Daily Press Summary
Big depositors in two largest Cypriot banks face significant losses under new bailout deal; Cypriot Archbishop calls for euro exit
The Cypriot government has agreed with the EU/IMF/ECB Troika on a revised bailout plan, which was signed off by eurozone finance ministers in the early hours of today. Under the deal, the second-largest Cypriot bank, Laiki Bank, will be split into a ‘good bank’ and a ‘bad bank’. All deposits below €100,000 will be transferred to the ‘good bank’, which will merge with Bank of Cyprus, the largest Cypriot bank. Deposits over €100,000 will remain in the ‘bad bank’, which will be wound down over time – meaning that all Laiki Bank big depositors are set to take significant losses.
Bank of Cyprus will be recapitalised, with deposits over €100,000 expected to take significant losses in the process (reports suggest the haircut could be of up to 40%). The controversial deposit levy has been scrapped, so the new deal will not have to be approved by the Cypriot parliament. Cypriot MPs had already adopted the bank restructuring plan on Friday, along with a set of measures to enforce capital controls, meaning that they don’t have to vote again on the details. It remains unclear whether Cypriot banks will re-open tomorrow as planned. Open Europe’s Raoul Ruparel appeared on CNN this morning discussing the deal. Open Europe’s rolling blog coverage of the Cypriot crisis was cited by CNN Money, Il Sole 24 Ore and Ziarul Financiar, Italy’s and Romania’s leading business dailies, ZeroHedge, and the Guardian’s and Telegraph’s live blogs, while Open Europe’s Pawel Swidlicki was cited in the New Zealand Herald.
Meanwhile, FAZ reports that the Cypriot Central Bank’s liabilities to the rest of the Eurosystem (Target 2) have increased by between €100m and €200m over the past week, suggesting that funds have been leaving the island despite the banks being closed and the restrictions on cash and electronic transfers. Separately, EUobserver reports that the leader of the Cypriot Orthodox Church, Chrysostomos II, said on Saturday, “It is certain that [the euro] will not last in the long term, and the best is to think about how to escape it.” According to a survey by pollster Maurice de Hond, 56% of Dutch think Cyprus should leave the eurozone.
FT Eurogroup statement EUobserver Irish Times European Voice EUobserver 2 FT 2 Independent Guardian Le Figaro El País El Mundo El Mundo 2 Kathimerini Kathimerini 2 Kathimerini 3 Times Mail Telegraph Irish Times European Voice Euractiv BBC Bild Welt Süddeutsche Süddeutsche 2 FAZ FAZ 2 New Zealand Herald Il Sole 24 Ore Ziarul Financiar El País
A leader in Handelsblatt argues: "For the first time, the eurozone dares to close down a bankrupt bank and let wealthy shareholders and bondholders pay for it". Writing in Die Welt, Sebastian Jost also welcomes the “ground-breaking” deal which places the burden on the wealthy rather than on the public, while adding that it is also a “risky experiment”.
Handelsblatt: Leader Welt: Jost WSJ: Nixon WSJ: Jenkins Jr. FT: Münchau FT: Dizard Telegraph: Halligan Telegraph: Bootle Saturday’s Telegraph: Moore Saturday's Telegraph: Leader Saturday's Guardian: Leader FT Weekend: Barber
Mats Persson: Events in Cyprus have shown just what a “high-risk gamble the euro was” and that Germany is “no longer willing indefinitely to foot the bill alone”
Writing in the Sunday Telegraph, Open Europe Director Mats Persson argued that “Events in Cyprus have shown just what a high-risk gamble the euro was.” He added, “The euro remains a supranational currency ruled by 17 national governments, parliaments and electoral cycles. If you could design a system whereby a splinter could take down an elephant, this would be it.”
In Saturday’s Times, Mats set out how Cyprus might leave the eurozone in the absence of a bailout deal. He noted that whatever the eventual outcome “the eurozone has never been this close to waving goodbye to a member” and that “this episode signals that Germany and the other northern European countries are no longer willing indefinitely to foot the bill alone. At the same time the eurozone continues to lack the tools to deal with an acute crisis. This makes change almost inevitable for the way the eurozone is governed.” He concluded that this could be an opportunity for the UK to push its vision of an EU in which “powers can be passed back to member states.” Mats also looked at the mechanics of a euro exit on his Telegraph blog.
Saturday's Times: Persson Sunday Telegraph: Persson Telegraph: Persson’s blog
David Cameron announces tighter rules on EU migrants’ access to benefits
In a keynote speech to be delivered today David Cameron will announce a raft of measures to restrict migrants’ access to welfare benefits. EU migrants will be stripped of jobseekers benefits after six months unless they can prove they have been actively looking for a job and stand a “genuine chance” of finding one. The Government will also extend the “range and depth” of questions in the habitual residence test, which checks that people meet residence requirements for housing and income-related benefits.
Open Europe research: Free Movement Times Mail Mail: Leader Sun Sun: Leader FT Guardian Conservative Home Telegraph Saturday's Telegraph EUobserver
Bersani in talks to form new Italian government, but divisions emerge in his own party
After being given a preliminary mandate by Italian President Giorgio Napolitano on Friday, Italy’s centre-left leader Pier Luigi Bersani has started a round of talks to try and gather enough support from other political parties to form the new government. However, divisions are emerging within Bersani’s own party – with a group of members closer to Florence Mayor Matteo Renzi pushing for some sort of coalition agreement with Silvio Berlusconi. Renzi will not attend a high-level party meeting tonight. Meanwhile, Berlusconi told Canale 5 this morning that new elections should take place “as soon as possible” unless Bersani’s party agrees to form a grand coalition with him and elect someone closer to the centre-right as next Italian President.
Corriere della Sera Il Sole 24 Ore Repubblica RAI La Stampa
Braun: Anti-euro Alternative for Germany could breakthrough nationally
Writing in Süddeutsche, Stefan Braun argues that the new anti-euro party Alternative for Germany could break through nationally as its opposition to the euro is not rooted in nostalgia for the Deutschmark but in doubt over the euro’s viability and the costs of the rescue efforts, in contrast to the main parties which are all committed to keeping the euro at all costs.
In an interview with Die Welt, the leader of the euro-critical Free Voters party Hubert Aiwanger argues that he would not rule out working with Alternative for Germany but argues that at present they are too dismissive of social policy and local issues. He argues that in his view the solution is not to give up on the euro altogether but to restore its “quality” by replacing countries like Greece and Cyprus with Sweden, Denmark and Poland.
Writing in Die Welt, Ulrich Clauß argues that Nazi-themed anti-austerity protests in Southern Europe are evidence of an “extreme divide in political culture between North and South in Europe”, adding that when ranked on issues like corruption in politics and administration, these countries rank alongside “third-world dictatorships”.
Welt: Clauß FAZ: Ross
The FT reports that in 2012 the Department for Business, Innovation and Skills made 26 requests to the EU to be allowed to conduct state aid - an increase of over 50% on previous years. Examples of projects requiring EU approval include plans to increase mobile phone coverage in rural areas, loans to credit-starved small- and medium-sized businesses in Northern Ireland, tax incentives for investment in poor regions and the Green Investment Bank.
Die Welt reports that Austrian Foreign Minister Michael Spindelegger said that “the EU has not done enough in Syria”, particularly in terms of facilitating political dialogue.
Saturday’s Telegraph reported that according to figures obtained by James Clappison MP, 22% of EU students who received public financed loans to study at British universities have disappeared without making repayments.
Saturday's Telegraph Saturday's Mail