Brussels, 12/02/2013 (Agence Europe) - Nothing concrete emerged from the eurozone finance ministers' meeting in Brussels on Monday 11 February about whether savers would be forced to accept a writedown in the value of Cypriot bonds as part of the country's rescue package.
The head of the Eurogroup, Jeroen Dijsselbloem, and Luxembourg Finance Minister, Luc Frieden, did not rule out such an option for making the Cypriot debt sustainable. Euro Commissioner Olli Rehn said that the idea of private sector involvement, leaked in the Financial Times on Sunday, had not come from the European Commission. French Economy Minister Pierre Moscovici said the idea would not be “pushed” by the European institutions or the member states. Cypriot Finance Minister Vassos Shiarly said he opposed the idea. In order to stamp out speculation, Dijsselbloem recommanded patience ahead of the signing of a Cypriot aid deal next month.
Officially, eurozone finance ministers barely touched on Cyprus at the meeting, focussing instead on Germany's concerns about potential money-laundering on the island. They called for fresh independent assessment of effective introduction of anti-money-laundering rules. If, during the course of this assessment by a private company, shortcomings should emerge, then extra measures would set out in the aid agreeement. Rehn said that active measures to tackle money-laundering would be an absolute precondition for EU aid.
On the sidelines of the finance ministers' meeting, Shiarly said he hoped the ministers would show more understanding as Cyprus is being forced to request international aid because of the write-down of Greek debt, which removed €107 billion in a PSI (Private Sector Involvement). He said that, as a sign of goodwill, Cyprus had gone along with this, but it had cost Cypriot banks €4.5 billion. Shiarly said the Greek PSI had been a mistake and such an situation would not apply to Cyprus because half of the island's private sector bond holders are, in fact, the very banks for which the aid was requested in the first place.
Shiarly hoped the country's natural gas reserves could be used to make the Cypriot debt sustainable. Nicosia has signed two gas drilling agreements, but it could take years before revenue starts to come in. (EL/transl.fl)