As we get closer to the deadline, the familiar brinkmanship pattern has emerged in the Cyprus crisis. The troika has issued an ultimatum and is awaiting the response of the target country. Usually, the ultimatum is implied and hidden behind vague political language. In a significant departure from prior precedent, the troika is now overtly threatening the proposed bailout recipient.
Analyzing eurocrisis drama becomes dramatically simpler after the troika issues an ultimatum, whether explicit or implicit. In this case, the lines are clear. Cyprus will either accept the troika’s €10bn loan offer and raise €7bn itself by March 25, or the ECB will remove ELA from Cypriot banks, and the eurozone will eject Cyprus.
There is no need to follow the news until Monday. In the meantime, the mainstream media will continue reporting progress or the lack thereof. Markets may travel up and down a bit on rumors, but you can safely ignore all of this information. Either the sides will accomplish a deal on Monday just in the nick of time, or they won’t.
Did I mention that Cypriot debt will be unmanageable under the new deal anyway forcing a renegotiation of terms within two years?