Cyprus refuses bailout conditions

The Cypriot Government has voted against the imposition of a savings tax, which was necessary to receive the Eurozone rescue package of Euro 10 billion, badly needed to shore up their banking system. Banks are still closed as investors remove as much of their cash as they can through the limited access provided by ATM's, in case the situation is reversed and the tax is enforced.

Cyprus GDP as a percentage of the overall Eurozone production is only about 0.2%, a tiny amount and the markets have calmly chosen to recognise that serious though this is for the inhabitants of this island, it is not an event capable of bringing the whole pack of cards down.

For now the Government are exploring other possibilitites but there is no sign that Euro officials are easing up on the conditions attached to the rescue package, which requires Cyprus to raise Euro 5.8 bn before the funds will be released from the central Troika purse.

There is a lot of Russian money washing around in the Cyprus banking system, taking advantage of advantageous tax breaks and there may be the possibility of financial aid coming from this area, which is being explored by the Cypriots.

Russia has a substantial interest in this situation and how they react to the hardball game that Eurozone officials are currently playing, is causing nervousness in markets not overly worried about Cyprus initially.