EUROZONE : CYPRUS BAILOUT: DELAY LIKELY.

Eurogroup President Jean-Claude Juncker believes that solving complex issues, such as squaring the circle of Cyprus' debt sustainability, will imply delays before the country's financial assistance package can be finalised. "It will take a while," he said, on 10 January. The next meeting of eurozone finance ministers, on 21 January, is unlikely to be conclusive, with a deal more probable in March after the general elections. In the meantime, a downgrade of Cyprus' credit rating by Moody's has hiked the pressure a notch.

Cyprus applied for a full EU-International Monetary Fund bailout back in June 2012 mainly due to the fallout of a Greek debt writedown earlier that year. Negotiations have dragged on since.

The single biggest question is how to ensure that the debt is sustainable. In the second quarter of 2012, the Cypriot government debt stood at 83.3% of gross domestic product (GDP). The figure floated most frequently for the size of the bailout programme is 17 billion, which is nearly equivalent to the entire Cypriot output. "Can there be a scenario under which 200% of GDP is sustainable?" one diplomat asks rhetorically. "Can we really avoid a haircut?" wonders the diplomat, recalling that the Greek case was supposed to be the one and only haircut. Economic and Monetary Affairs Commissioner Olli Rehn was reported by the German newspaper Handelsblatt, on 11 January, as having said that a haircut was "not an option". The German electoral cycle, with voters - fed up with having to foot the bill for bailouts - due to go to the polls in autumn, certainly weighs in the balance.

To slim down Cyprus' debt, the troika of lenders (Commission, European Central Bank...