Approach to Cyprus crisis causes divisions in eurozone

Ahead of a decisive Eurogroup meeting on Sunday evening, when it will be decided whether Cyprus can receive an EU-IMF bailout, eurozone members have given an indication of how split they are over how to deal with the island’s economic problem.

Cyprus has been told that it must reduce its banking sector to the EU average of 3.5 times the country’s GDP and many within the eurozone have blamed the current crisis on the island’s overblown financial sector.

“To all those who say that we are strangling an entire people … Cyprus is a casino economy that was on the brink of bankruptcy,» French Finance Minister Pierre Moscovici told Canal Plus television.

However, Luxembourg, whose banking sector is more than 20 times the country’s GDP, is critical of the way the eurozone has dealt with the Cypriot crisis.

“Some countries, such as my country and Cyprus also, have legally built something up over the past decades and you should not disparage that on principle,” Luxembourg’s Foreign Minister Jean Asselborn said at a meeting of EU foreign ministers in Dublin on Friday, according to German press agency DPA.

“There is no one who says that the automobile industry or the weapons industry are over-proportional in Germany,” he added, saying that Berlin should watch out not to speak in a “hurtful” tone to fellow EU members.