Its economy it represents just 0,15% of eurozone GDP, yet Cyprus – even before Greece – could be the first country to abandon the euro, creating many headaches for the stability of the continental monetary union.
The first to guess such scenario was Athanasios Vamvakidis, economist at Bank of America – Merrill Lynch, who has repeatedly underlined the risk of underestimating the situation of the "black sheep" of Europe, which in June 2012 asked the troika for around 20 billion euros in aid, a sustainable amount but not justified by the subsequent extremist attitude of the communist president Demetris Christofias, unwilling to submit to the conditions, deemed "unacceptable", imposed by the EU, the ECB and the IMF for the loan.
The beginning of 2013 seems to prove Vamvakidis' prediction right: the negotiation is increasingly complicated, so much so that no compromises are envisaged at the Ecofin meeting scheduled for 21 January. And while the EU commissioner's spokesman Olli Rehn tries to throw water on the fire ("At the end of the meeting, we will find an agreement for which financial stability will be guaranteed"), the real problem could once again be represented by Germany's position.
In fact, from Berlin they believe that it is not acceptable that such a small country should be allowed to put the system into crisis, nullifying the efforts and progress made in recent months by other countries in difficulty such as Italy, Spain or Greece itself. At the same time, Angela Merkel's government is perfectly aware that it will be difficult to reach an agreement before the end of February, when (on 17 and 24) the citizens of Nicosia and its surroundings will go to the polls and bring down the "Christofias obstacle" (this has already said that he does not intend to run again), as defined by the German newspaper Handelsblatt.
However, the danger seems to be not only that of ostracism from the fiery president: in fact, the Teutonic press is always focusing attention on the debt of the banking system of the small Mediterranean island, which alone needs more than 10 billion euros due to the real estate bubble and the losses following the restructuring of the debt of nearby Athens, in which the Cypriot institutions had invested quite a bit.
The fact is that it has been repeatedly proven that Cyprus banks are offshore hedges for Russian investors, who use them for tax fraud and money laundering: therefore, according to what was written by the German secret services (Bnd) in a recent report, aid to the credit system of Nicosia "It would be tantamount to helping the Russian mafia."
The role of Russia (from which Cyprus has also asked for a further 5 billion in aid in addition to the 20 from the troika) is therefore central, and this worries Angela Merkel a lot. While the IMF has launched yet another alarm pointing out that the continuation of the stalemate will lead the Cypriot public debt to swell to 180% of GDP, the chancellor made it clear that she did not want to hear reasons: "There will be no special treatment for Cyprus". If in 2012 it was Greece, in the first months of 2013 it will be the Cinderella Cyprus that will make Europe's greats tremble.
