For Cypriots, the euphoria that accompanied Cyprus’ joining the EU in 2004 and entry into the Eurozone in 2008 has faded into a distant memory that is turning into a waking nightmare. Cyprus is one of the smallest economies of the EU, with a relatively low level of sovereign debt and a high but manageable budget deficit. So where did the crisis originate and why is it threatening Eurozone financial stability?
The crisis does however create an opportunity for countries that have an interest in Cyprus’ gas, including Israel, Russia, Turkey and potentially QatarDr. Nasser Saidi
Cyprus has a large banking system (assets in excess of 900% of GDP), which is highly concentrated with too big to fail and too big to save banks. Its outsized offshore financial centre , with light handed regulation and low taxation, attracted deposits from Russia and other countries, becoming a tax haven, with 30 per cent of deposits from outside the euro zone and non-resident deposits exceeding its GDP.