Cyprus Parliament says no to blackmail

 From left to right: Mr Jeroen Dijsselbloem, President of the Eurogroup; Mr Michael Noonan, Irish Minister for Finance; Mr Olli Rehn, Vice President of the European Commission; Mr Michael Sarris, Cyprus Minister for Finance; Mr Wolfgang Schauble, German Federal Minister for Finance; Ms Christine Lagarde, Managing Director of the IMF (back). (Council of the European Union, Photographic Library).

From left to right: Jeroen Dijsselbloem, President of the Eurogroup; Michael Noonan, Irish Minister for Finance; Olli Rehn, Vice President of the European Commission; Michael Sarris, Cyprus Minister for Finance;  Wolfgang Schauble, German Federal Minister for Finance (sitted);  Christine Lagarde, Managing Director of the IMF (back). (Council of the European Union, Photographic Library).

Not one Cypriot Parliamentarian voted yes for the draft bill proposal, providing for a haircut on all deposits in Cypriot banks. As a result the island’s financial system will remain shut down until Thursday, in the hope that a solution to the stalemate will be found. It was quite a spectacle to see all the 19 governing DHSY party deputies to abstain from the vote, despite the fact that it was their party’s government who introduced the draft bill in Parliament.

Meanwhile the rest of the actors in this Cypriot tragedy, namely the Cypriot President Nikos Anastasiades, the German Chancellor Angela Merkel and her minister of Finance Wolfgang Schauble, the general manager of the IMF Christine Lagarde and the European Commissioner Ollie Rehn, all of them pointing a finger at each-other for the worst bailout package ever produced in the Brussels’s financial laboratory, the Eurogroup.

Pocketing depositors’ money

As for the new President of Eurogroup, the Dutch Minister of Finance, Jeroen Dijsselbloem, seemingly he was just presiding in the crucial meeting of last Friday night Saturday morning. It was in the early morning hours when it was born, the monster bailout package to save the Cypriot banks, by giving a deep haircut to their depositors’ money starting from the first euro.

As it usually happens in the European Union the need to arrive at a decision that contains something from everybody’s positions, produces at the end such an ugly monster that not even its parents like it. In this case the ugliest part of the deal was the haircut on all bank accounts in Cypriot banks. It was the newest German idea about how will be financed the future bailouts of failing Eurozone banks. Obviously the Germans were once more wrong, by not taking into account the reaction of the other side.

Now the whole thing is back in the incubation chamber and God knows what the new product will be. In the between there is a cacophony of opinions developing all over Europe, including Russia. A wealth of around €20 billion, in deposits to Cypriot banks belongs to Russians, who have parked their money in the islands’ offshore financial facilities, where no questions are asked. They also go for their vacations, there and usually combine business and pleasure. The haircut on their wealth came as an ugly surprise. Russian depositors/investors in Cyprus are expected to lose anything around €2bn and President Putin seems disposed to make a big fuss out of it.

As the stalemate drags on, the polyphony takes dangerous dimensions. Very important players in the island, like the prestigious Greek Orthodox Archbishop, are now openly proposing a full exit from Eurozone and a return to the Cypriot Pound.

In the same line of thinking the discussion has resumed in mainland Greece, about the futility of the Greek bailout package agreed last December. In must be reminded that Athens has signed with the troika of its creditors EU-ECB-IMF, three draconian Memorandums of Understanding over the past two years, which have by now cost the country at least one fifth of its GDP and a 27% unemployment.

Returning to the Cypriot crisis it seems that the only light in the tunnel came from the usually outspoken Austrian central banker, Ewald Nowotny, a member of European Central Bank’s Governing Council. He said that the ECB has not taken a decision yet, but according to the standard practice the central bank will offer liquidity to the Cypriot Banks when they open again and added that the ECB is also ready to play its role as lender of last resort.

In any case the ball is presently in the Cypriot government’s court. It is President Nikos Anastasiades who has to come up with a new plan. According to information from sources in the island, the new plan will leave untaxed the bank deposits of up to €20,000. To make up for the losses after the exemption of the small depositors, the government examines the possibility to raise money from the private social security funds. In any case the administration needs almost €6 billion in total. This amount together with a loan of €10bn from the troika of EU-ECB-IMF will be used to recapitalise the Cypriot banks.

