From Cyprus With Love

Posted on April 3, 2013. Filed under: Uncategorized | Tags: , , , , , |

By Scott Orr

cyprus haircutThe Republic of Cyprus is a tiny island in the Mediterranean Sea, perhaps best known through history as the birth place of Aphrodite, the Greek goddess of beauty, pleasure and love. But last week’s developments may have sent Americans to Wikipedia to learn more about one of the European Union’s smallest economies.

That’s because its economic woes could have Olympian impacts across the globe, including here in the United States.

Cyprus’ budget woes were so serious that the government proposed a so-called “hair cut,” the seizing of a percentage of the bank accounts of all Cypriots. Facing massive protests, the Central Bank in Nicosia later trained its sights on the rich, planning to scalp only those with savings in excess of 100,000 euros.

With the U.S. stock market booming, it’s hard to imagine a place as off the beaten path as Cyprus as an economic banana peel. But it could be.

Cyprus is the latest danger zone in the game of economic whack-a-mole known as the European financial crisis. And this is why such a small economy is so significant to American investors: It is symptomatic of the larger ills that are plaguing European states from the Mediterranean to the Baltic.

The U.S. economy has been recovering at a respectable pace, particularly over the last year during which relative economic stability has descended upon our friends in Europe. With signs of trouble’s return popping up in Cyprus, though, U.S. investors could become skittish, fearing a domino effect should the Cyprian economy fail. There already is talk that Slovenia and Luxembourg, two other small economies, could be next.

While economic forecasters are watching those two potential danger zones, they are really keeping their eyes on Italy, where economic and political concerns are combining into what could be a perfectly devastating storm.

Back home, the Obama administration is taking credit for a halting recovery and feeling empowered enough to focus, now, on other critical issues like immigration, guns and the environment. But more economic chaos could put an end to all that.

It seems like every recent summer has brought with it a new economic crisis in Europe and a new drag on the U.S. economy. Each time, the European economy has survived and the situation in Cyprus may evaporate as well.

But in a fragile economy where even signs of impending crisis can become crises themselves, the U.S. economy can ill afford another body blow. Especially one coming from the home of the goddess of love.

Turner GPA is a leading D.C.-based national lobbying and government affairs firm dedicated to delivering cutting edge policy advocacy for the manufacturing, defense, aerospace, health and energy industries. Members of our professional policy team can be reached at (202) 466-2511. We are also on the Web at


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