Cyprus Mail www.cyprus-mail.com
Wednesday, January 23, 2013
€1
CYPRUS
WORLD
LIFESTYLE
Urgent appeal for hungry Paphos families
Obama ball: not much room for dancing but a night to remember
Why everyone fell for the kooky one in Girls centre
10
6
Cyprus woes may hurt the eurozone Top bankers warn island’s problems could still derail ‘fragile confidence’ By Elias Hazou and Annika Breidthardt
C
YPRUS’ financial problems could still derail fragile confidence in the eurozone that the bloc fought hard to regain in 2012, European Central Bank board member Joerg Asmussen said yesterday. His comments follow doubts whether the island, with gross domestic product of barely 0.2 per cent of the euro zone’s output, was large enough for a potential default to unsettle the 17-nation euro zone, such a risk being a precondition for a bailout. “Disorderly developments in Cyprus could undermine progress made in 2012 in stabilising the euro area. Cyprus could well be systemic for the rest of the euro area despite its size,” Asmussen said. “Under normal circumstances one would expect the direct impact of a default to be limited, and it’s obvious that without assistance the country will default,” he told Reuters, but added the situation was not normal. “At the same time we should recognise that the situation is not normal. Even though the promise of the OMT (ECB bond-buying) and other important decisions have calmed the markets, this situation is still fragile.” Charles Dallara, Managing Director of the Institute of International Finance (IIF) also warned policymakers against complacency when dealing with Cyprus. “I would have thought we would have learned a powerful lesson from Greece that the relative or absolute size of an economy sometimes is ir-
relevant when it comes to its potential impact on the euro zone and indeed global markets,” he said. Among those to question the potential impact of difficulties in Cyprus is German Finance Minister Wolfgang Schaeuble, who has said repeatedly it was not yet clear “the problems in Cyprus could be a danger to the euro zone as a whole”. “We have to (establish) that very clearly as that’s what the (ESM) treaty says and we do need to stick to the rules we agreed in the treaty,” Schaeuble told reporters after the Eurogroup meeting on Monday. But Asmussen said Cypriot problems could affect twicebailed-out Greece through banking channels and send a negative signal to the rest of the euro zone, especially harming the outlook for states trying to regain full access to the markets. Concerns have centred on allegations from some states that Cypriot banks may be misused for money laundering and tax evasion, a view Cyprus rejects. Asmussen said monitoring and addressing such issues needed to be included in a bailout. During Monday’s meeting, Finance Minister Vassos Shiarly was at pains to address the money-laundering concerns, submitting documents showing that Cyprus was implementing all relevant EU regulations. A number of his eurozone counterparts, however, seemed unconvinced, warning that the issue must be settled before the signing of a bailout agreement. Outgoing Eurogroup President Jean-Claude Juncker
TURN TO PAGE 5
In this picture released yesterday Prince Harry makes early morning pre-flight checks around an Apache helicopter at the British controlled flight-line at Camp Bastion in Afghanistan’s Helmand Province. Harry was yesterday in Cyprus for ‘decompression’ before heading back to the UK (AFP)
Prince Harry relaxes in Cyprus after Afghan deployment PRINCE Harry is currently in Cyprus for a much needed alcoholic drink on his way back to Britain from his 20-week deployment to Afghanistan as an Apache helicopter pilot. He arrived late Monday. It is common practice and part of the vital recovery programme for British soldiers returning from Afghanistan to spend a few days in Cyprus as part of the ‘decompression’ procedure. The prince’s return was revealed via
Twitter by Major Laurence Roche, a spokesman for Task Force Helmand in Afghanistan. “Prince #Harry heads home from #Helmand. Next: 2 days’ “decompression” in #Cyprus & a well-deserved first alcoholic drink in five months,” The Major tweeted. According to the Daily Telegraph the Prince left the war-torn country on board a regular personnel aircraft and joined other UK-bound troops on their way home via Cyprus. Soldiers usually have a 24-hour
stopover at a British base, to wind down and sink their first beer after many months in active service. They are reportedly given four cans of lager and can go swimming, surfing and sunbathing on the beach. The compulsory down time also gives the servicemen and women time to reflect on their experiences and prepare themselves for returning to life in the UK. ‘Arrogant’ Harry criticised in UK Page 9