global problem. We are determined to do what is
:11:12. > :11:21.necessary. It has been so thoroughly investigated. We have taken action.
:11:22. > :11:25.So you have done a restructuring, you admit you need a better system
:11:26. > :11:29.to restore confidence in Cyprus and outside in your banking system. Do
:11:30. > :11:35.you really think you are making a good job of that? We have this
:11:36. > :11:42.highly publicised row between the governor of the central bank in
:11:43. > :11:44.Cyprus and the President. The President even tried to get the
:11:45. > :11:48.governor removed from his post. That does not look good, it does not
:11:49. > :11:59.restore confidence in the banking system, does it? I will say this,
:12:00. > :12:06.there is an issue regarding the role and responsibility of central banks.
:12:07. > :12:07.Before, we had no interest in central banks needing to be
:12:08. > :12:20.independent and acting independently, . The authority of a
:12:21. > :12:24.central bank should not be in the hands of one person. There should be
:12:25. > :12:33.checks and balances, they should be... Of course. I was asking you,
:12:34. > :12:41.there is a big row, a dysfunctional relationship between the President
:12:42. > :12:49.and the head of the central bank. As one of the arms of Cyprus's battle
:12:50. > :12:57.system, is that a situation that is viable? We are trying to handle the
:12:58. > :13:08.situation. We are looking at the issue, not a personal basis, but an
:13:09. > :13:14.institutional basis. There needs to be accountability and transparency,
:13:15. > :13:29.especially when it comes to such an important area. Should he resign? I
:13:30. > :13:38.am a 20 get into the discussion. There is an investigation by an
:13:39. > :13:48.independent prosecutor. I will not comment. Very quickly, on this
:13:49. > :13:53.matter, one of the areas of disagreement is lifting the controls
:13:54. > :13:59.on transfers of funds from Cyprus. When will that happen? With a lid
:14:00. > :14:15.might happen early this year. We have an agreed roadmap between
:14:16. > :14:20.ourselves and Cyprus. This roadmap, if we are to translate it into a
:14:21. > :14:25.timeframe, most of the restrictions would be gone by this year. That is
:14:26. > :14:33.our objective. That is our stated objective. We want the regulations
:14:34. > :14:44.to go by springtime. The last on the list will be the transfer of funds
:14:45. > :14:47.abroad, a simple transfer. We will wait for that announcement. Wouldn't
:14:48. > :14:51.it be nice if Cyprus could commercially risk -- exploit those
:14:52. > :14:57.energy reserves offered shores. It will help Ulster your budget,
:14:58. > :15:10.wouldn't it? Something like $800 million. You would like that money,
:15:11. > :15:19.wouldn't you. Week you know how much we are counting for a dare. This is
:15:20. > :15:27.good. We will do whatever else is necessary to fix the economy, to
:15:28. > :15:31.make it more competitive, better functioning and these energy
:15:32. > :15:39.prospects will be another. It will be very different. It is huge and
:15:40. > :15:45.important. It is not a substitute to real economic reform, and fiscal
:15:46. > :15:52.change. Looking at that change. Looking to the future, you said you
:15:53. > :16:00.said energy is being pursued in a decisive manner. To maybe have it
:16:01. > :16:06.licensed out to a number of potential gas fields offshore.
:16:07. > :16:11.Having the first exploratory drilling is and they have been
:16:12. > :16:18.successful. There will be more sick -- exploration this year. There is a
:16:19. > :16:26.timeframe is very promising and which really needs to be able to
:16:27. > :16:36.offer an economy. You said about a ten year slab. I do not agree. We
:16:37. > :16:39.could be one of the fastest economies in the European Union. You
:16:40. > :16:46.could be right. I do not write about upsetting Turkey? The self-declared
:16:47. > :16:53.Republic of North Cyprus. The -- declared in 1983. Only recognised by
:16:54. > :17:00.Turkey. Are you not worried about upsetting Ankara? It said any gas
:17:01. > :17:04.exploration in the sea waters should be undertaken by both committees.
