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Cyprus bailout delayed until spring Cyprus bailout delayed until spring
(about 2 hours later)
Eurozone finance ministers have told the government of Cyprus that a €17bn (£14.4bn) bailout must wait until the spring following concerns about the size of the rescue package, which is equivalent to the Mediterranean island's annual GDP. Eurozone finance ministers have told the government of Cyprus that a €17bn (£14.4bn) bailout must wait until the spring following concerns about the size of the rescue package, equivalent to the Mediterranean island's annual GDP.
Jean-Claude Juncker, the outgoing head of the group, said a decision on a rescue package would be left until at least March because "negotiations are ongoing". Jean-Claude Juncker, the outgoing head of the group, said a decision on a package would be left until at least March because "negotiations are ongoing".
Juncker warned that negotiations would be tough ahead of a decision to hand the Eurogroup's presidency to Dutch finance minister Jeroen Dijsselbloem.Juncker warned that negotiations would be tough ahead of a decision to hand the Eurogroup's presidency to Dutch finance minister Jeroen Dijsselbloem.
Cyprus will be the next big battleground for the Eurogroup, which must also judge the progress being made by Ireland, Portugal and Greece in meeting targets to reduce their debts.Cyprus will be the next big battleground for the Eurogroup, which must also judge the progress being made by Ireland, Portugal and Greece in meeting targets to reduce their debts.
Only 11 weeks into his job with the new Dutch coalition government, Dijsselbloem said he wants to move on from simply fighting crises and focus on longer-term policies to cement fledgling confidence. Only 11 weeks into his job with the new Dutch coalition government, Dijsselbloem said he wants to move on from simply fighting crises and focus on longer-term policies to cement fledgling confidence. He also said he saw an enhanced role for his new job that included a roving brief to attend meetings on behalf of the Eurogroup.
He also said he saw an enhanced role for his new job that included a roving brief to attend meetings on behalf of the Eurogroup.
In a letter to his eurozone colleagues outlining what he would focus on if chosen, Dijsselbloem said he would push to be invited to meetings of finance ministers and central bankers from the world's 20 biggest economies, the G20.In a letter to his eurozone colleagues outlining what he would focus on if chosen, Dijsselbloem said he would push to be invited to meetings of finance ministers and central bankers from the world's 20 biggest economies, the G20.
The Dutch minister, who is a Labour party representative in the coalition sworn in last November, said the eurozone should continue with reforms and fiscal consolidation that have pleased investors. The Dutch minister, a Labour party representative in the coalition sworn in last November, said the eurozone should continue with reforms and fiscal consolidation that have pleased investors.
"We now need to keep the momentum going, to ensure we retain the confidence we have managed to regain in a lasting manner," he said. "Our focus needs to shift from crisis management to delivering and implementing sound medium-term policies.""We now need to keep the momentum going, to ensure we retain the confidence we have managed to regain in a lasting manner," he said. "Our focus needs to shift from crisis management to delivering and implementing sound medium-term policies."
But in a clear message that he intends to soften the hardline stance taken by the right-wing dominated group until now, he warned that such policies should be tailored to the individual circumstances of each country. But in a clear message that he intends to soften the hardline stance previously taken by the rightwing-dominated group, he warned that such policies should be tailored to each country's circumstances.
Allowing countries more time to repay debts is likely to be welcomed by the Spanish prime minister, Mariano Rajoy, who has resisted a bailout package until the eurogroup relents on strict repayment rules and high interest rates on any borrowing. An increase in the time allowed to repay debts is likely to be welcomed by the Spanish prime minister, Mariano Rajoy, who has resisted a bailout package until the Eurogroup relents on strict repayment rules and high interest rates on any borrowing. Ireland and Portugal are also keen to renegotiate their rescue packages after two years of austerity.
