Cyprus Parliament Unanimously Rejects Bailout PlanPosted: March 19, 2013
Well, they did it. Matthew Boesler at Business Insider:
The Cypriot parliament has voted against the controversial bank bailout deal hatched with the EU over the weekend, reports Bloomberg.
36 voted no.
19 abstained from voting.
No one voted in favor of it.
The vote was held in a show of hands.
The big part of the bailout plan that has everyone up in arms: a controversial decision to apply haircuts to depositors, which essentially amounts to an expropriation of a certain percentage of money from everyone’s bank account.
That includes insured depositors – those with up to 100,000 euros in the bank – whose funds, up to now, were widely considered sacrosanct.
Now what? Your guess is as good as mine.
I imagine Russia is likely to play a role in this situation going forward, so I found some reactions to the bailout proposal from Vladimir Putin at The Brisbane Times. He wasn’t happy with the deal, which would have removed around 10% of the value of accounts held by many Russians.
Russia’s President Vladimir Putin called the proposed levy ”unfair, unprofessional and dangerous”, and his finance minister suggested Moscow could withdraw a €2.3 billion loan made to Cyprus in 2011. The bank levy was partly intended by Brussels and Berlin to prevent European Union taxpayers spending billions propping up the ill-gotten gains of Russia’s super-rich in Cypriot accounts.
Russian deposits in Cyprus, which offers attractive interest rates and asks few questions, are estimated at €20 billion, meaning Russian corporate and individual investors could lose up to €2 billion in one fell swoop.
Russia’s Finance Minister Anton Siluanov said: ”We had an agreement with colleagues from the eurozone that we’d co-ordinate our actions. So, we will consider the issue of restructuring of the loan taking into account our participation in the co-ordinated actions with the European Union to help Cyprus.”
Other Russian officials tried to allay fears by publicly announcing that whatever happens in Cyprus, the Russian financial system will remain stable.
I guess Angela Merkel is going to have to come up with another plan or else dream up some better threats.
Obviously this is a fast-moving story, but I’ll include links to the very latest headlines below and then post updates in the comments.
Financial Times: Stocks fall as Cyprus uncertainty mounts
Miamai Herald: Give Cyprus more time, Greece tells EU
Guardian UK: Crisis deepens as Cyprus MPs reject savings tax