:17:05. > :17:07.The Foreign Minister has warned your government, the Cypriot authorities
:17:08. > :17:20.are on adventurous policies in this regard. You have resonated threats
:17:21. > :17:28.buy the Turkish government. I don't think any EU member state should bow
:17:29. > :17:32.to threats. You will fully agree that these prospects and the other
:17:33. > :17:37.prospects relating to the prosperity and progress of South Cyprus should
:17:38. > :17:42.be shared with all of the people. We have the strongest incentive of
:17:43. > :17:46.anyone to resolve the problem of the division of Cyprus so the fruits of
:17:47. > :17:55.our economic to mail -- development will be shared. As you have said,
:17:56. > :18:04.regrettably, so many years Turkey maintains 35,000 troops and they are
:18:05. > :18:09.the reason why this prospect for a common future have not yet been
:18:10. > :18:14.realised. Are you not worried about upsetting them? What is your legal
:18:15. > :18:22.right to do? Is always the best route, is it, if you end up in
:18:23. > :18:28.raging Turkey? Nobody is comfortable when they are being threatened but
:18:29. > :18:43.nobody thinks about these threats that are completely un- founded,
:18:44. > :18:43.legally or morally. We are a member of the European Union. The gas
:18:44. > :18:45.fields have been licensed to international corporations. We are
:18:46. > :18:51.working very well with other neighbours in the region, Israel,
:18:52. > :18:59.Egypt's, London on we share the common natural resources. --
:19:00. > :19:02.Lebanon. We shall proceed. Economic, doesn't it make sense for
:19:03. > :19:07.you to do this with the cooperation of Turkey? A pipeline to Turkey into
:19:08. > :19:13.Turkey would be the easiest way for you to get this and the oil out
:19:14. > :19:18.rather than be confined. Economically it make sense for you
:19:19. > :19:23.to do this. Turkey is one of the biggest economies in the world.
:19:24. > :19:30.Until recently, a very dynamic economy. Everybody is thriving to
:19:31. > :19:38.access to this big market. We are immediate neighbours to Turkey and
:19:39. > :19:47.we have no access to this market. Cypriot ships cannot access... What
:19:48. > :19:52.is the point of upsetting Turkey? What I am trying to say is I agree
:19:53. > :20:00.that the prospects of corporation, of trade are enormous but how can we
:20:01. > :20:08.discuss the possibility of exporting gas or oil through Turkey when
:20:09. > :20:15.ships, merchant ships with a Cypriot flag, cannot even access Turkish
:20:16. > :20:24.cities. When there is no connection, flights between Cyprus and Turkey.
:20:25. > :20:29.Let's start from the basics. C acts and not only words on the part of
:20:30. > :20:33.Turkey and we fully agree that cooperation would be best for the
:20:34. > :20:41.region as a whole. The question is this, will these new-found reserves,
:20:42. > :20:47.they can either in -- inflame or solve the Cyprus problem.
:20:48. > :20:52.Reunification. The Turkish energy minister said that energy is
:20:53. > :20:57.produced in other parts of the world, here it will be a force for
:20:58. > :21:01.peace. We will make sure it is a force for peace and that is why we
:21:02. > :21:07.are cooperating with our neighbours, or the original actors
:21:08. > :21:12.and we hope that Turkey is able to join in this regional cooperation
:21:13. > :21:17.not only regarding energy but on other issues. What about the talks
:21:18. > :21:24.to try to reunify the two parts of Cyprus, the Republic which is
:21:25. > :21:30.recognised by everyone and the self declared Turkish part. You are
:21:31. > :21:36.working in a confederation. You want a joint declaration before you can
:21:37. > :21:43.even start talking. Why is the joint declaration so important? It is a
:21:44. > :21:48.small but important test that we are indeed in agreement at least as far
:21:49. > :21:53.as the objective. There is no point trying to negotiate when nobody
:21:54. > :21:58.agrees with the objective. You said the objective is to have a
:21:59. > :22:10.federation. One state but with two federal zones. With significant
:22:11. > :22:16.autonomy on day-to-day issues. It is alarming that the Turkish city
:22:17. > :22:23.leader will not utter a word of federation. That is the reason
:22:24. > :22:29.why... White-matter your promise is sovereignty as well, they say the
:22:30. > :22:32.Turkish Cypriot leader say that the two sides must drop the exchange of
:22:33. > :22:42.documents and start talks on an agreement. You asking for an
:22:43. > :22:47.addition to that. We need to verify and agree on the objectives. If one
:22:48. > :22:58.wants to go right in the other wants to go left, there is no point. He
:22:59. > :23:01.says he is ready for a deal on political equality, are you ready to
:23:02. > :23:07.give him that? Of course, of course, definitely. Within the framework of
:23:08. > :23:12.a federation and the legal sovereignty that we have mentioned.
:23:13. > :23:21.That is not an unreasonable thing to ask. The important thing is to get
:23:22. > :23:30.together and talk. There is no state in the world without single
:23:31. > :23:38.sovereignty. I don't think is is an obstacle. It is an absolutely
:23:39. > :23:44.necessary precondition if this will succeed. We want to be a member of
:23:45. > :23:50.the European Union after the solution. These are the
:23:51. > :23:53.fundamentals. In October we are going to be talking by Christmas,
:23:54. > :24:00.you are overoptimistic. One everything. This as well as the
:24:01. > :24:05.economy. We are facing challenges and we have a vision. The vision is
:24:06. > :24:11.to transform Cyprus and turn it into a island of stability. Cyprus is an
:24:12. > :24:18.excellent place to live, spent holidays and invest and this will be
:24:19. > :24:19.to the benefit of the region. Thank you very much for coming on
:24:20. > :24:49.HARDtalk. More warnings are in force of the
:24:50. > :24:52.day ahead,