EU economics commissioner Olli Rehn went on the record telling him that Cyprus is going to have to restructure its debt -- just two weeks after ruling such a thing out.
That might come as little surprise, given that Cypriot banks were loaded up to the gills with Greek debt, and Greek debt suffered a 70% haircut. Cyprus is tiny, and could never afford the €17 billion needed to bail out the banks and the government -- especially since that would bring the country’s debt load up to more than 140% of GDP.
Still, after the EU forced Greece to default, it drew a line in the sand: no more sovereign defaults, it said, since Greece was “unique and exceptional”. So this does go to show that you can’t really trust Europe’s promises. What’s more, Cyprus’s now-certain restructuring is going to be significantly messier than Greece’s was.
Emphasis mine. Via Cyprus’s now-certain default | Felix Salmon.