Suddeutsche Zeitung is reporting this morning that the SPD may block a Cyprus bailout on the grounds that it refuses to support tax dumping and money laundering. SPD chief Sigmar Gabriel is quoted as saying that the SPD could not approve a package for the Cypriot banks on the basis of current information available. If Angela Merkel were seeking SPD support (which she will need to get the package through the Bundestag), she will have to come up with good reasons, he said….a scenario he clearly considers implausible.
As the Greens have the same reservations about Cypriot banks, a Bundestag majority is not guaranteed. The article also quotes a German CSU MEP, who demanded a guarantee that the money goes to help the citizens of Cyprus, and not the oligarchs of Russia. The paper quotes government sources as saying that Merkel will only accept a package unless Nicosia accepts radical reforms (but did not say what that meant in practice). Cyprus has asked for a package of €17.5bn, of which €12bn is earmarked for the banking sector. The timetable is for the package to be approved by the eurogroup on February 10th.
There is of course a great deal of geopolitics involved in the Cyprus issue, concerning Turkey, Greece, Israel, the US, Russia, rare earth minerals and of course not forgetting oil. However, from a German social democrat perspective, the potential for Merkel-mashing in this situation may yet bring alive a BundesRepublik general election that was threatening to be the most one-sided affair in history.
In a SudZeit editorial, Claus Hulverscheidt writes that the Cyprus issue comes as a stroke of luck for the SPD and its struggling candidate, Peer Steinbrück. He notes how the party had been searching for a showdown with Merkel for years, and that this is politically an ideal, almost too good to be true-type of opportunity. Considering that the SPD’s reservations are shared by the vast majority of the German population, this may well have important political resonance for the German mild Left.