Europe

Commentators uneasy at Cyprus bailout 'experiment'

People queue to use the ATM of the Greek branch of Cyprus Popular Bank in Athens
Image caption Under the agreement all deposits of less than 100,000 euros will be secured

Initial reaction to the bailout agreed for Cyprus is ambivalent, with more than one European commentator calling it an "experiment". One Russian blogger suggests that for some, the new deal may be twice as bad as the one rejected last week.

A German newspaper headline expresses satisfaction that the bank losses are finally "hitting the right people" - those with big investments rather than the general public.

But there is concern about unforeseen repercussions, and the possibility of contagion in Spain and Italy.

Economic commentator Maksim Blunt on Russia's Ekho Moskvy radio

If [Cyprus] was a global financial centre to some extent, it has certainly stopped being one. This was the very aim of the Eurogroup's actions: their biggest problem with the Cypriot economy was that Cyprus had too big a banking and a financial sector, which was not commensurate with the size of the economy. As soon as restrictions on the flow of capital are lifted - and they will have to be lifted - the outflow of money from Cyprus will be very quick if not to say panicked.

Aleksey Goryachev in Russian liberal daily Novyye Izvestiya

In the long term, Cyprus could hold on to its niche as an offshore zone, since investors have a short memory... But this will only happen if there are no major adverse changes. For example, if there are no sanctions from Russia... In the short term, things are looking gloomy, and money will of course leave the country.

Prominent Russian blogger Andrey Malgin on LiveJournal

We were fighting against 10%, now we've got 20.

Former Russian Finance Minister Aleksey Kudrin on Twitter

The EU and its regulators bear the main responsibility for the Cyprus situation. They missed it.

Greek Cypriot singer and composer Alkinoos Ioannidis, in left-of-centre independent blog tvxs

We Cypriots are becoming refugees again, in our own homeland. Losing again our life as we built it, as we think we chose it, as we thought it was ours.

French newspaper Le Figaro

The EU and IMF did not hide last night that the banking "restructuring" would not be the most pressing step in the sanitation of the island. Like in Greece, Portugal and Spain - fiscal adjustment and recovery of external accounts are expected to follow, effecting a similar brake on activity.

Romarric Godin in French financial daily La Tribune

The euro is saved once again. But the eurozone does not come out unscathed from this crazy week of searching for a resolution to the Cyprus crisis... The Cyprus crisis that has shaken Europe during the past week is clearly a turning point. Despite the assurances of various European leaders that "Cyprus is a special case," we must recognise that the eurozone... has radically changed in nature and is not the same.

Sebastian Jost in German daily Die Welt

The compromise out of Brussels could be ground-breaking. For the first time the debts of shaky banks will not be passed on to the general public. But this could also be the beginning of a risky experiment.

Germany's Frankfurter Allgemeine Zeitung

The Cyprus compromise is a great experiment. How Europe will be handling future imbalances of banks will depend on its outcome. And whether the taxpayer can actually get out of the predicament of having to stand up again and again for ailing financial institutions.

Beda Romano in Italian financial daily Il Sole 24 Ore

The agreement is a compromise between conflicting requirements. On the one hand, the Eurogroup and the IMF wanted to radically downsize Cyprus' financial sector and prevent an excessive increase in debt... On the other, the Cypriot establishment has tried to avoid measures that are too unpopular with the public, trying to preserve as much as possible the benefits of the banking system, which in recent years has attracted many Russians.

Francesco Guerrera in Italy's La Stampa

The commotion over Cyprus adds a new level of difficulty to this [European] political and economic balancing act, and brings the spectre of contagion back to the fore. From this week, the eyes of the world are on Italy and Spain.

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