• Germany's news in English
 

Cyprus: German politics and 'envy' hurt bailout

The Local · 28 Jan 2013, 14:31

Published: 28 Jan 2013 14:31 GMT+01:00

German politicians have criticized plans to bail out Cyprus, saying its banks are havens for tax evaders and money launderers.

Cyprus's request for EU financial aid for its debt-ridden economy has been undermined by damaging allegations it is a laundromat for dirty Russian money as international lenders call for greater transparency.

"The issue is a political one because of the German elections," a government source told news agency AFP on condition of anonymity.

Cyprus sought out aid last June. But suspicions over banking sector transparency and Nicosia's reluctance to push through tougher reforms such as privatization have delayed the urgently needed bailout, leaving the country on the brink of bankruptcy.

"We are making sure we comply with all recommendations of the International Monetary Fund and the Eurogroup to ensure these allegations go away," said the

government source, referring to money-laundering charges.

"Another reason is that countries would like to have a piece of our pie as a financial centre," the source added.

Former finance minister Michalis Sarris said the money laundering issue keeps resurfacing because it is a "sexy topic" that sells in the German media and the election campaign in that country.

"Cyprus has to be above suspicion and do more than is necessary to demonstrate it is a reputable financial centre," Sarris told AFP.

He said under a draft bailout agreement, international lenders called for more transparency and a timely exchange of data when other countries request tax information.

"The government should ask for specifics and take the necessary measures required."

Nicosia is now on the counter-offensive on the issue of financial crime.

"It is obvious that behind the attacks against Cyprus there are vested interests. Those who attack Cyprus want to take its role as a serious, international, financial and investment centre," government spokesman Stefanos Stefanou told reporters on Thursday.

He said Cyprus was the fourth largest investor in Russia and the second biggest in Ukraine.

Fed up with negative reports alleging Cyprus to be a haven for the ill-gotten gains of Russian oligarchs, the Cypriot parliament is launching a campaign to defend the island's "clean" reputation on the European stage. And the government says it welcomes closer scrutiny of its financial sector.

"We are doing everything within our power for the implementation of all international recommendations. We disagree with allegations that there is non-implementation of laws and regulations," said central bank official Michalis Stylianou.

Eurogroup finance ministers made no decision on a rescue package for Cyprus

at a meeting in Brussels on Monday because negotiations on bank recapitalization are continuing. They said a decision would most probably be taken in March.

Outgoing Eurogroup president Jean Claude Juncker said this wait will also provide time for "close monitoring of the anti-money laundering" framework and its implementation.

Cyprus says it has adopted more international standards and recommendations than many of its fellow eurozone colleagues.

A Deutsche Bank report on the Cyprus debt crisis issued last week said there was an "excessive focus" on money laundering.

"It is rather Cyprus's status as an offshore tax haven with a relatively opaque banking sector heavily used by foreign depositors that is under scrutiny," said the report, referring to non-resident deposits of €24 billion, or $32 billion, much of it from Russia.

Nicosia called for a bailout in June when its banks, hit by the EU-imposed writedown on Greek debt, needed financial assistance.

In a draft agreement with the EU and IMF, the amount for the banks was set at up to €10 billion as part of a total package which could reach €17.5 billion - matching the output of the island's entire economy.

Although Cyprus has pushed through harsh austerity measures of around €1.2 billion in tax hikes and savings, fellow EU partners have called for more reforms.

AFP/mry

The Local (news@thelocal.de)

Your comments about this article

17:59 January 28, 2013 by smart2012
U cannot play the same game played with Greece with ciprus guys, as they know how financial business works and have strong Russian support. And here is the reason why ciprus is now telling the truth in the face of Verkel
Today's headlines
The photojournalist making news intimate
World Press Photo winner Mads Nissen. Photo: DPA

The photojournalist making news intimate

13 hours ago

Photographer Mads Nissen’s World Press Photo of the Year is currently touring Germany and the world. It’s a provocative image of two Russian gay men and one that some say is changing the definition of photojournalism.

Six athletics world champs head to Berlin
ISTAF is held annually in Berlin. File Photo: DPA

Six athletics world champs head to Berlin

13 hours ago

six world champions, freshly crowned from Beijing, will be gracing Berlin's Olympic Stadium on Sunday in the annual ISTAF track-and-field meet.

A week after heatwave, snow falls in Bavaria
Zugspitze, Germany's highest mountain. File Photo: DPA

A week after heatwave, snow falls in Bavaria

13 hours ago

From 30C to snow in under a week? It's possible in Germany where seven centimetres of the white stuff fell at the top of the Bavarian Alps on Friday.

