Bitter lessons of Cyprus

The attempt to make Cyprus’ international bailout contingent on an enforced bail-in of Cypriot bank depositors is a serious political gamble for the EU and a gamble on market sentiment on Eurozone banks.The attempt to make Cyprus a test case is motivated by a desire to keep Russian money in Cyprus firmly on the hook for any bailout – a fact that explains the contortions in the plan. But the Eurozone states behind the plan are also behind a wider push to put creditors back in the line of fire for bank failures, which is a reaction to the acceleration in plans for a European banking union.