President Nikos Anastasiades has announced an agreement between political parties in Cyprus to establish an “investment solidarity fund” as part of a new bailout plan.
No details have been released on how the fund would be constituted.
After a meeting that lasted for several hours on March 21, Cypriot leaders agreed to drop a hugely unpopular tax that had been proposed on bank deposits.
The decision came as the European Central Bank (ECB) told Cyprus it had until March 25 to come up with a new bailout arrangement or see its emergency funding cut off and its banking sector shut down.
The ECB is keeping Cypriot banks afloat by allowing them to use emergency funds from the local central bank.
Cyprus must raise 5.8 billion euros ($7.5 billion) in order to qualify for a 10 billion-euro ($13 billion) international bailout.
Meanwhile, Finance Minister Michalis Sarris is in Moscow for a meeting with Deputy Prime Minister Igor Shuvalov to discuss a possible Russian loan.
European Commission President Jose Manuel Barroso is also in Moscow to discuss Cyprus and said he was “very concerned” about the Cyprus crisis.
Barroso arrived in Moscow on March 21 for talks with Russian Prime Minister Dmitry Medvedev. Cyprus is reported to be at the top of the agenda.
Russians have $31 billion in private and corporate cash deposited in Cypriot banks.
‘Solution Within Europe’
But speaking at a meeting of the European Parliament’s Economic and Monetary Affairs Committee in Brussels, Dutch Finance Minister Jeroen Dijsselbloem, the head of the Eurogroup panel of eurozone finance ministers, said more loans were not the answer.
“If the Russians were to say, ‘We could lend more,’ that would not help on the sustainability of the debt situation. Building up debts in Cyprus doesn’t help them to work towards a new future,” Dijsselbloem said.
“The Eurogroup was and is of the view that small depositors should be treated differently from large depositors, and it reaffirmed the importance of fully guaranteeing deposits of below 100,000 euros,” he added.
On March 20, European Parliament President Martin Schulz told journalists in Brussels: “The eurozone must find a solution [to the Cyprus debt crisis] within our own frames, within the frame of our own cooperation in the eurozone. This is for me absolutely vital, and we should not run to find a solution outside the European Union.”