Oktoberfest and the Refugee Crisis
Munich plans to keep revellers, refugees apart
Police and refugees at Munich Central Station. Photo: DPA

Munich plans to keep revellers, refugees apart

13 hours ago

Police in Munich are preparing a significant operation to ensure that drunken revelers at Oktoberfest are kept away from refugees arriving at the city's central station from Budapest.

Criminal had time for pit stop in 20-cop-car chase
Photo: DPA

Criminal had time for pit stop in 20-cop-car chase

17 hours ago

With 21 police cars and a helicopter hot on his heels, it seemed unlikely that police in Düsseldorf would fail to catch one rogue motorist. But after a two-hour pursuit, that's exactly what happened in the early hours of Friday.

What's keeping Germans awake at night in 2015?
The Greek debt crisis has been haunting German dreams. Source: Wikipedia

What's keeping Germans awake at night in 2015?

1 day ago

Having to cough up for the excesses of spendthrift southern Europeans is the fear most likely to haunt German nightmares in 2015. But getting caught up in a natural disaster isn't far behind, an annual survey shows.

This Week in History
The death of a great humanitarian
Schweitzer spent most of his later years at Lambaréné. Photo: DPA

The death of a great humanitarian

1 day ago

On September 4th 1965, the world lost one of its most dedicated and tireless humanitarians, as Albert Schweitzer died in the African hospital he had created and cherished for over 50 years. A hospital that continues to save lives today.

Refugee crisis
Pro-refugee group push punk classic to no. 1
Die Ärzte singer and drummer Bela B. with a DVD titled "not interested in Nazis" in 2009. Photo: DPA

Pro-refugee group push punk classic to no. 1

18 hours ago

Under the banner of "Arsehole Action", activists campaigning against xenophobia and hatred of refugees have pushed a 1993 hit by punk band Die Ärzte mocking the far right to the top of Germany's charts.

Refugee Crisis
Orban: Muslims threaten European identity
Viktor Orban, guardian of Europe? Photo: DPA

Orban: Muslims threaten European identity

20 hours ago

Hungarian Prime Minister Viktor Orban warned Thursday that the wave of mostly Muslim refugees coming to Europe threatens to undermine the continent's Christian roots - an idea rejected by German Chancellor Angela Merkel.

Football fan given 18 months for lighting flare
Football fans set of a flare. File Photo: DPA

Football fan given 18 months for lighting flare

20 hours ago

Germany is continuing its zero tolerance approach to football supporters lighting flares in Bundesliga grounds after a Schalke supporter was jailed for 18 months on Thursday with no parole.

RECEIVE OUR NEWSLETTER AND ALERTS

Features
'Berlin is kind of like the best American city'
Features
How Brits in Germany are facing Brexit fears
Sport
German named 'arse bombing' world champ
Travel
Retiree finds parked car after three-week search
National
Ten ways Germany puts Britain to shame
Business & Money
German gadget clamps down on Nutella thieves
Society
Is Germany now a nation of couch potatoes?
National
Half of Germans 'have had sex in their car'
Society
Deadly stew spooks home vegetable gardeners
Politics
The man who brought two Germanies together
Features
Where to get your culture fix in Cologne
Education
Fairytale world of Brothers Grimm brought to life
Rhineland
Thieves leave 1,000 open beers untasted
National
Way to some Germans' hearts is through their wallets
National
Germany's biggest challenge: European refugee crisis
Travel
Where to get your adrenaline pumping in Germany
Technology
Could thieves hack into luxury cars?
What to watch out for when snapping your lunch
National
German lefties through history
National
The fight over prostitution heats up
National
Merkel: migrants, not Greece, are the real challenge
Features
How I explained the Queen to the Germans
Education
Why Germany does 'back-to-school' traditions better
National
Germans are ‘not how foreigners think’
National
A mum and daughter reunite 70 years after WWII
Sport
Bra stops bullet in hunting mishap miracle
National
Cows trample German woman to death in Graubünden Alps
Business & Money
Start-up helps new Berliners short cut bureaucracy
National
The 1,000s of Germans massacred after the Second World War
Sport
Germany star scores own goal with PR gaffe
Features
'Women-only' parking: sensible or sexist?
Politics
Satire and reality blur in parody party's strife
National
13-year-old boy detained for trying to join Isis
Culture
Berlin restaurant serves up Greek Crisis Menu
Rhineland
Doctor on trial after woman wakes in morgue
Society
Six odd things Germans do in the summer
Society
Police bust kinky Bavarian couple over painful love-making
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

6,913
jobs available
Toytown Germany
Germany's English-speaking crowd