The now-rejected bailout tax plan has left Cypriots and Europeans alike unhappy. Now Cyprus is looking to Russia for money.
As Cyprus, the eurozone’s third smallest economy, is staring state bankruptcy in the face, European leaders are scratching their heads: How did we end up in this mess? And, more importantly, what is the way out?
In spite of the potentially devastating consequences, the Cypriot parliament on Tuesday vehemently rejected a bailout deal for the technically insolvent country hammered out in Brussels a few days earlier. Under the deal, 10 billion euros ($13 billion) would have come from the eurozone’s rescue mechanism, but it would have obliged Cyprus itself to add another 5.8 billion euros ($7.5 billion). This additional money was meant to be raised through a one-off tax on each account held in Cyprus, and there is some confusion about where the idea for this special levy came from in the first place – Nicosia, Brussels, or even Berlin.
Whatever the answer, everybody is unhappy now.