Greek Cyprus bailout looms over EU summit

The heads of states of European countries are gathering at a two-day EU summit, where they will be tackling the long-standing issue of forming a bailout plan for Greek Cyprus. The freshly elected Greek Cypriot President Anastasiades is holding his breath to come up trumps at the summit.

European Union leaders meet today and tomorrow with another eurozone debt bailout, this time for Greek Cyprus, looming on the horizon as Europe’s faltering economy and soaring unemployment stoke unease at stinging austerity policies.

Dutch Finance Minister Jeroen Dijsselbloem said yesterday that he and his eurozone colleagues would meet after the EU summit on tomorrow to work on a bailout plan for Greek Cyprus – following previous rescues for Greece, Ireland, Portugal, and for Spanish banks.

Greek Cyprus government spokesman Christos Stylianides said just-elected President Nicos Anastasiades hoped “to create a positive climate” at the summit in Brussels. A final deal on a bailout is expected later this month.

There has been much debate over a compulsory reduction, or haircut, on deposits in local banks to cut the overall cost of the rescue but Nicosia says this would be catastrophic, not only for Greek Cyprus but for the entire 17-nation bloc, and the idea seems to be losing ground.

“The situation is difficult but there is no reason for panic,” said Stylianides, adding there would be no haircut and no further cuts in public sector pensions and salaries.

“Patience is required and you will see that hard work brings good results,” Anastasiades said as he left for Brussels.