If Cyprus’ government is breathing some relief that it has relented to demands from international lenders to confiscate bank accounts to trigger a 10 billion euros ($13 billion) the international press believes that the country’s future is still bleak.
The Financial Times noted the long struggle for the deal to be reached to save Cyprus’ banks and economy from collapse and that foreign banks are keenly eying the deposits of rich Russians almost certain to take out all the money that’s left in Cypriot banks after the seizure of 30-100 percent of their savings.
The Wall Street Journal emphasized that “lasting damage” has already been caused on the Cypriot economy. “In the coming weeks or possibly months, Cyprus will have to pass through strict controls on money transfers in and out of the economy, that will likely cut off its citizens and companies from much of the rest of the euro zone’s financial system,” the paper reported.
According to The Economist it was a better, but still painful, deal than an original which would have taken 6.75 percent of the allegedly guaranteed deposits under 100,000 euros, with Cyprus ready to break its own laws to get its hands on other people’s money. The magazine also wondered where Cyprus will find economic growth with any potential revenues from offshore gas reserves years away and unlikely to attract deposits to banks with trust broken. ‘
The conservative Dow Jones Newswires stressed that the deal made by conservative President Nicos Anastasiades, who broke his vow to safeguard depositors a month after taking office will help end speculation of Cyprus being pushed out of the Eurozone for now.
The BBC mentioned there were few winners and that the price of rescue may be worse than not being saved. Michala Marcussen, global head of economics at Societe Generale, said : “Cyprus may be too small to matter much economically to the euro area, but the events around the bailout are significant, and contagion remains a risk”.
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