Cyprus investors must assume the risk: Germany
Investors who placed their money in Cyprus in order to pay less tax should shoulder the risks when it comes to a bailout, German Finance Minister Wolfgang Schaeuble said on Tuesday.
"Whoever invests their money in a country where they pay less tax, and perhaps where there is less supervision, shoulders the risk when that country's banks are no longer solvent. That's a fact," Schaeuble said in an interview on German public radio Deutschlandfunk.
In exchange for a 10-billion-euro ($13-billion) bailout for debt-laden Cyprus agreed by EU leaders on Saturday, a controversial levy will be slapped on bank savings.
The move has raised widespread anger in Cyprus, but also in Russia, where investors have placed vast amounts of cash in the island's banks.
If they were not to foot the bill for the bailout, then it would fall to European taxpayers to pay for the billions of foreign investment in Cyprus, Schaeuble said.
"That would be irresponsible," he said.
The minister also said that Cypruss economic model, which used low tax rates to attract foreign money, was "bankrupt".
The eurozone has told debt-hit Cyprus to revise the controversial levy on bank deposits to allow small savers to escape the tax amid a public outcry and fears of a bank run.
The statement from eurozone finance ministers came Monday after Cyprus baulked at putting the bailout plans to a parliamentary vote, as the growing uncertainty forced a prolonged closure of the island's banks.
Cyprus shut its banks until at least Thursday and delayed a parliamentary vote on the package until Tuesday after large queues formed at ATMs on the island.
© 2013 AFP