Cyprus deal will go down to the wire in Brussels

housands of bank employees protest outside the Finance Ministry in Nicosia Photo: REUTERS/Yannis Behrakis

So a beautiful, bright day dawns here in Cyprus – a day that will go a long way to determining this country’s future. It is only the weather which looks bright at the moment.

After a night of discussions with fellow politicians and the Troika – the two women and one man from the European Union, the International Monetary Fund and European Central Bank – President Nicos Anastasiades set off for Brussels. Less cap in hand than begging bowl.

Cyprus’ masters are not in this country any more – but they are waiting to speak to Cyprus’ politicians for a day of posturing, brinkmanship and negotiation that may finally end this stage of Cyprus’ uncertainty.

Because these really are the final hours. Europe, and more particularly the Eurogroup of Eurozone nations, is no stranger to taking things to the wire, to sleep deprived though the night meetings and deals hammered out by exhausted wearied minds. This deal, should it be made, will be no different.

And let’s not be under any illusion how important that deal is. For all the detailed economics and days of work it’s not even terribly complicated. Cyprus needs to raise 5.8 billion euro in order to get the 10 billion Europe has agreed to provide as part of a bailout.

The problem is not just that a country of 800,000 people has to raise that figure but that Europe and Cyprus have to agree to how that money is raised.

If they don’t agree there is no bailout. If there’s no bailout by tomorrow the European Central Bank will cut the money it’s providing to the banks.

They would collapse and the prospect for Cyprus would be a Euro-exit and the start of a new currency with all the uncertainty and devaluation that would cause.

The last time Cyprus’ leaders were in Brussels, eight days ago now, they found themselves boxed into a corner by the fellow eurozoners – they thought their bailout deal would be similar to those countries which had gone before them.

In fact it was the first to involve one of those great Brussels terms “a bail-in.” Basically a message from Germany and the others that there’s no more European money being handed out for “free” – as well as the consequences of austerity and cuts those wanting others to put their hands in their pockets would have to do so themselves too.

There’s no doubt that meeting and the past days have proved a shock to Cyprus’ government, political parties and population. The early defiance - which saw proposals for a levy on all savings rejected – is now waning.

It looks like there will be levies after all – not on small savers under 100,000 euro but certainly on figures above that.

The irony is that Cyprus itself chose to levy everyone in the hope of protecting it’s standing with foreign investors. In the end those wealthier investors may yet pay more as a result of this week of horse trading.

When the Cypriots left Brussels a week ago they were reeling from the terms imposed on them by their fellow Europeans.

This time they need to leave with a deal – or this tiny country is likely to secure a place in history as the first to leave the Eurozone with all that entails for those within and without.

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