Sunday, March 24, 2013

Chancellor Merkel Angry with Cyprus as Euro Crisis Intensifies

At Der Spiegel, "Iron Chancellor Returns: Merkel Can't Contain Anger over Cyprus":
Angela Merkel is known for her measured approach to even the most controversial issues. The crisis in Cyprus, however, has enraged the German chancellor. In parliamentary meetings on Friday morning, she did little to disguise her fury -- though she shoulders some of the blame herself.

Coalition parliamentarians have rarely seen Chancellor Angela Merkel so upset. Whether it has been election defeats, internal bickering in the government or the euro crisis, she almost always finds moderate words even as others panic. She has earned a reputation for being cool and calculating.

But the situation in Cyprus appears to have frayed her nerves. In meetings with parliamentarians from her conservative faction and later with those from her junior coalition partner, the Free Democrats (FDP), it quickly became clear on Friday that her patience with Cyprus is running out. Together with Finance Minister Wolfgang Schäuble, she left no doubt as to her frustration with Nicosia's new plan for raising €5.8 billion in badly needed capital.

Merkel disapproves of the Cypriot proposal, which involves bundling state assets into a "Solidarity Fund" that includes the country's retirement fund to back bond issues. According to reports on Friday, she is not alone. The troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, agrees with her assessment.

What happens next? "I hope that it doesn't result in a crash," Merkel told FDP parliamentarians according to a meeting participant. Merkel has long warned of a potential domino effect should a euro-zone member state enter insolvency. But now, her government is no longer excluding the possibility.

The chancellor is particularly frustrated by the lack of communication with Cypriot leaders even as the situation worsens dramatically. Some in her party have even used the word "autistic" to describe Nicosia's apparent unwillingness to communicate with Berlin. "What we have never experienced before is that, over a period of days, there has been no contact with the EU or with the troika," Merkel reportedly told the parliamentarians.
More at that top link.

Plus, "Search for a Solution: Troika Reportedly Rejects 'Plan B' in Cyprus."