The Bundestag debated about whether the German funds put in the ESM can be used for loaning money to Cyprus. This makes more sense if you look at it this way, and what makes less sense is that the other EZ FinMin were able to say "yes" without submitting it to their own parliaments.
How big is the Cyprus aid package anyway? First the Cyprus bailout was €17bn, then it swelled to €23bn. Then top eurocrats criticized the press for writing about leaked documents (sorry, Olli, but we were in good company).
So, how big is it?
The FT's Peter Spiegel reckons that the correct answer may be €20.6bn, having carefully scrutinized all the documents available. But it's worryingly unclear.
It was Spiegel who helpfully published the leaked Debt Sustainability Analysis work on Cyprus (which included the €23bn figure) earlier this month. He took another look yesterday, after commissioner Olli Rehn claimed that reporters "have been comparing apples with pears and coming up with oranges".
Those leaked documents (pdf) clearly showed a €6bn increase in the program, which all falls on Cyprus. But it now appears that certain items shouldn't really be counted as they actually cut the country's debt burden (eg: the controversial gold sale will help to lower Cyprus's borrowing costs.)
Spiegel writes:
The “baseline – full bailout” assumptions going into the deliberations were that the total cost of the bailout would be €16.7bn, broken down this way:
Or, to put it more simply: €6.7bn to run the Cypriot government and €10bn to shore up its faltering banks.
- €8.9bn to recapitalize Cyprus’ banks
- €1.1bn to recapitalize its cooperatives
- €1.8bn to finance the Cypriot government over the course of the three-year program
- €4.9bn to pay off bonds that come due during the program
A close reading of the European Commission’s assessment of financing needs for Cyprus after the agreement looks like this:
Or, to put it more simply: €7.5bn to run the Cypriot government and €13.1bn for its banks. Add that up and you get €20.6bn, not the €23bn contained in the ESM document.
- €10.6bn to wind-down or restructure Cyprus’ two largest banks
- €2.5bn to recapitalize cooperatives and small banks
- €3.4bn to finance the Cypriot government
- €4.1bn to pay off bonds that come due during the program
This confusion didn't cause much alarm in the Bundestag this morning, as German MPs voted in favor of the plan. After all, the international lenders' contribution remains at €10bn.
Cypriot MPs, though, may demand answers.....
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Un oficial al Ministerului cipriot de Finanţe, Christos Patsalides, a asemănat vineri tratamentul aplicat Ciprului de Germania şi FMI cu "împuşcarea unui porumbel cu o bombă atomică", el afirmând că au distrus un sistem economic funcţional.
Oficialul, care a participat la negocierile recente dintre Cipru, Uniunea Europeană şi FMI, a descris totodată creditorii internaţionali ca "forţe de ocupaţie", cărora nu le pasă de drepturile omului, relatează Kathimerini, citat de Mediafax.
Patsalides a făcut aceste afirmaţii în cadrul unei anchete judiciare referitoare la circumstanţele care au condus la prăbuşirea economică a uneia dintre cele mai mici ţări din zona euro.
"O echipă neînduplecată de tehnocraţi a aplicat o pedeapsă fiscală sălbatică Ciprului. La insistenţa Germaniei şi FMI, au împuşcat un porumbel cu o bombă atomică", a spus Patsalides.
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