Politicians from both left and right agreed that without such a deal, the rescue would not have a hope of winning approval in the Bundestag. Wolfgang Schäuble, finance minister, had done a good job, they admitted.
The SPD has tended to criticise Ms Merkel and her government for being too mean and hesitant in bailing out its debt-laden eurozone partners – and then vote in favour of the deals in the Bundestag. Along with the environmentalist Greens, the Social Democrats have backed all the programmes for fear of aggravating the financial crisis and spooking the markets. Such responsible behaviour has not won them any votes, and it is a German election year.
Both SPD and Greens declared that Cyprus must abandon its current “business model” of providing a tax haven for wealthy Russian depositors, in particular, before they would approve any rescue.
The idea of a “haircut” for uninsured depositors came from the SPD. It also insisted that corporation tax should be increased from the minimal rate of 10 per cent, and Cyprus should join Germany, France and other eurozone countries in introducing a financial transaction tax.
Sigmar Gabriel SPD chairman, ruled out once again any use of the €500 billion European Stability Mechanism to recapitalise Cypriot banks directly – the only real alternative to the levy on deposits.
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