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Tiny Cyprus flashes defiance at EU partners, latest in a string of fightbacks

The moment word broke that Cypriot lawmakers in Parliament had voted down a bailout deal that would have raided everyone's savings to prop up a collapsing banking sector, a huge cheer rose up from hundreds of demonstrators gathered outside that echoed through the building's corridors.

Many relished it as a kind of David-against-Goliath moment — a country of barely a million people standing up to the will of Europe's behemoths who wanted it to swallow a very bitter pill to fix its broken-down economy.

"Shame on Europe for trying to snatch people's savings. It's a mistaken decision that will have repercussions on other economies and banking systems," said protester Panayiotis Violettis. "People have stopped trusting the EU which should be our protector."

Fighting back is not a new experience for Cypriots. From the 1950s guerrilla war against British rule to Greek Cypriots' defiant refusal in 2004 to accept a U.N.-backed peace plan to reunite the island, they are used to holding their own against big opponents.

Just as quickly as Cyprus' euro area partners decided that a deposit grab was the only way out, so Cypriots decided their tiny island was ground zero in Europe's new financial scorched earth policy and that it had to be resisted at all costs.

"Better die on your feet than live on your knees," one placard among the throngs of protesters read. Another said: "It starts with us, it ends with you" as a warning to other Europeans that their savings were no longer safe.

Politicians seized on the public mood. "This is another form of colonization," Greens lawmaker Giorgos Perdikis spouted in Parliament. "We won't allow passage of something that essentially subjugates the Cypriot people for many, many generations.

"Unfortunately, instead of support and solidarity, our partners offered blackmail and bitterness," said Parliamentary Speaker Yiannakis Omirou. The indignant leader of the country's Orthodox Christian Church, Archbishop Chrysostomos II, added: "This isn't the Europe that we believed in when we joined. We believed we would receive some kind of help, some support."

The country's foreign minister, Ioannis Kasoulides, even acknowledged that Cypriot negotiators had contemplated exiting the euro instead of accepting their euro area partners' terms.

In the end, Cyprus accepted a deal that would safeguard small savers but where depositors with more than 100,000 euros in the country's two most troubled banks would lose a big chunk of their money.

Nonetheless, Europe was stunned at the sheer brazenness. How could a pipsqueak country on Europe's fringes thumb its nose to continental juggernauts Germany and France and dare to turn down a deal meant to save it from economic chaos?

It's not the first time the country has pushed back in defiance, even against what many would consider as insurmountable odds. The island's majority Greek Cypriots fought former colonial ruler Britain to a draw in a four-year guerrilla campaign in the 1950s that aimed for union with Greece. That conflict ended in the country's independence in 1960.

Just 14 years later, a Turkish invasion prompted by an abortive coup by supporters of union with Greece resulted in the island's division into an internationally recognized, Greek-speaking south and a breakaway, Turkish-speaking north.

The invasion and its fallout remains an existential matter in the minds of Cypriots and it still informs many of the political and economic decisions the country and its people make.

"Greek Cypriots lost nearly everything during the 1974 invasion," said University of Cyprus History Professor Petros Papapolyviou. "So they reason, what else do we have to lose? Why accept another injustice?"

In 2004, Greek Cypriots again defied international expectations when they voted down a United Nations-backed reunification plan they believed was unfairly weighted against them.

A few days later, the island joined the European Union and some EU leaders were left fuming at what they saw as Greek Cypriot deceit for promising to sign up to a peace deal in exchange for EU membership.

Nearly a decade later and European acrimony at the Cypriot "no" hasn't entirely dissipated. German Finance Minister Wolfgang Schaueble told the Sunday edition of German newspaper Welt am Sonntag that "Cyprus was admitted to the EU in hopes that the plan of then-U.N. Secretary General Kofi Annan to overcome the (island's) divide would be honored."

"I interpret (that) as indicating a sense of vindictiveness rather than rational, result-oriented thinking." said University of Cyprus Associate Professor Yiannis Papadakis.

Were the tough bailout terms some sort of belated punishment? Whether that's true or not, such notions only feed a Cypriot proclivity for conspiracy theories. As in other small, insular societies, threats — real or imagined — sharpen a sense of collective victimhood.

Papadakis said Cypriots see their political culture as underpinned by personal relationships. Hence their reference to "friends" instead of "allies," which implies a more pragmatic relationship.

"That's why Greek Cypriots often complain of a 'betrayal from our friends'," he said. But it's wrong for the EU to foist all the blame on Cypriots when things go awry, Papadakis added.

"I believe that the rest of the EU has made a large share of mistakes during this arduous process."