Angela Merkel welcomes ‘fair distribution’ of burden in Cypriot crisis

Deal will help win back confidence, says German finance minister Wolfgang Schäuble

France’s finance minister Pierre Moscovici (left), IMF managing director Christine Lagarde, and Germany’s finance minister Wolfgang Schäuble  at  a Eurogroup meeting  in Brussels.  Photograph: Sebastien Pirlet/Reuters

France’s finance minister Pierre Moscovici (left), IMF managing director Christine Lagarde, and Germany’s finance minister Wolfgang Schäuble at a Eurogroup meeting in Brussels. Photograph: Sebastien Pirlet/Reuters

Tue, Mar 26, 2013, 06:07


Chancellor Angela Merkel has welcomed yesterday’s agreement with Cyprus for sparing taxpayers with bank deposits under €100,000 and imposing rescue costs on those who inflated the island’s banking sector.

German finance minister Wolfgang Schäuble said he was very pleased with the “fair” deal, a variation of a Berlin-IMF proposal rejected in Brussels talks a week previously.


‘Fair distribution’
“I am very pleased that a solution for Cyprus was successfully reached last night which meant that the country’s insolvency was averted,” said Dr Merkel yesterday, welcoming a “fair distribution” of the burden on to “those who have contributed to causing these undesirable developments”.

“That’s as it should be,” she said. “The banks must take responsibility for themselves. That’s what we have always said. We don’t want taxpayers having to save banks but that banks save themselves.”

Mr Schäuble said the deal, the basis for further negotiations between Nicosia and the EU-IMF troika, would shore up Cypriot public finances and “help win back lost confidence” in the island state.

In Berlin yesterday the opposition Social Democrats (SPD) and Green Party indicated they would support a Bundestag vote to release a German contribution to a €10 billion EU-IMF rescue fund. The vote is likely to take place by the end of April at the latest.

“We should have had this result a week ago,” said Mr Carsten Schneider, SPD budgetary spokesman in the Bundestag. “The result is a clear signal to EU member states with oversized banking sectors that is not sustainable for economic development.”

Bailout rebels in the government ranks said that, in line with previous rescue programmes, they would not be supporting the Cyprus deal.


‘Long way’
“Experience to date shows that, to get initial parliamentary approval, rescue programmes are later improved to the benefit of the over-burdened states,” said Klaus-Peter Willisch of the ruling Christian Democrats (CDU).

Norbert Barthle, CDU bundestag budgetary spokesman, said yesterday’s deal goes a “long way” toward satisfying the demands of German MPs.

“The result of the negotiations correspond for the greater part with our original proposals for a bail-in,” said Mr Barthle.

Dr Merkel’s junior Free Democrat (FDP) coalition partner welcomed the deal as a warning on tax competition in Eu rope.

“For Ireland, Portugal, Greece and Cyprus, the message is that they must consider which tax burden they have to have to finance their state and in the long term,” said Otto Fricke, an FDP Bundestag MP.