Cyprus Problem | Cyprus Bailout a Long Way Off

Cyprus Problem | Cyprus Bailout a Long Way OffGerman politicians are threatening to block the Cyprus bailout which needs an estimated €17bn to recapitalise its banks. They are arguing that unless the south agrees to wide ranging economic reforms and privatisations then the aid package could be vetoed by the Bundestag.

Angela Merkel, the German chancellor, insists that the Communist president, Dimitris Christofias, accepts asset sales.

“We agree it is important that the troika should talk with Cyprus and that there can be no special conditions for Cyprus because we have common rules in Europe,” Merkel said. “We are far from the end of the talks.”

There is concern that a large portion of the aid deal could go to Russians who have laundered money through Cyprus. The SPD chairman, Sigmar Gabriel, rejects any idea that German taxpayers would “save Cypriot banks whose business model is based on facilitating tax evasion”.

It is believed that the Cypriot bailout could be delayed until Christofias leaves government next month and so it looks like talks will continue into March. With the south struggling to pay December bills, it seems inconceivable that it could get through another an entire quarter without either creating a financial crisis or coming up with a loan from doubtful sources.

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