Cyprus needs a bailout mostly to rescue its banks which are in trouble after making loans totalling around eight times the country’s national output.
Cyprus’s economy was also hammered by its close banking and trade links with recession-ravaged Greece.
Brussels refused to give Nicosia all the money it asked for, instead insisting Cypriot bank account holders had to forfeit some of their savings.
The result was a one-time levy of 6.75 percent on all deposits under 100,000 euros and 9.9 percent on accounts holding more than that.
Trying to calm fears in other eurozone countries, officials stressed the situation in Cyprus is unique and this kind of levy on bank accounts would not be used elsewhere.
Those affected will include many rich Russians with deposits in Cyprus and political expert Nikolai Petrov said the Kremlin sees a silver lining in that.
“There is a certain positive element from the point of view of the Russian government in that conditions for keeping money in Cyprus will become harsher and unprofitable and that fits in with the idea of repatriation of that offshore money, which Putin has promised for quite a long time,” explained Petrov.
Russian deposits in Cypriot banks are estimated to be at least 15 billion euros and perhaps as much as 35 billion, with the source of much of money murky.