BERLIN (AP) — German Chancellor Angela Merkel said Wednesday that Cyprus can't expect special treatment as it negotiates a bailout with international lenders.
The Cypriot president, Dimitris Christofias, said last week that he would refuse any request by creditors to sell off state-owned companies as part of a rescue package. The country holds elections Feb. 17 and Christofias isn't seeking re-election.
Merkel's Germany has been a leading advocate of demanding tough conditions in exchange for rescue loans. The chancellor told reporters that "there can be no special conditions for Cyprus — we have general rules in Europe."
Merkel also said that "we are far from the end of talks" on bailing out Cyprus. Cyprus government spokesman Stefanos Stefanou maintained the country hasn't asked for any special treatment. He told state broadcaster CyBC late Wednesday that Cyprus just wants what was agreed in a draft bailout deal with its international lenders — the European Commission, the European Central Bank and the International Monetary Fund — to be implemented.
The draft deal says the government "will consider" privatizations if the debt load is deemed unsustainable. But Cypriot authorities interpret that to mean that selling off state-owned companies isn't a certainty, in part because they do not believe the debt load will be unsustainable.
Cyprus is seeking a bailout chiefly to rescue its banks, which held large amounts of toxic Greek debt. A group of debt inspectors will determine how much Cypriot banks will need to replenish their capital reserves in a report later this month.
That amount will, in turn, determine Cyprus' debt load and whether it can handle it. Cypriot authorities argue that the banks' needs are notably less than the "up to €10 billion ($13.06 billion)" that the draft deal stipulates and are pleading their case with the debt inspectors.
Even if the Cypriot officials' own estimations prove incorrect, Christofias' departure may allow for a shift in the stand against privatization. Stefanou said Cyprus' partners in the 17-nation eurozone should be mindful of the fact that the country's banks suffered huge losses as result of their decision to write off most of Greece's privately held debt.
Greece's debt write-off cost Cyprus' banks nearly a quarter of the country's €17.5 billion ($22.85 billion) gross domestic product.