Spain is being talked about a lot these days, but few people know that Cyprus, with fewer than one million inhabitants, member of the European Union since 2004 and in the euro area since 2008 January XNUMX, is in even worse conditions, and therefore comparable (and chargeable) to those of nearby Greece.
According to what he said governor of the Central Bank of Nicosia, Panicos Demetriades, who in an interview with Financial Times he admitted that Cyprus is increasingly about to ask for aid from the EU: “By the end of June we have to recover 1,8 billion euros to recapitalize Cyprus Popular Bank, the country's second largest creditor: it is clear that the closer the deadline gets, the more likely it will become to appeal to the European Union. Also because – the president of the People's Bank Michalis Sarris added on the FT – I don't see where that money could come from if not from Europe”.
The situation is becoming quite embarrassing for the third largest island in the Mediterranean, which until now has always been strongly opposed to assistance from Brussels, preferring instead to borrow money from Russia. However, the very strong risk of contagion from the "cousins" of Athens now looms over Cyprus, whose crisis is affecting Nicosia very closely, as the country's banks have lost more than 3 billion euros in the writedown of Greek sovereign debt and have invested more than 22 billion euros in loans to the Greek private sector.
Demetriades, who took office only last month, also suggested that it might still be possible to proceed with the recapitalization of Banca Popolare in other ways, such as private sector financing or a loan from another country. Russia, for example, as mentioned, has already lent Cyprus 2,5 billion euros to help the government meet debt payments. The governor also recalled that Nicosia is in talks with the European authorities for an attempt to extend the deadline until June 30 at the end of August.
Cyprus is therefore trying in every way to avoid the end of Portugal, Ireland, Greece and perhaps, shortly, Spain. At the moment President Demetris Christofias, far left, declared that "there will be no new measures against workers" as long as he is in office, even if he himself didn't feel like ruling out an appeal to the EFSF. However, the risk is more current than ever: the crisis in Greece has upset Cypriot banking stability, and an eventual exit from the euro in Athens would most likely also bring Nicosia with it.
