Pavlos Xanthoulis
What has stayed with me most from Cyprus’ first term holding the Presidency of the EU Council, back in 2012, is the issuance of the Council Conclusions, the unanimous decisions that called for approval of the infamous EU directive on “banking resolution and recovery.” This was the directive that included the so-called “haircut” of shareholders, bondholders, and depositors. In other words, the Cyprus Presidency, while steering the EU, played a role in adopting the unanimous Conclusions that effectively endorsed the directive and the haircut on December 14, 2012.
Specifically, paragraph 8 of the Conclusions “encouraged co-legislators to agree on the proposed directive on recovery and resolution,” emphasizing that “the Council,” made up of all member states including Cyprus, was committed to reaching an agreement “by the end of March 2013.” This, of course, included the haircut of shareholders, bondholders, and depositors.
Although the formal agreement was delayed, the political commitment of EU countries, expressed through those unanimous Conclusions, was already clear. Cyprus, in effect, became the testing ground: the directive was applied to the island before it was formally adopted, in March 2013.
As a result, Cyprus experienced the full financial haircut, the state entered a bailout program, and oversight by the Troika was imposed, all under a framework promoted during the Cyprus Presidency as an “ad hoc solution” for the country. Yet, despite this, those involved in the Presidency celebrated its achievements and declared it “successful,” a description that, frankly, stretches credibility.
It is reasonable to ask whether the Cyprus Presidency could have altered the course of events. Perhaps not. But at the very least, Cyprus should have stalled the issuance of Conclusions on December 14, 2012, which called for approval and implementation of this directive. It did not. The reasons for this inaction might be clarified by AKEL, the ruling party at the time, or by then-President Nikos Christodoulides, who was Cyprus’ representative during the Presidency, or by his former rival in the recent presidential elections, Andreas Mavroyiannis, who served as Deputy Minister for European Affairs at the time.
Today, Cyprus again holds the EU Council Presidency, nearly 14 years after its first term. Media, advertisements, and videos show that the current government is heavily investing in this Presidency, likely as one of the platforms Christodoulides intends to leverage in pursuit of a second term.
Yet the current Presidency is already sending strange signals. The first is the elevation of a statement by 26 member states into what is treated as unanimous Conclusions, a narrative advanced by both President Christodoulides and Deputy Minister for European Affairs Marilena Raouna.
If the Cyprus Presidency, which in 2012 consented to Conclusions that promoted deposit haircuts, is now willing in 2026 to consent to processes that effectively “cut” the Cypriot veto by substituting the unanimous Conclusions of the 27 member states with mere statements of 26 — then we may be heading toward self-inflicted disaster. The Presidency, which has been in the spotlight since January 1, may not even need a stylist: it appears ready once again to prove capable of becoming its own executioner.
This is no longer only about financial haircuts that led to economic collapse; it could also be about cutting the Cypriot veto, a move that would inevitably trigger political disaster and one in which Cyprus itself plays a part.
All of this unfolds while Turkey presses for the erosion of the Cypriot veto, simultaneously testing a new EU-Turkey relationship free of the Cyprus issue and its associated obligations, with support from influential European circles. This is something President Christodoulides should have understood on his recent trips to Berlin and Brussels.
In any case, caution is warranted whenever the Cyprus Presidency handles the scissors: history shows it is all too prone to “haircuts.”
