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People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation euro zone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker euro zone economies and might possibly lead to bank runs.
People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation euro zone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker euro zone economies and might possibly lead to bank runs.
(Petros Karadjias/AP)

CARL MORTISHED

Cyprus pays a price for tolerating dirty money

CARL MORTISHED

LONDON — Special to The Globe and Mail

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There is an unpleasant tradition in Europe for collaborators with the enemy to have their hair shorn. The EU has not gone as far as shaving the heads of Cypriots but the weekend's decision to seize a slice of the cash held by ordinary depositors in Cypriot banks as a condition for a €10-billion ($13.2-billion) bailout of the insolvent Mediterranean state is a "haircut," not a tax.