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.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Who cares about the unity of Ukraine?

Parliament compromises on Banking Union but sends market abusers to jail

China by numbers: 10 facts to help you understand the superpower today

Greek citizens to pay the price again but Tsipras risks losing next elections

Sudan: top UN official demands cessation of violence and rape against civilians by security forces

Syria: A bloody tracer of Trump – Putin rapprochement

Samsung’s profits fall as cheaper smartphones gain market share

‘Complacency is still strong’ over stopping genocide, says top UN adviser

#Travelgoals: why Instagram is key to understanding millennial tourism

FROM THE FIELD: Weaving profits in Azerbaijan

To tackle climate change, we need city diplomacy

How the United States can win back its manufacturing mojo

German opposition win in Lower Saxony felt all over Europe

‘We are nowhere closer’ to Israeli-Palestinian peace deal, than a year ago, Security Council hears

The EU pretends not knowing what happens in the Western Balkans

‘Bleakest period yet’ in Occupied Palestinian Territory: UN human rights expert

US must abide by humanitarian refugee accords: UN refugee agency

Tiny Iceland teaches the West how to treat bankers

Eurozone: The cycle of deficits, debts and austerity revisited

Europe led by Germany seems vulnerable to Trump’s threats

The world wide web is 30. Here are 8 things you should know about it

Youth Parliament to finalise millennials´ priorities for future of the EU

Facts and prejudices about work

We have a space debris problem. Here’s how to solve it

At this Italian bookshop, children swap their recycling for something to read

The European Youth explains the age gap in European business in the 21st century

The impossible end of the war in Syria

A Sting Exclusive: “On the road to Japan-EU Economic Partnership Agreement”, by Ambassador Katakami of the Japanese Mission to the European Union

Is it too soon to hope for a tobacco free Romania?

TTIP: why it is worth not to pull the covers over your head?

Major UN aid operation for 650,000 gets underway across Syria-Jordan border

Innovative urban financing can make our cities stronger

Unlock the value proposition for Connected Insurance

Congrats to the #FutureofMalta: a new age of voting

How ‘small’ is Europe in Big Data?

Mine action is at ‘the nexus’ of peace, security and development: UN official

Here are 5 of the biggest threats to our oceans, and how we can solve them

Towards the Rise of the United States of the Atlantic?

UN genocide adviser welcomes historic conviction of former Khmer Rouge leaders

MEPs wants to increase research funding to €120 billion in 2021-2027

From DIY editing to matchmaking by DNA: how human genomics is changing society

Where is heading Putin’s Russia?

Draghi to lay his print on long term ECB policies prior to exiting next year

Is it just visa-free travel that Erdogan demands from the EU to not break the migration deal?

250+ senior claims leaders under one roof, exchanging transformation strategy

Medical students of today, technological doctors of tomorrow

Ghana will grow faster than any other economy this year, the IMF says why

New VAT rules in the EU: how a digital sea could have become an ocean

This surgeon runs a makeshift hospital for over 200,000 people

The entire Australian state of New South Wales is in drought

Every bite of burger boosts harmful greenhouse gases: UN Environment Agency

Largest joint UN humanitarian convoy of the war, reaches remote Syrian settlement

Key economic forum in Russia: New technology a ‘vector of hope’ but also ‘a source of fear’ says Guterres

Towards a zero tobacco public space in Cameroon

Norway is known for its cold weather – but it’s been in the grip of a severe heatwave

Global leaders and companies pledge to reduce the gender pay gap by 2030

EU labour mobility: Inconvenient truths for everybody

‘Grave consequences’ await if new deadly escalation of violence in Gaza continues – top UN official

Breaking barriers between youth in the new tech era: is there an easy way through?

Ercom, cutting-edge Telco solutions from Europe

More Stings?

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