No Debt Cut

BERLIN (AP) — German Chancellor Angela Merkel has underlined the refusal of Greece's European creditors to consider forgiving part of the debt-ridden country's rescue loans, though she stressed in an interview published Saturday that Berlin's aim is to keep Greece in the eurozone.

Greece's new government insists it will honor pre-election promises to seek a cut on the country's rescue debt and scrap painful budget measures that were demanded in exchange for the loans.

Merkel said in an interview with the daily Berliner Morgenpost that Europe will continue showing solidarity with Greece and other nations hit by Europe's debt crisis "if these countries undertake their own reform and saving efforts," and fended off a question about the new Greek government's moves to reverse reforms and rehire suspended workers.

"We — Germany and the other European partners — will now wait and see what concept the new Greek government comes to us with," she was quoted as saying. She was clear, however, about prospects of a debt cut.

Athens already was forgiven billions of euros by private creditors, Merkel said. "I don't see a further debt haircut."

As for demands that have surfaced in Greece for Germany to pay more compensation for Nazi crimes during World War II, Merkel said that "this question doesn't arise."

Merkel said she wants Greece to be successful and acknowledged that "many people there have hard times behind them."

"The aim of our policies was and is for Greece to remain a part of the euro community permanently," she said.

The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Monetary policy of the zone is the responsibility of the European Central Bank (ECB) which is governed by a president and a board of the heads of national central banks. The principal task of the ECB is to keep inflation under control. 

Though there is no common representation, governance or fiscal policy for the currency union, some co-operation does take place through the Eurogroup, which makes political decisions regarding the eurozone and the euro. 

The Eurogroup is composed of the finance ministers of eurozone states, but in emergencies, national leaders also form the Eurogroup.

Since the financial crisis of 2007–08, the eurozone has established and used provisions for granting emergency loans to member states in return for the enactment of economic reforms.

US Security Fallout

Neelie Kroes (below), European commissioner for digital matters, who said: 'If I were an American cloud provider, I would be quite frustrated with my government right now.'

European businesses are likely to abandon the services of American internet providers because of the National Security Agency surveillance scandal, the European commission has warned.

Neelie Kroes (left), the commission vice-president who speaks on digital affairs, predicted that providers of cloud services, which allow users to store and access data on remote servers, could suffer significant loss of business if clients fear the security of their material is under threat.

The warning came as it appeared that the Americans and the Europeans were to start investigating alleged breaches of data privacy in the EU as well as US intelligence and espionage practices.

Despite threats from France to delay long-awaited EU-US negotiations on a new transatlantic free trade pact, scheduled to open in Washington on Monday, EU ambassadors in Brussels reached a consensus on Thursday to go ahead with the talks.

They could not yet agree, however, on how to respond to a US offer of parallel talks on the NSA scandal, the Prism and Tempora programmes and issues of more traditional espionage arising from reports of how US agencies bugged and tapped the offices and embassies of the EU and several member states.

Dalia Grybauskaitė, the president of Lithuania, said on Thursday that she was not seeking an apology from the Americans. Lithuania takes over the rotating six-month EU presidency this week.

While no decision had yet been taken, she said she hoped the EU-US talks on electronic surveillance would also be launched on Monday and run concurrently. Since much of the alleged US hovering up of telephone and internet traffic in Europe is assumed to amount to commercial and industrial espionage, the two parallel sets of talks will affect one another.      Read more: 

Cypress Has Money Woes

Cypress is having money problems

BRUSSELS (Reuters) - Euro zone finance officials acknowledged being "in a mess" over Cyprus during a conference call on Wednesday and discussed imposing capital controls to insulate the region from a possible collapse of the Cypriot economy.

In detailed notes of the call seen by Reuters, one official described emotions as running "very high", making it difficult to come up with rational solutions, and referred to "open talk in regards of (Cyprus) leaving the euro zone".

The call was among members of the Eurogroup Working Group, which consists of deputy finance ministers or senior treasury officials from the 17 euro zone countries as well as representatives from the European Central Bank and the European Commission. The group is chaired by Austria's Thomas Wieser.

Cyprus decided not to take part in the call, a decision that several participants described as troubling and reflecting the wider confusion surrounding the island's predicament.

"The (Cypriot) parliament is obviously too emotional and will not decide on anything, if Cyprus does not even feel that they can attend the call it is a big problem for us," the French representative said, according to the notes seen by Reuters.

Closed...

"We have never seen this."

The German representative raised the need to learn more about capital outflows from Cyprus to Russia and Britain, and emphasized that "we stand ready to find a solution immediately" as long as the parameters of the bailout agreed among euro zone finance ministers on Saturday are respected.

The official also referred to the need to resolve the issue of Cyprus's two biggest banks, both of which are close to collapse, and mentioned the possibility of Cyprus leaving the euro zone.

In the event of an exit, the official said steps needed to be taken to "ring-fence" the rest of the euro zone from the impact and to ensure there was no contagion to Greece.

One issue repeatedly raised on the call was the risk of large outflows of capital once Cypriot banks reopen, probably on Tuesday. The ECB representative said the situation was being closely monitored and "technical preparations" were being made to try to limit the amount of any outflow.

"Some additional laws need to be passed. Overall we are in a very difficult situation," the official said, according to the notes. "(We're) trying to do everything within the powers to limit any unauthorized outflows."

Cyprus's finance minister continued discussions in Moscow on Thursday to see whether a way can be found to involve Russia in the bailout so that large depositors in Cypriot banks, many of whom are Russian, are not hit with a one-off levy.

Financial markets have largely taken the problems in Cyprus in their stride, perhaps calculating that any collapse of an economy worth only around 17 billion euros, will have only a limited impact, or that a solution will be found in the end.

"Markets believe that we will find a solution and that we will provide more money and this might not be the case," one of the participants on the call said, according to the notes.

In wrapping up the teleconference, the chairman described the situation as "foggy" and expressed concern about Cyprus's decision not to take part in the call.

"The economy is going to tank in Cyprus no matter what," the notes quoted him as saying. "Restrictions on capital will probably be imposed," he said, adding that further conference calls would be organized in the coming days.