Cyprus in crisis: what lies ahead?

Finance Minister Vassos ShiarlyInteresting comments were made by some of German leading politicians regarding Cyprus bailout. They have stated that they do not rule out a Cyprus default. They have stated that the Cyprus economy is small and the Cyprus default would not be considered as a systematic failure for EU. However, the European Central Bank has signalled an opposite opinion saying that a failure of any Eurozone member would have a negative impact on the whole Eurozone. Some people commented that the Cyprus government should reject a Greek bond haircut as it has immediately sent the Cyprus economy into trouble. The amount that was written off was too big for the size of the Cyprus economy. Another point to mention is delay and indecisiveness of the Cyprus government. When the Cyprus government had applied for a bailout, it must be quick to negotiate terms and conditions with Troika promptly. The government had to be prepared to sacrifice something in exchange of a quick fix. The Cyprus government was very proud of itself defending semi-government organisation like CYTA, a telecom company, or EAC, power supply company. Privatisation could be very good for the economy as it would help to eliminate inefficiency and ineffectiveness in both companies. As time passed Troika has started to look deeper in the Cyprus problems. The corporate and financial services industry has come under attack for loose anti-money laundering procedures, for Cyprus being a tax oasis due to its low corporate tax rate of 10% and for being a banking haven for Russian oligarchs and businessmen.

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