Foreign Correspondent: April 30

Tomorrow night Foreign Correspondent delves into the financial disaster of Cyprus after bank accounts were compulsorily acquired by the Central Bank.

ABC Economics specialist, Stephen Long speaks to Cypriots trapped by a national crisis and looks at its grave repercussions for Europe and the rest of the world.

Cypriots can be a spirited, passionate bunch but if you lobbed onto their sundrenched Mediterranean island home right now you’re likely to see and hear those passions running higher and louder than usual.

They’re variously shocked, outraged, in denial or mired in despair.

The reason? They put their hard earned money into the bank and a bigger bank took it.

It’s an extraordinary transaction, sending shockwaves through other nations wrestling with epic debt and being forced into deals with the European Union to stay afloat. If this kind of thing could happen in Cyprus then surely it could happen anywhere “rescue” deals are being done.

ABC Economics specialist, Stephen Long joins Foreign Correspondent to explore the profound implications of one of the most destabilising, destructive deals done in the course of the European Financial Crisis. Long travels across the island nation and meets people trapped by a national crisis that everyone agrees guarantees, not just recession but depression. Businesses are closing, the construction industry is frozen and sackings have begun. Unemployment, currently 15%, is predicted to surge to more than 30%. Wages are being cut by as much as a quarter.

So why is Cyprus, a rocky island nation of 800,000 people suffering such extreme financial pain – much worse than any of its fellow heavily indebted European nations – Greece, Ireland, Portugal and Spain?

The man who signed the deal – Cyprus’ former Finance Minister Michael Sarris – says it was out and out bullying by The Troika – the European Union, the European Central Bank and the International Monetary Fund.

It is not only Cypriots who are suffering. Tens of thousands of foreigners, Russians, Britons and other Europeans have been lured to Cyprus during recent decades. Sunshine, low taxation, relatively cheap real estate and a British-style legal system were all incentives to relocate from chilly northern climes.

Real estate agent Izabella Vinogradova says many wealthy Russians brought their money to Cyprus because they’d had bad experiences with Russian bank failures. But the seizure of their bank deposits has smashed the faith of her clients in Cyprus. The price of mansions on the rocky heights above the port city of Limassol have crashed.

Cypriots though have no choice but to have faith in themselves, to endure the pain and to recover. They’ve done it before, they say, almost universally citing the events of 1974 when the northern third of the island was seized by the Turkish military, causing a huge number of Greek Cypriots to seek refuge in the south.

Can they survive The Haircut?

Tuesday at 8pm on ABC1.