Is the Euro Crisis returning? The parliament in Cyprus has rejected a new law that would apply a one-time tax on private bank accounts. Not a single parliamentarian voted in favor of the measure despite it being a precondition for receiving a 10 billion euro bailout from the eurozone and the International Monetary Fund.
European finance ministers had intended the levy to raise nearly 6 billion euros to help recapitalize the country’s banks, which need the bailout to avert bankruptcy.
Even after the measure was changed to exempt accounts with a balance of under 20 thousand euros, critics still see it as an extreme policy shift that would have serious consequences on investor confidence.
After rejecting EU conditions for a bailout, Cyprus is looking to Russia for help. But plans are also being made by various eurozone countries, the IMF, the ECB and the indebted country itself, should a bailout not be forthcoming.
In the past, banks in Cyprus have lured investment with offers of high interest rates, attracting large amounts of capital from Russia. In the opinion of German Finance Minister Wolfgang Schäuble, the Cypriot banks’ business model of low taxes and little supervision has failed.
What effects would Cyprus’ insolvency have on the eurozone? Will Cyprus have to leave the monetary union? Will parliament in Cyprus pull an about-face and agree to the EU bailout? If private bank customers are made to carry part of the costs, what consequences will that have on investment in the eurozone?
Tell us what you think: Russian Roulette - The Cyprus Euro Gamble
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Ulrike Guérot – is the Berlin bureau chief of the European Council on Foreign Relations. Previously, she was with the German Marshall Fund and prior to that headed the European Union unit at the German Council on Foreign Relations. Guérot also taught as a junior professor in the European Studies faculty of Johns Hopkins University in the United States. Later she became a researcher at the Organisation Notre Europe in Paris and was a staff member of the foreign policy working group of the CDU/CSU parliamentary group in the German Bundestag. Her specialties include the European integration process, German-French ties and German-American relations. For her her engagement on European integration She has been recently awarded the prestigious ‘Ordre pour le Merite’.
Theodore Kouvakas - studied art history in Florence and architecture in Venice, and trained to become a journalist. In the 1980s, he wrote for a range of media outlets. Kouvakas covered foreign policy and financial markets for Imerissia SA, a financial and business newspaper. Since 2010, he had served as Berlin correspondent for Real Media SA. Now he ist he Berlin correspondent for the Greek daily ELEFTHEROTYPIA. His areas of expertise include European financial markets and foreign policy.
Friedrich Thelen - After earning his doctorate in law, in 1975 he took on the post of director at the German Development Service. Friedrich Thelen then worked as a journalist for the leading weekly newspaper "Die Zeit". In 1978 he switched to the business weekly "Wirtschaftswoche", where he began his career as the magazine's Bonn correspondent and bureau chief. Later he became the bureau chief of Wirtschaftswoche's Berlin office. He currently heads his own consulting office.