Clash among euro partners: no new aid for Cyprus
The recently agreed rescue package of ten billion euros will not be renegotiated or topped up. In response to a question about more money, eurogroup head jeroen dijsselbloem said in luxembourg on thursday: "that would not be a good situation for cyprus, because the loans must also be able to be paid back."That is why the lenders had limited the amount to ten billion euros. "The program is well calculated on the basis of expectations," says the dutchman.
Cyprus tried to smooth the waters. The cypriot government spokesman christos stylianides stressed on cyprus state radio (RIK) that although some changes to the austerity program were desired, the government wanted to adhere to the agreement with the lenders: "I emphasize this again and again so that this is understood."
In an urgent letter to the EU, cyprus president nikos anastasiades asked for help for the country’s largest bank, cyprus bank. The head of state criticized that the bailout of the banks was done "without careful preparation". In addition, the recession in cyprus is more severe than expected.
It was only in mid-april that the euro partners agreed on the aid package for cyprus after much wrangling. The island state was in crisis because of its oversized financial sector and a burst credit bubble.
Austria’s finance minister maria fekter said she sees no alternative that is "better than what we have painstakingly worked out by consensus."In the euro group there is "gross misunderstanding" about reopening the package now. The cyprus decision was very difficult, stressed luxembourg luc frieden.
Ministers also discussed government crisis in greece after closure of state broadcaster ERT. The eurogroup said the troika should return to greece in early july and complete its mission. Otherwise, the disbursement of the next aid tranche could be in danger. The troika of lenders had interrupted its mission at the beginning of the week against the backdrop of the political crisis in athens.
The eurogroup gave latvia the green light to 1. January 2014 to introduce the euro. The euro finance ministers issued a corresponding recommendation to the eu heads of state and government, as diplomats reported. The final decision will be made on 9. July.
The finance ministers also wanted to agree on basic rules for direct financial injections into ailing banks from the euro bailout fund ESM. Dijsselbloem said: "we have made progress. I hope we will get results today."
Federal finance minister wolfgang schauble (CDU) also expected a compromise on the baselines. According to him, the banking union is an important pillar in the fight against the crisis: "there is the attempt to gain more confidence in the european banking sector through a banking union."But this would only be possible within the framework of the EU treaties.
The EU steps up its fight against the dangerous credit crunch for smes in crisis countries. The EU commission and the european investment bank (EIB) presented an ideas paper on how to improve financing for small and medium-sized enterprises.
