Cyprus is the 21st century Titanic – which also sunk its own battleship.

For those who do not know, Cyprus sits as a very sizable ancient landmass in the midst of three large spheres of influence. One African, one Asian, and one European, and as the last stepping stone for any civilized Westerner who goes off the deep-end into another part of the world -- thus the country does seem very culturally mixed.

Perhaps that’s why it was no surprise, to most Cypriots, their country’s recent credit quagmire has left creditor institutions from all over the world clawing their way into their banks. It's not pleasant place for once rosy-tinted Russian tourist economy that allegedly settled in to rest and relax in what happens to be the European Union’s largest off-shore financial fortress, far away from Moscow rules, and what is an eerily reminiscent response how their banks were handled after crisis hit the old country, in 1997, for these 40% of all Cypriot deposit holders.

Like watching horror film's reel cut into pieces and has hastily been reassembled, the final cut leaves us with what looks like a image of country that was no longer entirely its own year. It's now heavily ladened with kleptocratic Russian influence and opaque ideas and entirely questionable ideals of German-styled austerity, and thus picture gets worse as time goes by.

We know the gap between what the Cypriot government was willing to go to keep the European wholesale and the European Central Bank happy in the beginning, to keep them buying their bonds, went from naïve to positively poddleish. To be more candid, it went from the Prime Minister of Cyprus who had once been the chief lawyer to Russian playboy, billionaire, oligarchic, and Chelsea Football Club owner Roman Abramovich, to a lapdog for these three, very large, European financial entities.

Prime Minister Nicos Anastasiades apparently asked, and also apparently begged, to be told to resign as he sat through negotiations in the EU capital of Brussels -- as so many other Prime Ministers have in the past so he wouldn’t have to govern through what amounts to a terrible mess. Like the reforms which will cut heavily into the budget or presiding over the end of an economy that gone from small-time agriculture in just dates and olive oil to one built into one of the highest standards of living in the world.

But just like oil, or snake oil in this respect, off-shore banking is more temporary than not and a curse at that. The over-confidence it breeds with foaming bubbles frothing out of an old-fashioned national economy can only be wiped clean away when crisis impacts and someone knocks on the car-door taking the keys with them. Prime Minister Nicos Anastasiades has a very long road ahead.

Indeed, but where does he go from here? We can analogize what will happen to the country in the same way as its banks will be restructuring. It’s rather a spectacular, but crude and blunt, plan learned by the lesson of the Financial Crisis of 2008. As it was so expertly sliced and diced by the European Central Bank this time around, the plan follows –as surmised by Tim Harford in his book Adapt: Why Success Always Starts with Failure – that like splitting a country into good assets and bad assets, and a commission not of Anastasiades’ choosing, will split the country’s financial sector apart and ignore, completely, the concerns of its corporate bondholders. Assets will stripped and under an equally arbitrary authority which will tinker with what was a fixed rate of money which will not be returned to the bank’s customers, since there is no mandated bank insurance policy, and these will be folded under the umbrella of the bad assets. Essentially, the toxic company will own the good one, so that unlike when the US bailed out its banks, Cypriot banks will not continue fulfilling intra-bank contracts, will be unable to essentially sell good assets in order to keep the bank afloat, collect large salaries, and so on.

So will Cyprus fall off what is essentially the bailout cliff? By saving the patient you inadvertently kill him as well? Well, Cyprus is also quite a resilient place. Its recent mass invasion happened just forty years ago in 1973 when half the island was occupied by a large Turkish contingent. Since then things have fizzled, but the 80 or so Russian billionaires and hundred-millionaires will probably stay quite angry for a long time to come. Anyone who had converted their Russian passports for Cypriot ones will have now realised this error, since their new homeland shoved them under a bus in just a couple weeks. But not to worry, a friend of mine in Singapore told me he’s been contacted by about three ‘hyper-high net worth’ individuals who came from, yes you can imagine, Cyprus of all places.