Bloomberg News

Russia Must Be Part of Cyprus Bailout, Schaeuble Tells Lawmakers

January 15, 2013

Russia must participate in a euro- area bailout package for Cyprus, German Finance Minister Wolfgang Schaeuble told lawmakers today in Berlin.

European officials have signaled they expect Russia to back a solution keeping Cyprus afloat, Schaeuble told legislators from Chancellor Angela Merkel’s Christian Democratic-led bloc, according to a party official who was present.

A bailout for the Mediterranean island nation, the fifth since the European debt crisis broke out more than three years ago, will take more time to negotiate with Cyprus’s international creditors, Schaeuble told lawmakers.

German parliament members from inside and outside Merkel’s governing coalition have voiced concern about a bailout because of allegations of tax fraud among banks in Cyprus and deposits by Russian billionaires exploiting a favorable tax regime. Rainer Bruederle, the caucus leader for Merkel’s Free Democratic coalition partner, told Bild newspaper Jan. 9 that there are “too many question marks” surrounding aid for Cyprus.

Schaeuble told lawmakers from Merkel’s CDU and its CSU Bavarian sister party that no concrete numbers for Cyprus’s financial needs have been finalized since negotiations began in earnest in November, said the official, who spoke on condition of anonymity according to official protocol.

Asset Sales

The German minister said officials are closely watching next month’s presidential election in Cyprus, which will produce a successor to President Demetris Christofias, the official said. Christofias, a communist, rejects selling state assets as part of a finance package.

The so-called troika of international creditors -- the International Monetary Fund, the European Commission and the European Central Bank -- will have difficulty reaching an agreement without privatization of Cypriot assets, Schaeuble told the lawmakers in Berlin, according to the official.

Merkel threw her support behind Nicos Anastasiades, the head of Cyprus’s center-right DISY opposition, during a visit to the island last week. Christofias told reporters today in Strasbourg that a Cyprus aid deal is being delayed by the government’s differences with the IMF over Cypriot banks’ capital needs.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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