Friday

3rd Feb 2023

Cyprus expects EU bailout deal in next 10 days

  • Cyprus ruins - will EU taxpayers' money be used to make sure Russian money-launderers do not lose their cash? (Photo: jnocca93)

With Greece (twice), Ireland , Portugal and Spain (its banks) already on the list, Cyprus expects to clinch an EU bailout of up to €15 billion next week.

Negotiations on details of the rescue start in Nicosia on Friday (9 November).

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

A "troika" of international lenders - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), led by commission official Maarten Verway - landed in the Cypriot capital on Thursday.

A Nicosia-based Cypriot source told EUobserver talks are expected to wrap up by Monday at the earliest or by the end of next week at the latest.

He said the big question is whether or not to split the bailout - likely to be in the range of €8 billion to €13 billion, with an absolute maximum of €15 billion - into two parts.

He said the IMF wants the EU's Luxembourg-based bailout fund, the ESM, to directly recapitalise Cypriot banks. The rest of the money would be a loan to the Cypriot government, as with Ireland or Greece. But the ECB wants the Cypriot exchequer to carry the whole burden.

He added the troika wants Cyprus to slash government spending in order to get back in the black. But Cyprus wants to boost income tax instead.

"For the troika to come to Cyprus now it means they are ready for an agreement," the contact said.

"The talks are just starting. It's too early to comment on them," a commission spokeswoman noted.

Cyprus got into trouble over its banks' exposure to Greek debt and because an explosion last year - literally, at an ammunitions dump and nearby power station - blew a hole in its budget.

It got a cheap €2.5 billion loan from Russia, an important financial partner, to help tide things over.

But prospects of extra Russian money did not materialise.

To make matters worse, its Russian connection caused embarrassment this week when the German foreign intelligence service, the BND, leaked a report to German magazine Der Spiegel saying Russian oligarchs and crime bosses have stashed €20 billion in Cyprus' banks.

Zooming in on one case, Hermitage Capital, a UK-based firm, has filed a complaint with Cyprus' attorney general to seize €24 million worth of Russian money on the island.

The firm says it was embezzled from Russian taxpayers by tax officials and that when its lawyer, Sergei Magnitsky, exposed the scam, he was tortured to death in prison.

For their part, the EU commission and Cyprus say only that Cyprus is a signatory to international anti-money-laundering treaties.

"It's a non-issue and it won't come up in the troika talks," the Cypriot contact quoted above said.

But for his part, Magnitsky's former employer, Hermitage Capital chief Bill Browder, says it is not OK.

"Corrupt Russian officials working together with organized criminals used Cyprus to launder a significant part of the biggest tax refund fraud in Russian history. We are looking forward to a robust investigation in Cyprus and seizure of the dirty money regardless of who is providing bailout funds to the country," he told EUobserver.

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.

Cyprus could 'combine' Russian and EU loans

Cypriot President Demetris Christofias is waiting to see whether the EU or Russia offers the best deal for his troubled banks - and has not ruled out taking loans from both.

Hawkish ECB rate-rise 'puts energy transition at risk'

The European Central Bank raised interest rates by another 0.5 percent to a 14-year high, and expects to hike rates by another half percent in March. But what does that mean for the green transition?

Opinion

More money, more problems in EU answer to US green subsidies

Industrial energy-intense sectors, outside Germany and France, will not move to the US. They will go bust, as they cannot compete in a fragmented single market. So to save industry in two member states, we will kill the rest?

Latest News

  1. MEPs launch anonymous drop-box for shady lobbying secrets
  2. Hawkish ECB rate-rise 'puts energy transition at risk'
  3. MEPs push for greater powers for workers' councils
  4. How Pavel won big as new Czech president — and why it matters
  5. French official to take on Islamophobia in EU
  6. EU green industry plan could spark 'dangerous subsidy race'
  7. Wolves should be defended, EU ministers urge
  8. EU Commission wants drones for Bulgaria on Turkey border

Stakeholders' Highlights

  1. Party of the European LeftJOB ALERT - Seeking a Communications Manager (FT) for our Brussels office!
  2. European Parliamentary Forum for Sexual & Reproductive Rights (EPF)Launch of the EPF Contraception Policy Atlas Europe 2023. 8th February. Register now.
  3. Europan Patent OfficeHydrogen patents for a clean energy future: A global trend analysis of innovation along hydrogen value chains
  4. Forum EuropeConnecting the World from the Skies calls for global cooperation in NTN rollout
  5. EFBWWCouncil issues disappointing position ignoring the threats posed by asbestos
  6. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal

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. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  4. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  5. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  6. European Committee of the RegionsRe-Watch EURegions Week 2022

Join EUobserver

Support quality EU news

Join us