Friday

8th Dec 2023

Bundestag approves Cyprus bailout

  • The German Bundestag has approved all eurozone bailouts so far (Photo: BriYYZ)

The German Parliament on Thursday (18 April) approved with a large majority a €10 billion EU and International Monetary Fund bailout for Cyprus. They also backed a request to give seven extra years for Ireland and Portugal to repay their loans.

Out of the 600 MPs who cast their vote on the Cyprus bailout, 487 were in favour, 102 against and 13 abstained.

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

The Bundestag previously had threatened to veto a Cyprus deal due to concerns over money laundering and doubts that the tiny Mediterranean island is "relevant" enough for the eurozone to be worth saving.

Speaking ahead of the vote, German finance minister Wolfgang Schaeuble said even though the Cypriot economy is less than 0.1 percent of the eurozone GDP, letting the country go bust would undo the market confidence that has returned over the past year and endanger Greece, Portugal, Ireland and Spain.

"Cyprus is systemically relevant," Schaeuble said.

"I ask you to approve this package so that we can prevent Cyprus undermining the progress made in stabilising the eurozone," he added.

Separately, Schaeuble asked for the Bundestag to approve a seven-year loan extension for Portugal and Ireland, who "adopted a lot of reforms in the last years" and "deserve our respect."

MPs approved the request with similarly high majorities: 496 votes in favour for the loan extension for Portugal, 498 for Ireland.

The Social-Democratic opposition, while criticising the way Schaeuble handled the negotiations on the Cypriot bailout - which in a first version would have touched on all deposits on the island - approved the deal out of "European solidarity."

"We have to show solidarity with Cyprus, but not with tax evasion and money laundering," said SPD chief Frank-Walter Steinmeier.

He said the SPD got what it wanted as the Cypriot government agreed to impose losses on rich depositors and to increase the corporate tax, as well as accept an external audit on how banks implement rules against money laundering.

The only group having voted against the bailout was the leftist Linke, who criticised the German government for "dismantling the social systems" in all the bailed out countries and protecting "big banks" at the expense of the people on the street.

Linke MP Gregor Gysi also pointed out that an upcoming vote in the Cypriot parliament may thwart the deal. "Let's wait and see what happens," he said.

A vote will "for sure" take place later this month, but no date has been set yet, a Cyprus government spokesman told this website.

The government counts on a thin majority in the 56-seat parliament: 29 would be in favour, whereas the anti-bailout opposition can count on 27 votes.

Bundestag likely to approve Cyprus bailout

The German parliament is likely to approve Cyprus' bailout programme despite concerns over a widening funding gap and growth projections which may prove too optimistic.

Ireland and Portugal set for debt deferral

Ireland and Portugal are to be given more time to repay their emergency loans with both countries seen as good pupils in following the imposed austerity programme.

Spain's Nadia Calviño backed to be EIB's first female chief

With less than a month to go before the start of a new leadership of the European Investment Bank, the world's largest multilateral lender, the path seems finally clear for one of the candidates, Spanish finance minister Nadia Calviño.

Analysis

Is there hope for the EU and eurozone?

While some strengths may have been overlooked recently, leading to a more pessimistic outlook on the EU and the euro area than the truly deserve, are there reasons for optimism?

Spain's Nadia Calviño backed to be EIB's first female chief

With less than a month to go before the start of a new leadership of the European Investment Bank, the world's largest multilateral lender, the path seems finally clear for one of the candidates, Spanish finance minister Nadia Calviño.

Analysis

Is there hope for the EU and eurozone?

While some strengths may have been overlooked recently, leading to a more pessimistic outlook on the EU and the euro area than the truly deserve, are there reasons for optimism?

Latest News

  1. EU suggests visa-bans on Israeli settlers, following US example
  2. EU ministers prepare for all-night fiscal debate
  3. Spain's Nadia Calviño backed to be EIB's first female chief
  4. Is there hope for the EU and eurozone?
  5. Crunch talks seek breakthrough on EU asylum overhaul
  6. Polish truck protest at Ukraine border disrupts war supplies
  7. 'Green' banks lend most to polluters, reveals ECB
  8. Tense EU-China summit showdown unlikely to bear fruit

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Join EUobserver

Support quality EU news

Join us