Merkies: 'Dear deal for Cyprus is mainly buying time’

25 March 2013

Merkies: 'Dear deal for Cyprus is mainly buying time’

In the opinion of SP Member of Parliament Arnold Merkies, uncertainty continues to surround Cyprus, despite the agreement reached this evening.

Arnold Merkies SP‘What this expensive Cyprus deal has bought above all is time. No end has been put to the uncertainty, because major sections of this agreement have not been properly worked out and remain unclear. It appears that what they were looking for was the best solution for the banks rather than the best solution for Cyprus’s people. We cannot vote in favour of a ten billion euro loan without being clear whether this is a solution for Cyprus.’

The SP is sceptical as to whether the agreement represents an adequate approach to the banks and whether the bill for this will really fall to private investors in the financial sector to settle. ‘We need still to take a good look at the way this is being applied,’ says Merkies. ‘It’s being said that Laiki Bank’s shareholders will now have to contribute to paying, but this bank was already 84% owned by the state, so there’s nothing much in that. And as for the other bank, Bank of Cyprus, which is largely in private hands, it remains completely uncertain how investors and rich Russians are going to pay their share.’

Last week Merkies drew attention to Finance Minister and Eurogroup chair Jeroen Dijsselbloem’s gross error, which must also be blamed on the other negotiating parties, in imposing a levy on bank accounts under €100.000. ‘This levy has now in any case been thrown out, which is advantageous for ordinary Cypriots,’ says Merkies. ‘The question remains as to why so much uncertainty and disquiet was created for an entire week. Small savers in Cyprus, but also surely those elsewhere, have been extremely worried about their savings, which doesn’t do much for confidence. Already with all this uncertainty disquiet has grown enormously.’

According to Merkies there should be no question of new loans to Cyprus until there is clarity over how private parties will contribute and a clear picture of Cyprus’s future is sketched out. ‘€10 billion will now be handed over without our knowing how Cyprus is going to produce the rest of the money,’ Merkies points out. ‘It’s even been agreed that Cyprus will once again go cap in hand to Putin for new negotiations over support. It all looks unstable, but with this emergency package the question is simply whether that money will ever be paid back if Cyprus falls once more into difficulties.’

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