Tuesday

26th Mar 2019

German opposition threatens EU aid for Cyprus

  • Classical-era ruins on Cypriot coastline: its banks may need up to €17 billion to survive (Photo: jnocca93)

German opposition leader Sigmar Gabriel has said he will try to block an EU-Cyprus bailout unless Cyprus cleans up its banking sector.

Speaking in German newspaper Sueddeutsche Zeitung on Wednesday (9 January), the centre-left SPD party chief said: "At present we do not [agree to the rescue package]. I cannot imagine that German taxpayers will save Cypriot banks whose business model is based on allowing tax fraud."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

He added: "If [German Chancellor] Mrs Merkel wants SPD approval for the Cyprus package, she will have to have very good reasons. But I do not see these at present."

Eurozone finance ministers are currently waiting for a report by US-based consultancy firm Pimco on the long term health of Cypriot banks.

Cyprus expects them to agree a draft memorandum of understanding on the bailout - worth up to €17 billion - at a meeting in Brussels on 21 January and to formally approve the measures on 10 February.

But under German law, its finance chief, Wolfgang Schauble, must get parliamentary approval before signing a legally binding agreement in the EU's Luxembourg-based bailout fund, the ESM.

Gabriel's SPD party controls just 146 out of 622 seats in the Bundestag.

But according to Sueddeutsche Zeitung, Merkel's majority is under serious threat.

In addition to the SPD, Green deputies also have ethical reservations on Cyprus, while over 20 MPs in Merkel's ruling coalition oppose her euro policies on principle.

The debate comes after a leaked German intelligence report last year said Cyprus is a haven for Russian tax evaders and organised crime.

An EU diplomat told this website that December's draft of the bailout memorandum already stipulated "a number of conditions about transparency in the [Cypriot] financial sector."

He added: "I expect the final version of the memo to deal with these topics as well."

Meanwhile, Cyprus is mobilising its top officials to tell EU colleagues that its banks do not do anything wrong.

On Monday, the head of the Cypriot central bank, Panicos Demetriades, met with eurozone countries' ambassadors in Nicosia.

A follow-up meeting with Cypriot finance minister Vassos Shiarly is planned for this week or next week.

"[Demetriades] explained all the issues about money laundering - that the problem does not exist. He showed them reports by all the relevant bodies, such as the OECD [a Paris-based economic club], and he explained how the system works. A lot of people talk about this subject without really knowing the facts," a Cypriot spokesman, Nikos Christodoulides, told EUobserver.

He added that Russia might also be invited to contribute money if there is an EU bailout.

"First there must be an EU agreement, then we might ask them [Russia] to join," he said.

But for some, Russian input is not welcome.

Cyprus' anti-money-laundering body, Mokas, is currently investigating whether Cypriot banks were used to launder over €20 million of stolen money for Russian officials linked to the killing of anti-corruption activist Sergei Magnitsky in 2009.

Magnitsky's former employer, the UK-based investment firm Hermitage Capital, believes that Russian cash might be used to quash the probe.

"[Russian President] Putin is absolutely terrified of anyone lifting the lid on Cyprus and is willing to spend any amount of government money to make sure that doesn't happen," Hermitage Capital chief Bill Browder said.

Investigation

Cyprus launches probe into Russian mafia money

Cyprus has opened an investigation into evidence that stolen Russian tax money linked to the murder of Sergei Magnitsky was laundered through its banks.

Merkel warns Cyprus not to expect special treatment

German Chancellor Angela Merkel has warned Cyprus it should not expect special treatment when negotiating the terms of its bailout, which she suggested would not be concluded anytime soon.

News in Brief

  1. EU tables plan for joint approach to 5G security
  2. MEPs agree to scrap summer time clock changes by 2021
  3. European Parliament votes on reform of copyright
  4. New French-German parliament meets for first time
  5. EU parliament reduces polling ahead of elections
  6. UK parliament votes to take control of Brexit process
  7. EU publishes no-deal Brexit contingency plans
  8. EU urges Israel and Gaza to re-establish calm

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. EU lawmakers pass contentious copyright law
  2. France takes Chinese billions despite EU concerns
  3. Europe before the elections - heading back to the past?
  4. Romania presidency shatters EU line on Jerusalem
  5. The Spitzen process - a coup that was never accepted
  6. Russia and money laundering in Europe
  7. Italy takes China's new Silk Road to the heart of Europe
  8. What EU leaders agreed on climate - and what they mean

Join EUobserver

Support quality EU news

Join us