Cyprus is beginning a diplomatic effort to win the bailout it requested seven months ago, as election-year politics in Germany threaten to impede talks.
With Cyprus Finance Minister Vassos Shiarly speaking to sceptical Dutch lawmakers in The Hague on Thursday, German Finance Minister Wolfgang Schäuble is seeking to satisfy doubters in his Parliament in Berlin to back a fifth euro area bailout.
By demanding that the so-called troika of creditors deem Cyprus a threat to euro area stability before aid is provided, Schäuble has restated European Union rules in an appeal to aid-weary voters spooked by reports of Russian money-laundering in Cyprus. He has also rattled smaller euro states.
German Chancellor Angela Merkel’s spokesman, Steffen Seibert, was the latest official to thump the EU rulebook, saying on Wednesday that to qualify for aid, a country must pose a risk to “all of the euro area". He dismissed media reports that Germany was softening its stance as “very misleading".
In smaller euro capitals, which are required to contribute to the ESM, Germany’s message may come across as a threat. “Aid to eurozone members can’t depend on the size of the country”, Slovak Finance Minister Peter Kazimir said on January 29 in an e-mailed reply to questions. “But of course, not meeting the rules can’t remain unpunished.”
The ECB has already tipped its hand. Executive Board member Jörg Asmussen, Schäuble’s former deputy, said “disorderly developments in Cyprus” could undermine progress made in the crisis fight last year and send the wrong signal as aid recipients Ireland and Portugal re-enter markets.
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© Kathimerini
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