Germany Backs Cyprus Aid as Schaeuble Cites Default Risk
German lawmakers approved a rescue for Cyprus as Finance Minister Wolfgang Schaeuble warned that refusing aid to a fifth crisis-ravaged state risked triggering a sovereign default and contagion to other euro nations, Bloomberg reported. The lower house, or Bundestag, backed German participation in the 10 billion-euro ($13 billion) financial lifeline by 487 votes to 101 with 13 abstentions in Berlin today, almost three years after the euro-area debt crisis first required lawmakers to act in May 2010. Lawmakers also approved extending aid terms for Ireland and Portugal. “We must avoid turning the problems in Cyprus into new problems for other euro countries,” Schaeuble told lawmakers in a speech before the vote. “Cyprus is in a dramatic situation. If we don’t help Cyprus, then Cyprus inevitably faces sovereign default.” Help for Cyprus from the European Stability Mechanism, the euro area’s rescue fund, passed by an overwhelming margin after the two biggest opposition parties signaled support for Chancellor Angela Merkel’s plan to contribute to the latest bailout since the debt crisis began in Greece in 2009. Read more.