(3-20-13) The government of Cyprus wants a bailout from the European Central Bank, which is primarily controlled by Germany, that will force depositors to give up 6.7% of accounts which are smaller than 100,000 Euros and 9.9% for accounts larger than 100,000 Euros. This confiscation is couched as "deposit insurance." Since Cypriot banks have become a refuge for Russian KGB mob money, there has been some reluctance to take this route.
What the Cypriot government wanted was an absolute guarantee on all deposits, both foreign and domestic. But the ECB didn't want to agree to this which was what was also done to Iceland, Ireland and Portugal. The ECB didn't want to guarantee foreign deposits at 100 cents on the dollar.
The Cypriot government then said that if the ECB couldn't guarantee this, they wanted refuge somewhere in Europe. After all, what kind of Russian money is in Cypriot banks?
The Cypriot government has a pretty good idea who the Russian depositors are and whence came the money.