EU gives Cyprus bailout ultimatum

Initiatives

The European Union gave Cyprus till Monday to raise the billions of euros it needs to clinch an international bailout or face the collapse of its financial system and likely exit from the euro currency zone. In stark twin warnings on Thursday, the European Central Bank (ECB) said it would cut off liquidity to Cypriot banks and a senior EU official made clear to Reuters that the bloc was ready to see the bankrupt island banished from the euro in the belief it could then contain damage to the wider European economy. The ECB ultimatum came as the island’s leaders struggled to craft a “Plan B” to raise the €5.8-billion contribution demanded by the EU in return for a €10-billion ($13-billion) bailout from the EU and International Monetary Fund. Cyprus’s central bank governor said, he expected to clinch a financial support package by Monday. He did not say how. The government has ordered banks to stay closed until Tuesday. In Moscow, Cypriot Finance Minister Michael Sarris said he was discussing possible Russian investments in the island’s banks and energy resources to reduce its debt burden, as well as an extension of an existing €2.5-billion Russian loan.

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