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March 26, 2013

Bailout Saves Cyprus from Potential Bankruptcy Plunge

Watch Mixed Reactions to Cypriot Banking Bailout Deal on PBS. See more from PBS NewsHour.

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The country of Cyprus avoided bankruptcy yesterday after it agreed to terms for a financial bailout from its partners in the eurozone. The bailout, which totaled $13 billion, may have prevented financial chaos, but will still leave citizens hurting.

“I don’t think there is any denying that the Cyprus people will have to go through tough times and will suffer the consequences of a protracted period where wrong decisions were made,” said Cyprus Finance Minister Michalis Sarris.

As part of the deal, large depositors in the two biggest banks will take substantial losses to help the government raise some $7.5 billion, and the country’s second largest bank will be shut down. While this will prevent Cyprus from falling out of the eurozone, many in Cyprus felt the deal was far from generous.

“We feel rather bitter. And we feel rather that we have not been treated the same way as other partners, probably being the smallest, I don’t know. But we are a resilient people. And we are going to fight,” said Cyprus Foreign Minister Ioannis Kasoulides.


Quotes

The decisions that were taken were harsh. It is a catastrophe. It will be a long time before things are right again,” - Savvas Georgiou, Cyprus.

“It’s a big shame what has happened. But with the way things were going, what else could they do? There was no other solution. God help us all,” – Elizabeth Loakovou, Cyprus.

Warm up questions

1. What is the eurozone?

2. Where is Cyprus?

3. What is a bailout?

Discussion questions

1. How would you characterize the Cypriot reaction to the news of the bailout?

2. Why do you think the other eurozone countries wanted to bail Cyprus out?

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