Sunday

4th Dec 2022

Cyprus: bank crisis will not spoil EU presidency

  • Denmark handed over the EU chairmanship to Cyprus 10 days ago (Photo: cy2012.eu)

Cyprus has said the near-collpase of its banking system will not stop it from running a normal EU presidency.

Its EU mission in a statement circulated on Monday (9 July) said: "The two issues are not connected and Cyprus is ready and able to exercise a fully successful presidency."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

It added: "Cyprus has all the potential and, most importantly, the will to act as an honest broker, with the aim of furthering European integration and of a better Europe."

Its status as an honest broker will be tested on Tuesday when it chairs its first meeting of EU finance ministers at the same time as angling for soft bailout terms.

Cyprus last week formally applied for EU help.

The decision on whether this will be a Spanish-type bank bailout only or a Greek-type state rescue, as well as the size of the outside help, is to be taken in early August.

Monday's Cypriot communique said the problem is confined to lack of bank capital and underlined the island's competitiveness - a potential reference to its low corporate tax rate and flexible wage laws, two features which could come under pressure from EU negotiators in the bailout talks.

"For sure we need a bailout for the banks. The amount is already there - €2.3 billion. If there are other needs and how big they are, this is a matter for negotiations," Cypriot spokesman Michalis Koumides told EUobserver.

Euro-using countries' finance ministers are meeting in Brussels on Monday ahead of the EU finance ministers' event.

They are expected to give Spain more time to meet budget discipline targets.

But early reports indicate that Luxembourg threatened to veto the move unless Spain backed the installation of a Luxembourgish official, Yves Mersch, on the board if the European Central Bank in place of a Spanish candidate.

Meanwhile, the Greek delegation suffered a political setback ahead of Monday's event when a minister resigned over EU bailout terms.

Nikos Nikolopoulos, the deputy labour minister said in his resignation letter that the new government is giving into EU austerity too easily.

"The issue of renegotiating with the troika, as well as the correction of significant distortions in labor, pension, social security and welfare issues, should have been emphatically put on the table from the start," he wrote.

Nikolopoulos is the third minister to go from the new government.

Finance minister Vassilis Rapanos resigned on 25 June for health reasons. Shipping minister Giorgos Vernikos stepped down shortly later when it came out he was the owner of an offshore firm, in violation of Greek rules.

Analysis

Cyprus - buoyed by gas hopes

There is a spring in Cyprus' step as it considers the major energy reserves off its coast. It wants to become a Meditarranean hub. But the politics of the region make it extremely complicated.

Cyprus seeks €11.5 billion bailout

Cyprus is reportedly seeking a €11.5 billion credit line from member states using the euro to help bailout its troubled banks and close its budget gaps.

Agenda

German court and Dutch elections to shape WEEK ahead

EU watchers will be spoiled for choice this week as a series of important events are likely to compete for their attention - top of the bill is a decision by Germany's highest court on the eurozone's bailout fund.

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. EU must break Orbán's veto on a tax rate for multinationals
  2. Belarus dictator's family loves EU luxuries, flight data shows
  3. How Berlin and Paris sold-out the EU corporate due diligence law
  4. Turkey's EU-funded detention centres ripe with abuse: NGO
  5. In green subsidy race, EU should not imitate US
  6. EU Commission proposes suspending billions to Hungary
  7. EU: Russian assets to be returned in case of peace treaty
  8. Frontex leadership candidates grilled by MEPs

Join EUobserver

Support quality EU news

Join us