Submitted by: Donald Hank
CYPRUS IS IN DEEP TROUBLE
Cypriots like to think they are ever so slightly superior to their mainland cousins. More orderly, less prone to bending the rules, more financially sensible. But over the weekend, their shame reached a depth to rival that of their linguistic and cultural close relatives – whose country is firmly established as the global embodiment of fiscal folly.
Cyprus had already joined the bailout club. In December, it became the latest country in the eurozone to apply for a rescue programme, to the tune of 17.5 billion euros. The problem was that the money couldn’t be found from the international creditors and institutions that had propped up, by various methods, Greece, Ireland, Portugal and Spain.
So, for the first time since the debt crisis erupted, the Eurogroup – the finance ministers of the 17 states in the eurozone – decided that depositors in Cypriot banks should pay directly to keep those banks afloat. It called for a one-off tax to raise 5.8 billion euros towards saving the country. It was euphemistically called a “solidarity levy” – the price Cyprus had to pay for a 10 billion euro bailout from Euroland. Without it, the country risked defaulting on its bond repayments within weeks.