With a new President in place trying to get a handle on an economic crisis that has seen banks pushed toward insolvency, Cyprus may need a bailout of some 10 billion euros, about $13 billion, far less than the 17 billion euros, nearly $21.9 billion originally predicted.
That was the estimation of The Netherlands’ Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup, the finance chiefs of the Eurozone’s 17 countries that include Greece and Cyprus. Speaking to Dutch national broadcaster NOS on the sidelines of a debate with Dutch Parliament, he said that reports Cyprus would receive 17 million euros were mistaken.
“That’s going considerably lower, in the direction of ten billion,” Dijsselbloem said. He didn’t give specifics about the package to be discussed on March 15 but said Russia might help more than it already has and Cyprus would not be left with an unsustainable debt load, the Associated Press reported. The Dutch Parliament later approved the country’s participation.
Cypriot President Nicos Anastasiades is in negotiations with officials of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) on the size of the bailout and what kind of austerity measures will be implemented in return.
The country’s banks were nearly ruined by their big holdings in Greek bonds that the Greek government devalued by 74 percent last year in a bid to write down that country’s debt. Cypriot banks were also highly exposed in the Greek market where pay cuts, tax hikes and slashed pensions have forced more than 25 percent of Greeks to be unable to pay their loans and credit cards.
Cyprus peace envoy Alexander Downer said the UN would launch a new bid for talks on reuniting the island only after it has secured a bailout for its nearly bankrupt economy. Downer returned to Cyprus for a first meeting with Nicos Anastasiades, the newly elected Greek Cypriot president, before holding talks in the island’s north with Turkish Cypriot leader Dervis Eroglu.
“It’s my judgment… that Cypriots need for the moment to conclude the negotiations — particularly the president — with the Troika,” said Downer, according to Agence-France-Presse (AFP.) “Those economic issues are bigger economic issues than most countries face. Those economic issues need to be dealt with,” the UN envoy told reporters.
Turkish troops have occupied the northern third of Cyprus since invading the island unlawfully in 1974 and have never been forced by the UN to withdraw. Turkey set up the Turkish Republic of Northern Cyprus (TRNC) which only Turkey recognizes. The continuing occupation remains a stumbling block in Turkey’s bid to join the European Union (EU) of which Cyprus is a member.
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