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Cyprus next up on eurozone bailout trail

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(Globalpost/GlobalPost)

Eurozone finance ministers are meeting Friday in Brussels to tackle the long-delayed request by Cyprus for a bailout, which would be the fifth international rescue in three years of the debt crisis.

After the governments of Greece, Ireland and Portugal each secured sovereign support, Spain proved a special case as Madrid sought limited help only for its stricken banks, insisting that it did not need and would not seek a full debt bailout.

Here are the details of the other rescues, beginning with Greece, the epicentre of the debt crisis.

GREECE

Greece got two bailouts -- a first for 110 billion euros in 2010 and then another in 2012 worth 270 billion euros in rescue funding and an unprecedented private sector debt write-down.

The two programmes included draconian austerity measures -- across the board government spending cuts, increased taxes, reductions in civil service numbers, among others.

The International Monetary Fund, the European Commission and the European Central Bank oversee the programmes, monitoring compliance by Athens.

The regular Troika reviews have proved difficult at times, with aid payments sometimes held up as a result.

The bailouts are hugely unpopular in Greece where the austerity drive is widely blamed for soaring unemployment and pushing the economy deep into recession.

IRELAND

The 'Celtic Tiger' paid for the excesses of its boom years when over-extended banks had to be rescued in 2010, nearly bankrupting the country in the process.

The government tried to keep the banking sector afloat but the amounts involved were so great it had no option but to seek help from the IMF and EU. The bailout came to 85 billion euros, accompanied by similar austerity measures to those applied to Greece.

Ireland has done better however in meeting its bailout targets, despite a sharp economic downturn, and has gradually returned to the money markets to raise funding as its borrowing costs have fallen.

PORTUGAL

Portugal was forced into the arms of the IMF and EU in May 2011, requiring a debt rescue of 78 billion euros after Lisbon's strained public finances saw it unable to raise fresh finance. Portugal is seen to have done well, like Ireland, mostly meeting its bailout programme targets.

But Portugal on Friday won an extra year from its creditors to bring down its public deficit in line with EU targets.

SPAIN

In June 2012, Spain looked as if it too would need a rescue as the collapse of its banking system, largely down to a burst property bubble, forced the government into a corner. Madrid however insisted that it was able to get by without a rescue, seeking instead a credit line of 100 billion euros to help the banks.

In the event, the government used only some 41 billion euros of the available finance as the market pressure eased and its borrowing costs fell too.

CYPRUS

Cyprus, whose banks were badly exposed to their failed peers in Greece, sought a bailout in June 2012 but negotiations proved difficult, with the country hoping at one stage to get help from Russia.

A new conservative government elected in February brought a sense of urgency to the talks, but the signals on Friday left it uncertain that the Eurogroup could close off a deal immediately.

The negotiations turn on the amount involved, initially put at about 17 billion euros or equal to the total annual output of the economy.

A bailout that size however would increase the country's debt burden to unsustainable levels so discussions are underway on how to reduce it, perhaps to 10 billion euros.

The balance could be made up by privatisation proceeds and new taxes, likely on bank deposits after the government bluntly rejected a plan for a 'haircut' on bank accounts.

A key sticking point for hardline lenders like Germany has been the island's Russian connections, with its banks allegedly involved in money laundering.

burs-cel/bmm/rt

http://www.globalpost.com/dispatch/news/afp/130315/cyprus-next-eurozone-bailout-trail