Subject: Morning Brief: Cyprus bailout sparks new round of economic turmoil in Europe
From: "Foreign Policy Magazine" <[email-masked]>
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Date: Mon, 18 Mar 2013 09:16:18 -0400 (EDT)

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FP Passport Morning Brief
Monday, March 18, 2013
Cyprus bailout sparks new round of economic turmoil in Europe
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*Top news: *With the decision to require Cypriot depositors to pay for a  
bailout of the country's ailing banking sector, European regulators may have  
set off [1] a new phase in the eurozone crisis as outrage mounted over the  
weekend against the plan and some analysts warned that a run on Cyprus' banks  
may spread to Italy and Spain.

In Cyprus, political support for the 1 billion euro bailout package is now  
crumbling. The Cypriot parliament has delayed a key vote to approve the  
measure after people flocked to ATMs over the weekend to remove cash from  
their accounts before the tax was implemented. Under the terms of the current  
deal, accounts with under 100,000 euros would be taxed at a rate of 6.75  
percent and accounts over 100,000 at a rate of 9.9 percent. Cyprus'  
president, Nicos Anastasiades, tried to to sell his country on the deal,  
which was largely forced on him by European financial mandarins, in an  
address to the nation, arguing that without the deal the country's financial  
system would completely collapse, the economy would be crippled, and the  
country would likely exit the eurozone.

Under previous bailouts, bond holders have been forced to take losses on  
their holdings in order to finance loan packages, but individual depositors  
have so far been exempt from having their savings raided to bail out banks.  
The reversal of that policy has led to fears that depositors in Spain and  
Italy may move quickly to remove their savings from banks, a move that would  
devastate those countries' financial systems. The new policy is the result of  
two main factors: Germany's unwillingness to finance further bailouts out of  
its own pocket and the presence in the Cypriot banking system of large  
deposits held by Russians, who have taken advantage of the country's lax  
banking rules to park their money there. Russian President Vladimir Putin  
slammed the measure, calling [2] it " "unfair, unprofessional and dangerous."

Anastasiades is now attempting [3] to renogotiate the terms fo the deal to  
shift the rate at which deposits would be taxed to more heavily affect larger  
deposits, a move that would place the burden more heavily on the large  
foreign deposits which currently reside in Cypriot banks.

*China: *Speaking on the final day of the People's National Congress, China's  
new prime minister, Li Keqiang, presented [4] a reformist vision for his  
country's future, arguing that growth must occur within the parameters of  
environmental protection.

------------------------------------------------------------------------------
Middle East

 * With the amount of territory under its control steadily growing, the
   Syrian opposition is attempting [5] to form an interim government capable
   of dispensing basic services.
 * Israel released [6] Ayman Sharawneh, a Palestinian man who has been on a
   hunger strike for several months, in a deal that will require him to be
   confined to Gaza for the next 10 years.
 * Days ahead of the 10th anniversary of the U.S. invasion of Iraq, a car
   bomb struck [7] just north of the southern city of Basra, killing at least
   10 and wounding several others.

Asia

 * Afghan opposition politicians have opened [8]negotiations with the Taliban
   ahead of next year's election, which will determine the sucessor to Hamid
   Karzai.
 * Five men were arrested [9] in connection with the gang rape of a
   39-year-old Swiss woman travelling by bicycle through central India
   together with her husband.
 * When the clock hit midnight on Saturday, Pakistan's government became [10]
   the first in the country's history to serve out its full term, a crucial
   milestone for a democracy with a history of coups and instability.

Europe

 * A top Russian diplomat said that the United States' decision to move parts
   of its missile defense system out of Europe did not address [11] Russia's
   concerns on the issue.
 * Britain's three main political partise reached [12] an agreement over how
   to regulate the British press, an initiative put forward after revelations
   of wide-spread phone hacking.
 * The Italian parliament elected [13] speakers in both its houses, but it is
   likely Italians will have to return to the polls in order for a government
   to be put in place.

