Cyprus applied for financial aid last June after its banks suffered huge losses on a EU-approved writedown of Greek debt, but some eurozone states have voiced unease about bailing out a country they say must improve financial transparency.
“Nobody has proved so far that we offend against the rules or even support money laundering,” Finance Minister Vassos Shiarly told Der Spiegel magazine in an interview published Sunday (13 January).
“We see our future as a serious financial centre. That’s why we want to be one step ahead of our European partners in financial market regulation in future,” he told the weekly.
Shiarly said money laundering existed everywhere, including in Germany, but that Cyprus was fighting it resolutely.
In November, Der Spiegel had cited a German intelligence agency report as saying “Russian oligarchs, business people and mafiosi” would benefit most from any bailout and that Cyprus was a “gateway for money laundering in the EU”. According to the report, about €20 billion were deposited in Cyprus in 2011 by Russian oligarchs.
But while German Chancellor Angela Merkel on Friday called on Cyprus to move forward with its own obligations and reforms, she also said EU states must show solidarity, apparently giving conditional support to a bailout for the island.
Finance Minister Wolfgang Schäuble said later on Friday that unless the Cypriot government could show it was sticking to anti-laundering rules, “we have no desire for a race on who is willing to do something first”.
A potential rescue bill of €17 billion, equivalent to the country’s entire economic output, has deepened concerns among EU partners about Cyprus’ debts, and some doubt it would be able to repay the aid without more concessions from lenders.
Will the Bundestag ratify the bailout?
A number of lawmakers from Germany’s parliament, which would have to approve any bailout, have already voiced concerns about a rescue for Cyprus, a popular tax haven for wealthy Russians.
Cyprus says it fully complies with international rules against money laundering and that its double-taxation avoidance treaty with Moscow and low tax rate give it a competitive edge.
Shiarly rejected demands to raise the corporate tax rate, saying it was discussed intensively when Cyprus joined the EU and found not to be a problem.
But European Central Bank board member Jörg Asmussen told Der Spiegel that Cyprus would need to do more before financial aid could flow.
“My impression is that improved transparency of the financial sector will be decisive for member states to agree to a programme,” Asmussen was quoted as saying.
The results of an asset review of Cyprus’ banking sector are due on 18 January and eurozone finance ministers will discuss the country’s aid request at a regular meeting in Brussels on 21 January. No decision is expected from that meeting.
Shiarly said the island state’s parliament had agreed all conditions set by international lenders for a bailout.
“Given the uncertain situation, a quick decision by the Eurogroup is necessary to stabilise market confidence,” the finance minister added.
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