Eurozone crisis: Cyprus becomes the 5th nation to request a bailout

Tuesday, June 26, 2012
By Paul Martin
June 26, 2012

EUROPE – Finance chiefs of the euro zone’s four biggest economies will hold last-minute talks in Paris on Tuesday evening to try to narrow differences on the currency area’s future after Cyprus became the fifth member to request a bailout. Ministers from Germany, France, Italy and Spain will discuss how to manage the crisis in the short term and proposals for closer long-term fiscal and banking integration to prepare for a European Union summit starting on Thursday. Financial markets are on edge and international pressure for decisive action is rising but the summit, the 20th since the bloc’s debt woes began in early 2010, is not expected to produce a lasting solution to the crisis. “Tomorrow there is a meeting, which will be very important, between (French President) Francois Hollande and (German Chancellor) Angela Merkel, and this evening I will receive the finance ministers… along with the European Commissioner,” French Economy Minister Pierre Moscovici said. A report prepared by the EU’s top four officials suggests the euro zone could create a treasury for the single currency and issue euro bonds in the medium term as the final stage of a fiscal union. However Merkel, who leads Europe’s biggest economy and the main contributor to its bailout funds, again ruled out on Monday any sharing of debt or bank liabilities as “economically wrong and counter-productive.” The finance ministers’ session was called at such short notice – in an apparent rush to repair damage from a public rift between Merkel and leaders of the other three states when they met in Rome last Friday – that one finance minister’s press staff only learned of the invitation on Tuesday morning. Little Cyprus, the 17-nation currency area’s third smallest economy with just 1 million residents, added drama to a fraught week by applying for rescue loans on Monday. –Reuters

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