The Cypriot government has little room for maneuver as parliament resumes debate today on legislation to unlock bailout funds and prevent a financial collapse, Luxembourg Finance Minister Luc Frieden said.
“I see little wiggle room, including financially, for some European countries to make additional concessions to Cyprus,” Frieden said on German RBB Inforadio today. Euro-area finance chiefs discussed Cyprus on a teleconference late yesterday.
“The difficulty is that we’re not getting any details from Cyprus,” Frieden said. “That’s why we decided last night that we’d have to analyze the details and reconvene this weekend to see if we can back them or not.”
Euro-area finance ministers expect a proposal from Cyprus “as rapidly as possible” to raise the 5.8 billion euros ($7.5 billion) needed to trigger emergency loans, according to a statement issued after yesterday’s teleconference.
Cyprus in June became the fifth euro-area nation to request a rescue. The action came after Greece’s debt restructuring, the largest in history, trashed the financial health of lenders including Bank of Cyprus Plc and Cyprus Popular Bank Pcl, the country’s two largest.
The euro fell after Cyprus Finance Minister Michael Sarris said he had failed to obtain the financial support he sought from Russia.
Sarris was still in Moscow last night and didn’t take part in the finance ministers’ call, said Frieden. “He was represented by a colleague. A lot is still missing to draw any conclusions.”
Frieden said “time is slipping away” for Cyprus. “Banks will open again in Cyprus on Tuesday and a solution is absolutely necessary,” he said. “This isn’t just about Cyprus; it also concerns Germany, Luxembourg and the stability of the euro zone.”
Russia should contribute to the bailout, Frieden said.
“Even if Cyprus is just a small island, it’s a problem for all of Europe and also for those who are economically linked to Europe,” he said. “I would welcome it if Russia would contribute, but the solution has of course to be approved by the 17 in the Eurogroup.”