Salmon: The Cyprus Precedent
Don't for a minute believe that this decision is part of some deeply-considered long-term strategy that was worked out in constructive consultations between the EU, the IMF, and the new Cypriot government. Instead, it's a last-resort desperation move, born of an unholy combination of procrastination, blackmail and sleep-deprived gamesmanship.
The details aren't entirely clear yet: We're told that deposits of more than 100,000 euros are going to have to pay a tax of 9.9%, for instance, but it's not obvious whether that applies to all of the large deposit or just to the amount over 100,000 euros. And there's still a real chance (according to ekathimerini.com) that the Cypriot parliament could scupper the whole deal. But for the time being, everybody's going on the assumption that the deal will go through, that Cyprus will get its 10 billion euro bailout from the EU, and that everybody with a Cypriot bank account in Cyprus (a group that The Telegraph reports includes members of the U.K. military) will see their accounts taxed by at least 6.75%.