Ireland and Portugal are also keen to renegotiate their rescue packages after two years of austerity. The Netherlands is one of only four eurozone countries to have retained the highest credit rating throughout the crisis and has been one of the hardliners, along with Germany and Finland, on the need for tough austerity in countries benefiting from eurozone support. However, the Dutch economy has begun to suffer in the last 18 months, dragged down by declines in demand for its goods and services from other eurozone members.
The Netherlands is one of only four eurozone countries to have retained the highest credit rating throughout the crisis and has been one of the hardliners, along with Germany and Finland on the need for tough austerity in countries benefiting from eurozone support. While Dijsselbloem has signalled his desire to take on a more expansive role, the crisis in Cyprus and ongoing instability in Greece, which on Sunday suffered a bomb attack on the country's biggest commercial centre – a mall in the centre of Athens – are likely to absorb much of his time.
However, the Dutch economy has begun to suffer in the last 18 months, dragged down by declines in demand for its goods and services from other eurozone members.
While Dijsselbloem has signalled his desire to take on a more expansive role, the crisis in Cyprus and ongoing instability in Greece, which on Monday suffered a bomb attack on the country's biggest commercial centre – a mall in the centre of Athens – are likely to absorb much of his time.
The attack on the mall unnerved government officials, with many expressing fears of a dangerous escalation in political violence, as the crisis-hit country endures a sixth straight year of recession.The attack on the mall unnerved government officials, with many expressing fears of a dangerous escalation in political violence, as the crisis-hit country endures a sixth straight year of recession.
For the first time the perpetrators chose to target a popular shopping centre, planting a bomb in a newspaper stand on the first floor of the mall. For the first time the perpetrators chose to target a popular shopping centre, planting a bomb in a newspaper stand on the first floor.
A warning call to two local media outlets only 50 minutes before the blast triggered a panic-stricken evacuation of the building. Two security guards suffered minor injuries in the attack. A warning call to two local media outlets only 50 minutes before the blast triggered a panic-stricken evacuation of the building. Two security guards suffered minor injuries.
Many economists blame the Eurogroup's austerity policies for pushing Greece to the edge of collapse and argue a more sympathetic stance would have prevented the entire eurozone falling back into recession. Many economists blame the Eurogroup's austerity policies for pushing Greece to the edge of collapse and argue that a more sympathetic stance would have prevented the entire eurozone falling back into recession.
Dijsselbloem is expected to continue Juncker's work for deeper integration of the continent's banking system, which is seen by many officials as a necessary element in the eurozone's restructuring.Dijsselbloem is expected to continue Juncker's work for deeper integration of the continent's banking system, which is seen by many officials as a necessary element in the eurozone's restructuring.
Juncker, Luxembourg's prime minister, who has chaired meetings of the 17 eurozone finance ministers for the past seven years, said in an interview with Swiss newspaper Neue Zürcher Zeitung that his successor must have a feel for the problems of all of the countries in the currency bloc. Juncker, Luxembourg's prime minister, who has chaired meetings of the 17 eurozone finance ministers for the past eight years, said in an interview with Swiss newspaper Neue Zürcher Zeitung that his successor must have a feel for the problems of all the countries in the bloc.
Eurogroup role
The Eurogroup, created after the Lisbon treaty in 2005, is a creature of the single currency. It is made up of finance ministers from all 17 member countries and meets to discuss economic affairs common to the group and the management of the euro.
Since 2008 it has been bogged down in crisis management. Even now, it will spend much of the next six months discussing how Portugal, Ireland and Greece are faring after borrowing large dollops of cash from the currency union's richer nations.
Jean-Claude Juncker, Luxembourg's prime minister and finance minister, has presided over the group for the last eight years. Jeroen Dijsselbloem, the novice Dutch finance minister, is a Labour party chief and analysts expect him to loosen the group's pro-austerity stance.
The Lisbon treaty sets out the specific duties of the group, which is effectively to act as a subcommittee of the eurozone prime ministers, who ultimately decide policy.
Mario Draghi, president of the European Central Bank, and Olli Rehn, president of economic and monetary affairs at the European Commission also attend the meetings.