Cyprus Banking Crisis: Will Russia Ride to the Rescue?

The Cyprus government is scrambling to find alternative ways to fund its part of a European Union bailout, including asking for help in Moscow, after the island’s parliament resoundingly rejected the terms initially agreed. The lawmakers’ vote was seen as a complete denunciation of the controversial plan to levy a one-time tax on bank deposits of Cypriots and non-Cypriots alike. Despite the international uproar that the bailout has generated, the E.U. shows no sign of budging from its insistence that Cyprus itself must fund a part of its own rescue package. Together with the International Monetary Fund, the E.U. has said it is willing to put up $13 billion — but only if Cyprus itself contributes about $7.5 billion in revenue. German Finance Minister Wolfgang Schaueble told a TV interview on Tuesday evening that he “regretted” the parliament’s decision to reject a package that had been worked out together with the government. If the public indignation wasn’t already palpable over the E.U. deal, which was agreed upon this weekend after a 10-hour negotiation process between eurozone finance ministers, the plan was put up for a parliamentary vote Tuesday in which not a single member of the 56-strong Cypriot parliament voted to endorse it: 36 deputies voted against, 19 abstained and one wasn’t present. The island has run into serious financial difficulty because its banks were heavily exposed to Greek debt. But the government can’t afford to bail it the banking system on its own. In the parliamentary debate, Averof Neofytou, the deputy head of President Anastasiades’ party, warned, “We are on the brink of an unruly bankruptcy.” Bankruptcy would be the worst outcome for all of Europe, since it would once again put at risk the continent’s single currency, the euro. However, the European Central Bank says that, for the moment at least, it is continuing to provide liquidity to Cyprus’s banks in accordance with its usual rules and procedures. In reality, the Cyprus government has precious few options. One is to revamp the proposed levy in order to exempt small

READ THE ORIGINAL POST AT business.time.com