Jeremy Hobson: The tiny Mediterranean island nation of Cyprus is formally asking for a bailout from Europe. The country says it needs more than $10 billion from its euro zone partners to avoid default.

For more let’s bring in Marketplace’s Stephen Beard from the slightly larger island known as England. Stephen, it seems like it would be hard to say that Cyprus is too big to fail, I mean it’s not exactly Spain or Italy.

Stephen Beard: No that’s right — not the biggest domino in the pack. As you say it is a tiny island in the east Mediterranean, population about a million, with an economy smaller than that of Vermont. But Cyprus is important, it is of course a member of the euro zone and it has geopolitical importance too.

Here’s Stephen Lewis of Monument Securities:

Stephen Lewis: Well Cyprus occupies a strategic position in the Mediterranean. It’s not very far from Syria. The British have used it as a base for more than a century. In those military terms it has enormous value. 

Beard: Which is probably why the Russians have already lent Cyprus more than $3 billion and the Chinese are reported to be interested in lending them money too. And that’s why the euro zone will probably bail out Cyprus pretty quick to keep those other two countries at bay.

Hobson: Well Stephen, this comes on the hills of the Spanish formal bailout request yesterday, it does seem like the pace of bailouts is quickening.

Beard: Yes, the crisis is certainly spreading. And this is hugely embarrassing for the euro zone, this bailout request, because this week we had the latest make or break summit to resolve the debt crisis, and Cyprus takes over the revolving presidency of the European Union next week, as a leading politician put it, ‘a tragic coincidence.’

Hobson: Marketplace’s Stephen Beard in London, thank you.

Beard: Ok Jeremy.