Salmon: Cyprus' Bad Haircut Day
Written by: Felix Salmon
NEW YORK (Reuters Blogs) -- As The Wall Street Journal reports, Cyprus has said όχι to the idea of taxing deposits: good for them. And the parliament did so decisively, as well: 36 "no" votes, 19 abstentions, and (as FT Alphaville notes) zero "yes" votes. Even the president, who initially said in an official statement that Cyprus had no choice but to say yes, was already moving on the Plan B before the vote was even taken (as ekathimerini.com notes), although no one yet is entirely clear what exactly Plan B entails.
One very big hint comes from the fact that the Cypriot finance minister, Michael Sarris, is in Moscow Tuesday (where, according to Reuters, he's denying via text message reports that he has resigned). Russia accounts for the lion's share of Cyprus' uninsured deposits, and president Vladimir Putin has said, according to Business Insider, that even a 9.9% tax on those deposits would be "unjust, unprofessional and dangerous." Given that the only way that Cypriot president Nicos Anastasiades kept the tax to less than 10% was by taxing the insured depositors at an unacceptable 6.75%, there is obviously a lot of appetite within Russia to help Cyprus find a way out of this mess.