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Cyprus Eschews ‘Dogmatic’ Austerity as Bailout Talks Loom

Sept. 11 (Bloomberg) -- The Cypriot government seeks to avoid “dogmatic” austerity measures that could damage social cohesion as it prepares for talks with international lenders, spokesman Stefanos Stefanou said.

“It is our conviction that the experience of battling the crisis worldwide has proven that one-sided and dogmatic austerity policies do not lead out of the crisis, but put economies in a vicious circle,” Stefanou told reporters in Nicosia today.

Cyprus on June 25 became the fifth country in the euro area to seek external aid. Euro-area finance ministers agreed to begin talks two days later. No amount was specified for the rescue, which will encompass the public sector as well as banks. Cyprus also sought assistance from the International Monetary Fund and Russia.

Neoklis Sylikiotis, the government minister for commerce, industry and tourism, said last month that the communist-led government is “opposed to indiscriminate, across-the-board measures that lead to recession instead of growth.”

Cyprus is girding for talks with the so-called troika -- the European Commission, the European Central Bank and the IMF - - that oversees euro-area rescues.

A European Union official said yesterday that Cyprus needs to submit a “more substantiated” aid request for the process to move forward.

Once the government has drafted its proposal for the troika, it will hold discussions with other political parties in an attempt to forge a unified position, Stefanou said.

Cyprus hosts euro-area and EU finance ministers for meetings on Sept. 14-15.

To contact the reporter on this story: Stelios Orphanides in Nicosia at sorphanides@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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