In Cyprus as in Britain, the prudent must pay for others’ folly – but not like this

The Cypriots are the authors of their own misfortune, having turned their banking system into a rackety offshore haven for Russian loot and lent most of the proceeds to Greece. But it was madness on the part of bailout negotiators to shake confidence in banks across the eurozone by trying to impose a levy on deposits held by even the smallest Cypriot savers, in what was presumably an attempt to cream off a layer of ill-gotten foreign cash. And even if the proposal has been radically watered down by the end of the week, we now know the European powers-that-be are prepared to pull this device out of their toolbox if the subject government is too weak to resist. That threatens to undo much of the good work of European Central Bank president Mario Draghi, whose declaration last July that he would do ‘whatever it takes to preserve the euro’ and maintain confidence in its banks seemed to mark a turning point in the eurozone crisis.