Mario Draghi confronts Berlin over contagion from Cyprus default Cyprus may need €17bn (£14.6bn) in aid, almost 100pc of GDP. Its banking liabilities are €130bn, or six times the economy, with shades of Iceland five years ago. No deal is likely until after the elections this month since the EU no longer wants to deal with Communist president Demetris Cristofias, who rejects EU-IMF austerity as a "failed recipe." Olli Rehn, the EU's currency chief, fears that failure to back Cyprus could once again shatter trust, setting off fresh capital flight . "It's essential that everybody realises that a disorderly default of Cyprus could lead to an exit of Cyprus from the eurozone," he said. It would be extremely stupid to take any risk of that nature. Dimitris Drakopoulos from Nomura said forced haircuts would violate an EU pledge not to repeat private losses imposed in Greece. If they mishandle this, it could be dangerous for Portugal. Who could then be sure they wouldn't do the same there ?" he said.