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

Opening – EP remembers Nelson Mandela and mourns attacks on Roma in Ukraine

Fairness in the food supply chain: Commission proposes to increase price transparency

What do refugees really need from those who want to help? A refugee explains

Jean-Claude Juncker and Theresa May at last week’s EU Council. Source: EC Audiovisual Services / Copyright: European Union, 2017 / Photo: Etienne Ansotte

EU leaders open “Phase Two” of Brexit talks and warn Theresa May of tougher times

European Commission adopts rules to ensure a smooth transition to its next President and the next College of Commissioners

Debunked: 5 myths about the future of work

Ramp up nuclear power to beat climate change, says UN nuclear chief

State aid: Commission approves €1.2 billion French “Fonds de solidarité” scheme for small enterprises in temporary financial difficulties due to coronavirus outbreak

Medical students, climate change and health: an unorthodox combination

EU summit: Are the London Tories planning an exit from the EU?

Can alternatives to rhino horn save these gentle giants?

More hiring freedom can reduce teacher shortages in disadvantaged areas

Make progress or risk redundancy, UN chief warns world disarmament body

Create conditions for ‘harmony between humankind and nature’, UN chief says on sidelines of G20 in Japan

The role of students in a migration crisis in Roraima, Brazil

Here are three key ways that data analytics can improve the workplace

How we can embrace the electrical vehicle transition by adopting smart charging

These are the best cities for tech

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

“Sorry mom it’s not our day”: the true refugee story of a young doctor and his family forced to flee their home

UN commemorates International Day of Solidarity with the Palestinian People

Mental health at stake: A silent epidemic of 21st century

Women’s empowerment ‘essential to global progress’ says Guterres, marking International Day

India m2m + iot Forum Hosts Successful 4th Editions of India Smart Cities Forum and India Smart Villages Forum

The importance of collaboration in the digital economy

Medical Education is #NotATarget

Ebola in DR Congo: New transmission chain risks reversing major gains

EU-China relations under investigation?

Knowledge management and entrepreneurship: short term vs. long term perspective

These photos show the world of science in stunning detail

Behind the firewall: a discussion on the evolution of cybersecurity in the utility industry

‘Negative forces’ at work in DR Congo threaten ‘largely peaceful’ relations across Great Lakes region, says outgoing UN envoy

FROM THE FIELD: Free tutorials in Mali, ‘a life-saver’ for Fatouma

One-third of Afghans need urgent humanitarian aid, millions suffer ‘acute food insecurity’

Landmark EU Parliament – ECB agreement on bank supervision

New European frontiers for renewable energy development

How blockchain is addressing key problem patterns in the financial services sector

Youth2030: UN chief launches bold new strategy for young people ‘to lead’

Juncker’s Investment Plan in desperate need for trust and funds from public and private investors

Ebola outbreak in DR Congo declared over, now let’s tackle other health challenges: WHO chief

2014 will bring more European Union for the big guys and less for the weak

UN human rights chief warns of women’s rights complacency

Energy: EU priority projects should be aligned with 2050 climate objectives

Doctors are humans too: the benefits of embracing your mental status

EU4FairWork: Commission launches campaign to tackle undeclared work

EU-Ukraine Free Trade Agreement sees the light as Moscow’s reaction once more looms

Brexit: European Council adopts decision to extend the period under Article 50

UN chief condemns deadly attacks in Pakistan

Coronavirus (COVID-19): The truth against the myths

How technology is leading us to new climate change solutions

Dozens of children at risk as clashes in Hudaydah near hospital – UNICEF

Why symbols of injustice matter and what to do with them

Italy’s dilemma after Merkel-Hollande agreed loose banking union

You will be eating replacement meats within 20 years. Here’s why

Commission presents its response to Antisemitism and a survey showing Antisemitism is on the rise in the EU

EU Copyright Directive: Google News threatens to leave Europe while media startups increasingly worry

Why education and accountability are important for developing countries?

Joint U.S.-EU Statement following President Juncker’s visit to the White House

Parmesan cheese on shelves in Italy (Copyright: European Union, 2014 / Source: EC - Audiovisual Service / Photo: Daniela Giusti)

CETA at risk again: Italy says it won’t ratify EU-Canada trade deal over product protection fears

Big oil’s climate pledges will fail without workforce equality

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