UPDATE 2-No debt restructuring for "persecuted" Cyprus

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Tue Feb 12, 2013 12:11pm EST

* Cyprus available a bailout equal to a whole economy

* Wary of fallout, Commission order out waste for depositors

* Eurogroup authority says Russia might be concerned in solution

By Leigh Thomas and Lefteris Papadimas

BRUSSELS/ATHENS Feb 12 (Reuters) ? The European Union has no
plans to restructure Cyprus?s debt and will try to keep down the
cost of a financial rescue, whose terms a island?s outgoing
president decried as persecution.

Crippled by a bearing to Greece, Cyprus needs 17 billion
euros ($23 billion) from a euro section to recapitalise a banks
and to financial a supervision over a subsequent 3 years.

That is roughly as most as a whole Cypriot economy produces
in a year, lifting doubts possibly a euro section member state
would ever be means to compensate behind a money.

Without outmost help, Cyprus would slip into default,
risking a euro zone?s credit and melancholy progress
made final year in convincing investors that a confederation will not be
overwhelmed by a debt problems.

EU Economic and Monetary Affairs Commissioner Olli Rehn said
on Tuesday that underneath a terms of a rising bailout, Cypriot
government debt would not be restructured to levy waste on
private creditors.

That should encourage private bondholders that they are not
being singled out for waste by European policymakers,
bolstering their certainty in shopping euro section bonds.

?The European Commission is not operative on any PSI option
for Cyprus,? Rehn told reporters, referring to a Private
Sector Involvement (PSI) that forced waste on holders of Greek
debt in 2012. ?Greece is a specific claimant and singular case.?

Following a assembly of euro section financial ministers in
Brussels on Monday, Eurogroup President Jeroen Dijsselbloem, who
chairs them, pronounced Cyprus was not positive a inexhaustible understanding either.

?We are perplexing to reduce a volume that would be brought
together by a member states,? Dijsselbloem, who is also the
Dutch financial minister, told Dutch broadcaster RTL 7 on Tuesday.

Cyprus asked for assistance in Jun 2012 and has spent the
past 8 months in negotiations with a European Commission,
the European Central Bank and a International Monetary Fund.

Politicians in Germany, a biggest donor to a euro zone?s
bailout fund, are wavering about extenuation Cyprus a rescue
because of a standing as a taxation breakwater for abounding Russians.

EU policymakers? tough position on Cyprus, that binds a
presidential choosing on Sunday, stirred a effusive president
to protest that a nation was being mistreated.

?Cyprus feels persecuted,? Demetris Christofias, who is not
seeking re-election, told reporters in Athens. ?We were forced
to review to a support mechanism, and instead of support, this
is persecution.?

Once elections have been hold and a new Cypriot boss is
in place, talks on a rescue are approaching to come to a head.

Rehn pronounced euro section financial ministers would confirm in March.

RUSSIAN LOAN

Cyprus has blamed a preference to restructure Greece?s debt
for destroying a possess economy, that was once buoyed by real
estate and a clever services sector.

Cypriot banks have a vast bearing to beside Greece
and had to write off around 80 percent of a value of their
Greek bond holdings.

To assistance to accommodate a financing costs, Cyprus has already
taken a 2.5-billion-euro loan from Russia that has built close
ties to a island of 1 million people.

Dijsselbloem pronounced on Tuesday that Moscow might be concerned in
the final bailout understanding given a loan it had provided.

?We know that there are many comment holders with a foreign
background, (in Cyprus) and partial of those are undoubtedly
Russian. That plays a purpose (in a solution),? he said.

Policymakers have been reduction transparent about a probability of
depositors in Cypriot banks losing money. Rehn pronounced the
Commission directed to safeguard a satisfactory pity of a cost burden.

On Monday, Cyprus?s financial apportion done it transparent he did
not wish to levy waste on bank depositors, observant speak of a
so-called bail-in was ?grossly exaggerated.?

Source: http://cyprustoday.net/news/index.php/update-2-no-debt-restructuring-for-persecuted-cyprus/?utm_source=rss&utm_medium=rss&utm_campaign=update-2-no-debt-restructuring-for-persecuted-cyprus

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