Cyprus rejects the EU bailout: What happens now?

The tiny island nation makes clear it won't tax its small-time bank depositors to save itself from bankruptcy. Are any of its other options better?

Protesters demonstrate during an anti-bailout rally outside Cyprus' parliament in Nicosia on March 18.
(Image credit: REUTERS/Yorgos Karahalis)

On Tuesday, Cyprus' parliament soundly rejected a controversial $13 billion European bailout offer — the vote was 0-36, with 19 abstentions — throwing the country's future, and to a lesser extent the European Union's, into disarray. "After the vote there were jubilant scenes outside the parliament in Nicosia," the capital, says Cyprus' Famagusta Gazette. "But as the grim picture of the dire situation becomes clearer, the relief felt by many in Cyprus may be short lived."

The most contentious part of the deal — hammered out last weekend by the government of Cypriot President Nicos Anastasiades and the "troika" of the European Commission, the European Central Bank (ECB), and the International Monetary Fund — was a one-off levy of 6.75 percent on all bank deposits under 100,000 euros, even though deposits up to that amount are supposed to be guaranteed safe. Anastasiades' amendment to that plan — exempting deposits up to 20,000 euros — didn't sway lawmakers.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us
Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.