Africa

 * One day after a referendum on the country's new constitution, Zimbabwean
   security forces arrested [14] three prominent opposition politicians and a
   renowned human rights lawyer.
 * Prime Minister Raila Odinga filed [15] a brief with Kenya's supreme court
   to overturn the decision that handed a narrow victory to Uhuru Kenyatta in
   the recent presidential elections.
 * A massive car bomb struck [16] the center of Somalia's capital, Mogadishu,
   killing at least 8 with casualties expected to rise.

Americas

 * Lima's first elected female mayor, who has launched an effort to tackle
   corruption in the city, will likely survive [17] a recall vote, according
   to exit polls.
 * Venezuelan opposition politician Henrique Capriles launched [18] a
   nation-wide tour as part of his effort to unseat Hugo Chavez's chosen
   successor, Nicolas Maduro.
 * A fireworks explosion in rural Mexico during a religious procession killed
   [19] at least 17 people.

/-By Elias Groll /

HASAN MROUE/AFP/Getty Images

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[1] http://www.nytimes.com/2013/03/18/business/global/facing-bailout-tax-cypriots-rush-to-get-their-money-out-of-banks.html?nl=todaysheadlines&emc=edit_th_20130318&_r=0&pagewanted=all
[2] http://www.bbc.co.uk/news/world-europe-21825981
[3] http://news.yahoo.com/cyprus-president-trying-amend-bailout-plan-192404965--finance.html
[4] http://www.nytimes.com/2013/03/18/world/asia/li-keqiang-chinas-premier-offers-plan-of-economic-and-social-reforms.html?nl=todaysheadlines&emc=edit_th_20130318
[5] http://news.yahoo.com/syria-opposition-pushes-form-interim-government-095217830.html
[6] http://news.yahoo.com/palestinian-ends-hunger-strike-deal-223812089.html
[7] http://www.bbc.co.uk/news/world-middle-east-21821159
[8] http://news.yahoo.com/ap-exclusive-karzai-opponents-talk-taliban-091454925.html
[9] http://news.yahoo.com/indian-police-5-admit-raping-swiss-tourist-002719207.html
[10] http://www.bbc.co.uk/news/world-asia-21817492
[11] http://news.yahoo.com/russia-unmoved-us-missile-defense-plan-change-072129271.html
[12] http://news.yahoo.com/politicians-clinch-deal-regulate-scandal-hungry-press-090815863.html
[13] http://www.nytimes.com/2013/03/17/world/europe/italian-lawmakers-elect-speakers-but-stability-is-elusive.html?ref=europe
[14] http://www.nytimes.com/2013/03/18/world/africa/zimbabwe-authorities-arrest-opposition-officials.html?nl=todaysheadlines&emc=edit_th_20130318
[15] http://news.yahoo.com/tear-gas-kenya-prime-minister-files-suit-121514448.html
[16] http://www.bbc.co.uk/news/world-africa-21829370
[17] http://www.miamiherald.com/2013/03/17/3292101/exit-polls-limas-mayor-survives.html
[18] http://www.miamiherald.com/2013/03/16/3290165/presidential-candidates-spar-in.html
[19] http://www.miamiherald.com/2013/03/17/3292006/death-toll-in-mexico-fireworks.html
[20] http://www.foreignpolicy.com/articles/2013/03/15/lost_in_the_desert_obama_morsy_egypt
[21] http://www.foreignpolicy.com/articles/2013/03/15/preserve_the_reserves
[22] http://www.foreignpolicy.com/articles/2013/03/15/iraq_roundtable_participants
[23] http://www.foreignpolicy.com/articles/2013/03/15/ends_and_means
[24] http://www.foreignpolicy.com/articles/2013/03/15/mali_s_bad_trip
[25] http://www.foreignpolicy.com
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[29] http://www.foreignpolicy.com/articles/2013/03/15/lost_in_the_desert_obama_morsy_egypt
[30] http://www.foreignpolicy.com/articles/2013/03/15/The_execution_of_the_Saudi_Seven
[31] http://www.foreignpolicy.com/articles/2013/03/15/will_south_korea_go_nuclear
[32] http://www.foreignpolicy.com/articles/2013/03/15/social_warfare_budget_republicans
[33] http://www.foreignpolicy.com/national_security_newsletter_signup
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