Brussels, 04/03/2013 (Agence Europe) - In an exclusive interview with this newsletter on Monday 4 March 2013, the prime minister of Luxembourg, Jean-Claude Juncker, said that, if a member state in the eurozone had a problem of the type, nature and scale of the Cypriot problems, then it would have to be considered a “systemic case”.
Juncker's comments echo the words of Euro Commissioner Olli Rehn at the weekend, warning in German magazine Der Spiegel of the dangers of Cyprus being forced out of the euro.
Cyprus was at the top of eurozone finance ministers' concerns on Monday afternoon, although no final decision was expected on the bailout plan. “We are going to meet our new colleague from Cyprus”, commented the head of the Eurogroup, Jeroen Dijsselbloem, laconically as he arrived in Brussels for the meeting.
Michael Sarris, who has taken over as Cypriot finance minister from Vassos Shiarly, warned his colleagues of the consequences of the rumours that private savers could well be required to take a hit to make the country's debt sustainable. Last month, Dijsselbloem explicity rejected such an idea (see EUROPE 10784).
Over the weekend, Sarris pointed out that the rumours had led to a “substantial outflow” of savings from Cypriot banks. The head of the Eurogroup said on Monday that the aid plan would have to address this danger. Euro Commissioner Olli Rehn said in Der Spiegel that the European Commission was not planning to get savers to contribute and said he did not want to see a writedown in the value of Cypriot bonds. Juncker said the problem must not be addressed with blinkers on.
At the Eurogroup meeting on Monday, the ministers are not expected to talk about the technicalities, focussing instead on money-laundering, said French Economy Minister Pierre Moscovici. Referring to the Cyprus question, Irish Finance Minister Michael Noonan said: “Banks and sovereign debt - you can do it all with €171.5 billion, but there are issues surrounding it which makes it quite difficult”.
A Cypriot source says that Sarris asked his colleagues what exactly was expected of the government so that the aid package could be finalised. He asked the same question of the troika of lenders (European Commission, European Central Bank and international Monetary Fund) in a meeting in Brussels on Sunday. Cyprus is not disputing the idea of an audit as such, but is reported to be in disagreement with the eurozone over who exactly should carry it out. The eurozone wants Cyprus to commission a private company to do so in order to have a quicker result. Cyprus wants a mixed group of public and private experts to be set up for the purpose.
Despite the disagreements, the Eurogroup head said he was confident agreement would be reached in March. German Finance Minister Wolfgang Schaüble said over the weekend that he would not let himself be pushed into an agreement. Juncker said agreement is needed by the end of the month and it was possible to have more speed and less haste. The Irish Presidency wants agreement “rather sooner than later”. (EL/transl.fl)