In any case the rejection of the haircut on deposits by the Cypriot Parliament is like calling ECB’s bluff, which said it will withdraw the liquidity line to the island’s banks, if the deal is not honoured by Nicosia. Novotny however seems to say quite the opposite. The problem is that the stalemate cannot continue beyond Thursday, the day the banks are supposed to open. With a bank run considered as a certainty and the protraction of the uncertainty with the banks kept shut being equally risky, the issue has to be settled today or early tomorrow.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Kors and Nyong’o: Food, fashion and film join forces at UN, for the world’s hungry

COVID-19: EU institutions take action to procure life-saving medical equipment

East Africa locusts threaten food insecurity across subregion, alerts UN agriculture agency

Microplastics have spread right to the sea bed, study finds

Why informal networks will be key to the COVID-19 recovery

Why Europe’s high productive performance is discredited?

Mergers: Commission clears acquisition of joint control over INWIT by Telecom Italia and Vodafone, subject to conditions

Mass measles vaccination campaign begins in Ebola-hit DR Congo province

Swiss vote approves nationwide paternity leave

Colombia’s former president says COVID-19 shows the importance of listening to indigenous peoples on how we treat the planet

Benefits of rural migration effect often overlooked, new UN report suggests

South Sudan’s women caught up in ‘futile man’s war’ UN gender equality chief

5 things we get wrong about young people, according to a US study

5 things you need to know about creativity

Here’s a reason to feel cheerful – the world is full of Good Samaritans

Here are 4 tips for governing by design in the Fourth Industrial Revolution

Remembering Kofi Annan

Fighting Terrorism Online: EU Internet Forum committed to an EU-wide Crisis Protocol

5 leadership lessons I learned from doing my own ‘undercover boss’

What the mighty mangrove tells us about our broken relationship with nature

Coronavirus: Commission stands ready to continue supporting EU’s agri-food sector

Obesity rates soar due to dramatic global diet shift, says UN food agency

Tackling terrorism: MEPs approve tighter rules on homemade explosives

Japan should reform retirement policies to meet challenge of ageing workforce

These photos show the world of science in stunning detail

“America first” policy goes against EU-US partnership, say MEPs

EU Commission: a rise in wages and salaries may help create more jobs

UN welcomes Angola’s repeal of anti-gay law, and ban on discrimination based on sexual orientation

Brexit update: can the UK General Election of 12 December 2019 lead to a Brexit extension to 2030?

This is how COVID-19 has impacted workers’ lives around the world

The secret to ending war? It’s too easy: more women in peace negotiations

Asia-Pacific ‘regional parliament’ underway to advance equality, empowerment, for more than four billion citizens

The reskilling revolution can transform the future of work for women

AIESEC Vlog

FROM THE FIELD: Persons with disabilities bike towards sustainability

How to tap the talents of refugees – one student at a time

These clothes were designed by artificial intelligence

Why moral leadership matters now more than ever

Bid to raise $5.5 billion for millions of Syrians and their host communities

Court of Auditors: EU budget money is there to be spent not to create value

Minding the information gap and why it’s important in tackling COVID-19

Coronavirus: European roadmap shows path towards common lifting of containment measures

New rules for temporary border controls within the Schengen area

Why strive for Industry 4.0

Action needed to end deadly clashes between African herders and farmers: UN chief

Learning lessons from across Europe – the hidden costs of COVID-19 on lung cancer

More capital and liquidity for the banks

‘Reaffirm the sanctity’ of religious sites, says Guterres, launching new plan to ‘counter hate and violence’

The EU prepares for the end of LIBOR: the Commission welcomes the agreement reached between the European Parliament and the Council on financial benchmarks

Nature is our strongest ally in ensuring global water security

Parliament approves key directive regulating professional qualifications

What are the real debates surrounding immigration in an increasingly globalized world?

More than one billion people do not have access to electricity. What will it take to get them connected?

Detecting online child sexual abuse requires strong safeguards

These countries are driving global demand for coal

4 lessons on human cooperation from the fight against Ebola

European Border and Coast Guard: 10 000-strong standing corps by 2027

As inequality grows, the UN fights for a fairer world

It’s time for global businesses to accept local responsibility

The EU condemns Faroe Islands and Iceland to poverty

More Stings?

Advertising

Comments

  1. I am regular reader, how are you everybody?
    This post posted at this site is truly good.

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s