Cyprus is something like an Iceland-2. The government is not the main culprit for the problems, but it is loaded with the expectations to find a solution. So something is wrong with the principles of the global finances.

Obviously Cyprus did the right choice. The real and capitalistic choice that leads to a healing in a long term.

European leaders obviously decided to make a nuclear test in financial system to demonstrate the consequences of not making the needed austerity reforms. Cyprus is the ideal range for this as the economy is very small and even enormous fluctuations there cannot harm the rest of EU. Cyprus is much smaller even than Greece, that itself is considered small enough for experiments. Anyway Cyprus is even better, because much of the money lost will be from outside EU. Cyprus is an offshore zone.