Without Russian aid, Cyprus is at EU’s mercy

March 22, 2013

Cypriot officials must agree on a bailout plan without Russia, Putin’s pick to head the central bank raises eyebrows, and Myanmar officials declare a state of emergency after days of violence. Today is Friday, March 22, and this is the World Wrap, brought to you by @dwbronner.

Police officers stand guard outside parliament during a rally by employees of Cyprus Popular Bank in Nicosia, March 21, 2013.  REUTERS/Yannis Behrakis

Cyprus teeters on the brink. Russia rejected Cyprus’ plea for financial aid, leaving the Cypriot parliament with few options as the European Central Bank’s deadline for a bailout plan approaches on Monday. If Cyprus does not reach a decision, the ECB will cut funds to Cypriot banks, potentially forcing the country to abandon the euro:

In Nicosia, the country’s biggest bank urged politicians to make haste and cut a deal with their EU partners as parliament considered proposals to nationalize pension funds, pool state assets and split the country’s second-largest bank in a desperate effort to satisfy those exasperated European allies. The governor of the Central Bank, Panicos Demetriades, warned political leaders the country would face a disorderly bankruptcy on Tuesday unless they approved the bills, an official present at the talks said.

If taken, the proposed measures may not be sufficient to raise the 5.8 billion euros the EU is asking Cyprus to contribute towards a 10-billion-euro bailout. According to parliamentary sources, German Chancellor Angela Merkel said to lawmakers that a successful plan must revolve around bank restructuring and debt sustainability, and that nationalizing pension funds is an unacceptable solution.

New head of Russia’s central bank walks a fine line. Vladimir Putin’s surprise pick for the next head of the Russian central bank, economic aide Elvira Nabiullina, reflects the challenges the Russian president faces in satisfying the dueling factions in his government amid a slowing economy and growing middle class discontent:

The liberals’ standard bearer, Alexei Kudrin, ran budget surpluses, repaid debts and saved windfall oil revenues in a rainy-day fund during an 11-year term as finance minister until he was ousted in 2011. But a rising group of Kremlin economists is determined to mobilize state resources to crank up flagging economic growth – including by slashing interest rates, a move that would be anathema to the inflation hawks who until now have been in charge of the central bank.

Nabiullina, the former economy minister worked on market reforms that guided Russia back to growth during Putin’s first term. She is seen as a compromise nomination, accepted by Putin’s opponents but cozy with the administration.

At least 20 killed in Myanmar conflict. Myanmar declared a state of emergency and imposed martial law in four central districts, following days of violent conflict between Buddhists and Muslims in the region. Officials imposed an overnight curfew in the affected areas earlier this week, and military officials have been called in to monitor the situation. At least 20 people have been killed since the violence began on Wednesday. Myanmar officials fear the resurgence of sectarian tension that left 110 dead in March 2011:

The unleashing of ethnic hatred, suppressed during 49 years of military rule that ended in March 2011, is challenging the reformist government of one of Asia’s most ethnically diverse countries. Jailed dissidents have been released, a free election held and censorship lifted in Myanmar’s historic democratic transition. But the government has faced mounting criticism over its failure to stop the bloodshed between Buddhists and Muslims.

Roughly 5 percent of Myanmar’s predominantly Buddhist population is Muslim.

Nota bene: Reuters photographers captured revelers covered in colored powder in the northern Indian state of Uttar Pradesh celebrate Lathmar Holi.


Potty mouth – As part of World Water Day, the United Nations launched a campaign for open conversation about toilets. (Al Jazeera)

Cyber backtrack – South Korea reversed its claim that China was responsible for last week’s hacking attack on banks and media companies. (CNN)

Gitmo Jr. – The U.S. Southern Command is asking for $49 million to construct another building for special detainees at Guantanamo Bay. (The New York Times)

Cyprus will pay for its sins – Reuters editor-at-large Hugo Dixon offers insight into where Cyprus has made, and continues to make, serious mistakes. (Reuters)

Do not disturb – Saudi Arabia has made it increasingly clear that tourists are not welcome. (Time)

From the File:

  • Obama visits Bethlehem’s Nativity Church
  • No sign of political unity as Italy awaits president’s decision
  • Pope urges dialogue with Islam, more help for the poor
  • China’s new leader welcomes Russia’s Putin as a friend
  • Central Africa Republic rebels infiltrate capital


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