How will the eurozone respond to the Cypriot parliament’s overwhelming rejection of the bank deposit levy? There are only a few days in which to make a deal before the country’s banks must re-open, with an ensuing run on deposits.
The question is whether Cyprus or the other eurozone countries blink first. Given all members present of the governing DISY party abstained on the vote, there is a chance that an amended bill could come before the parliament again. Indeed, one member, Nicos Tornaritis, said this evening that this would ‘strengthen the bargaining position of the Republic of Cyprus’.
This will still require action from other countries, whether in the form of concessions on the current plan, or a different deal altogether. Open Europe have listed a number of possible options on their blog. The German government took a hardline stance during the negotiations on the bailout deal, wary as it is of its own elections. But now the euro countries may well have to come up with an alternative plan, or risk Cyprus exiting the eurozone altogether. This really will put Mario Draghi’s ‘whatever it takes’ pledge to the test.Tags: Cyprus, European Union, Eurozone