Cyprus could cause wider problems for the eurozone if a bailout for the country is not agreed soon, said Jean-Claude Juncker, who stepped down as chairman of the eurozone’s finance ministers group last week.
“One should not underestimate the Cyprus problem,» the ex-Eurogroup head told Austria’s Kleine Zeitung in an interview published on Wednesday.
“If we don’t definitively solve the problem case of Cyprus, there is a contagion risk even from this very small national economy,» he said. «Time is pressing on.”
The Mediterranean island of Cyprus, suffering from heavy exposure to debt-crippled Greece, is waiting for a multi-billion-euro bailout.
But it has had to contend with misgivings from lender states over how committed it is to fighting money-laundering and why the island is a magnet for Russian money.
On Monday, Russian Prime Minister Dmitry Medvedev signalled willingness to help, bringing a deal between Europe and Russia on how to bail out Cyprus closer.
Asked whether Cyprus could ever repay the 17 billion euros $23 billion it is estimated to need, Juncker said: «It will be an enormous challenge for both Cyprus and the euro zone.
But he said there were limits to what Europe should be prepared to do to help Cyprus. «I don’t believe that Greece was worth saving at any price and in the case of Cyprus we will also not tolerate a bailout at any price. But we must negotiate.”
Juncker handed over the chairmanship of the Eurogroup, which he had headed since 2005, to Dutch Finance Minister Jeroen Dijsselbloem last week.