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(Image source: The Independent)
BY KATIE BRENNAN
After Cyprus’ parliament overwhelmingly rejected a controversial bailout that would
have dipped into private citizens’ savings, political leaders are trying to pick up the
pieces. Without the tax on deposits the bankrupt country is $6 billion short of the cash required
to get the E.U. bailout.
“It’s all about plan B right now. The president of Cyprus is meeting with representatives
of the troika at the presidential palace. He spent most the morning meeting with party
leaders here trying to find some kind of new solution.” (Via Bloomberg)
Then there’s plan C. CNN reports private Russian citizens and businesses have nearly
$38 million invested in Cyprus.
“Russia has a vested interest in making sure the banks don’t collapse. So, there
is a good chance that Russia will come to the aid again after the amount of loans they
have already given but that is something that is in negotiations right now in Moscow.”
Cyprus’ finance minister told CNBC the meeting with his Russian counterpart was an honest,
very constructive discussion.
“We will now continue our discussions to find a solution by which we will get, we hope,
we will be getting some support from Russia.”
He added those discussions will continue until they find a solution. And the pressure is
certainly on to find one. Until they do, banks in Cyprus are shut down to prevent mass withdrawals.
An economist told US News and World Report, "As soon as the banks open in Cyprus there
will be billions in withdrawals...There will be a collapse of the Cypriot financial system,
no matter what."
And euronews reports political leaders around the world are voicing similar concern.
“Germany’s Finance Minister has warned those banks may never reopen, after an extended
public holiday. One has to explain to the people of Cyprus that the Cypriot economic
model...has failed.”
The crisis in Cyprus has an analyst from RT considering a collapse of the entire Eurozone.
“From today on people will be aware that there is a precedent for burning investors
that want to hold the Euro and that is not good for the status of the euro, for the status
of the Eurozone."
If it does survive, the Eurozone still could be changed forever. Marios Mavrides, an MP
and former finance minister of Cyprus, told the BBC Cyprus could become the first country
to leave the euro.
“If we cannot come up with the €5.8bn in a few days, I think we will go to the Cyprus
pound. That will be the end of Cyprus in the Eurozone."
Banks in Cyprus are scheduled to reopen Thursday. Most reports suggest the new deal, whether
it is plan B, C or even plan Z, will include a lower tax on deposits under 100,000 euros,
if they are taxed at all.