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‘Money won’t support people in Cyprus, it will support banks’

Cyprus must raise US$7.5 billion before Monday to secure a $13billion loan from the EU and IMF. The debt-laden island faces pressure to downsize its banking sector. German economist Harry Bean told RT why Berlin insists Cyprus stop being a tax haven.

Germany has recently taken the toughest stance on the Cyprus rescue deal, slamming Nicosia's decision to create a solidarity fund made up of pensions, property and future gas earnings.

“Don’t forget that we’re heading for elections in Germany. Rescue packages that we’ve gone through in the past have been totally unpopular with the German taxpayer. Going ahead now with similar solution to what we had in the past - you just cannot sell it to the German taxpayer,” Harry Bean told RT.

On Sunday, Cypriot President Nicos Anastasiades traveled to Brussels hoping to reach consensus with eurozone finance ministers on the rescue plan aimed at preventing his country from going bankrupt.

“Those negotiations with Cyprus are very complicated. Every party has to keep up its bargaining power. It’s like game theory: you have to be on guard, you have to bluff… God knows what will happen,” the German economist noted.

Germans feel tired of paying multi-billion dollar bills for failing European economies.

“Ask Germans – we’re not saying we shouldn’t help Cyprus. Germans know that at the end of the day the money, the loans, the guarantees - whatever you want to call it – does not support the people in Cyprus. It’s supporting the banks, the banks’ owners, it’s supporting Wall Street, it’s supporting the equity bubble. That’s the whole issue here,” Bean added.

Cyprus hoped to secure help from Russia. However, the two-day negotiations between Cyprus' finance minister and his Russian counterpart failed to provide anything tangible. Michalis Sarris left Moscow empty-handed on Friday after Russia said it would not help out Cyprus before it agrees a bailout deal with the EU. It's been reported Sarris was asking for a $5 billion loan, but had no luck.

On Friday the discussion about the rescue plan for Cyprus’ financial crisis was postponed. It’s supposed to stipulate limits on financial transactions, the division of the country’s second biggest bank and the creation of an ‘investment solidarity fund’.

If the creditors do not approve the plan until Monday, the island may go bankrupt and drop out of the euro currency zone.