Can the EU last long if it cuts Cyprus out?

European Parliament ECON Committee chair Sharon Bowles (ALDE, UK) (on the left) and Jeroen Dijsselbloem, President of Eurogroup walking to take sits for the Economic Dialogue and exchange of views. 21.3.2013, (European Parliament photographic library).

European Parliament ECON Committee chair Sharon Bowles (ALDE, UK) (on the right) and                                       Jeroen   Dijsselbloem, President of Eurogroup walking to take sits for the Economic                                                              Dialogue and exchange of views. 21.3.2013,                                           (European Parliament photographic library).

The latest and most important rhapsody in the Cyprus tragedy was performed yesterday morning by the twenty-three members of the European Central Bank’s governing council. The text issued by them was very brief and went like this: “The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) (requested by the Central Bank of Cyprus) until Monday, 25 March 2013. Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks”.

In plain English it means that holders of bank accounts in any Cypriot bank may not be able to withdraw their own money after Monday 25 March and probably lose all of it. The vast majority of them have deposited in those banks the savings of a lifetime, minding their own business and not paying much attention to the political and economic developments. They trusted that their wealth is safe with a Eurozone bank, being supervised and controlled by the ‘authorities’, ECB included.

This ECB statement is obviously an ultimatum issued by the key player in this theatre of the absurd, the provider of liquidity to the banking system. Compare this ECB ultimatum to Cyprus, with what any other major central bank could have done in a case like this. It’s unthinkable, say for the American central bank, the Fed, to cut off the liquidity supply to one of its remote constituent central banks, say in North Dakota, because some lenders there went bust. In the 2008 credit melt down in the US the Fed plaid its role to the letter and saved the American economy in its entirety.

Then what is the conclusion after comparing the Fed with the ECB? Obviously that the Fed is a national bank, cooperating closely with the country’s government, while the ECB is a Frankfurt – Brussels ‘imperial’ like organisation with no national affiliations. Or just a few of them?

But in this game it’s not only the ECB that plays the role of an imperial authority, ready to severely punish a small nation, even to through it out to the wolfs. Of course if it’s not ‘systemic’. The same tactic is followed also by the Eurogroup. Incidentally its President, Jeroen Dijsselbloem, had to appear yesterday in a hearing at the Economic and monetary affairs Committee of the European Parliament. Naturally almost all the tough questions addressed to him by the MEPs were about Cyprus, directly denouncing the haircut on banks accounts below €100,000.

Dijsselbloem, not only defended the haircut on all deposits even from the first euro and said he was responsible for that, but he went as far as to tell the MEPs that he doubted if there was a possible ‘Plan B’. He didn’t mind when the Committee chair Sharon Bowles (ALDE, UK), opened the questioning by asking when it had first become clear to Mr Dijsselbloem, that the deal being proposed to Cyprus was a bad one. The President of Eurogroup insisted throughout the hearing that his idea of giving a haircut to all deposits, was the best one.

He kept this ‘I am always right’ attitude to the end. “What is your reaction to the ECB’s ultimatum that, with no deal by Monday, it would stop providing emergency liquidity assistance to Cypriot banks?” asked Sophie Int’Veld (ALDE, NL), referring to the above ECB statement.

“This is not a question of threats. The ECB is doing all it can within its mandate.  It can only provide assistance to banks if there is a programme”, Mr Dijsselbloem replied. Seemingly according to this Dutch ‘political animal’ the threat to cut off a nation, albeit tiny (Or probably because of that?) from its own life savings, is not a threat. Even if he is an offspring of van Gogh’s Potato Eaters, he had no right to treat the Parliament like that. Unfortunately the Parliamentarians could do nothing to question his official position. His mandate cannot be revoked by the Parliament.

Even a Dijsselbloem’s compatriot rose directly against him. Deputy Bas Eickhout (Greens, NL) said that even if a compromise had to be reached, it should have been Mr Dijsselbloem’s responsibility to prevent a levy on deposits below €100,000.

In short Mr Dijsselbloem, in his capacity as President of the Eurogroup, fully endorsed the ultimatum issued by the ECB, threatening Cyprus actually to through the country out from Eurozone. And that despite the fact that practically all the members of the Economic and monetary affairs Committee of the European Parliament were against it. This is exactly the democratic deficit in function.

However it was not only this Parliamentary Committee that didn’t approve of the haircut on bank deposits bellow the benchmark of €100,000. European Parliament President Martin Schulz on behalf of the majority of political group leaders in the European Parliament Conference of Presidents – EPP Joseph Daul, S&D Hannes Swoboda, ALDE Guy Verhofstadt, Greens/EFA Rebecca Harms and Daniel Cohn-Bendit, ECR Martin Callanan, made the following statement:

“On the Cyprus banking issue, the Conference of the Presidents is deeply concerned and takes a position that deposits of less than €100 000 should be exempted from any levy. A fairer and sustainable solution for the Cypriot people must be found. We need a European solution to the Cyprus problem, not an external one. Ordinary people’s savings should not be used to bail out the banking sector”.

Still the European Parliament is practically cut off, from the decision-making procedures around the Cyprus issue. It’s the bodies with no democratic legitimisation, mainly the ECB, that take the crucial decisions concerning the future of an entire nations. Such a Union cannot last for long.

Advertising

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

How Sierra Leone is using 3D printing to become a model state

Women’s work faces the greatest risk of automation, says new research

Can the whole world live in peace?

Mandela, ‘true symbol of human greatness’, celebrated on centenary of his birth

Climate change is a security threat. We must act now

Security Council condemns ‘heinous and cowardly’ attack in Iran

Advocate General ‘outlaws’ Data Retention Directive

Ending the era of dirty textiles

NHS: A great healthcare system but how accessible is it to migrants?

The drive for quality education worldwide, faces ‘mammoth challenges’

Education in Emergencies: EU announces record humanitarian funding for 2019 and launches #RaiseYourPencil Campaign

Human rights breaches in Bangladesh, Cuba and Vietnam

Force used against protestors in Gaza ‘wholly disproportionate’ says UN human rights chief

4 ways to cyberproof your business during mergers & acquisitions

UN General Assembly: Here are the 5 big summits to watch for

The EU Commission does nothing about the food retailing oligopoly

Eurozone’s central bank leadership prepares for shoddier prospects

Winter 2020 Economic Forecast: Offsetting forces confirm subdued growth

Autumn 2018 Economic Forecast: sustained but less dynamic growth amid high uncertainty

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

Burundi election countdown amid ‘deteriorating’ human rights situation

“A sustainable economy, low-carbon, resource-efficient, resilient and more competitive on the global stage”, EU Commissioner Vella in a Sting Exclusive

SDG progress ‘in danger’ of going backwards without change in direction, new UN report reveals

Energy of African youth ‘propelling’ new development era as UN ties bear fruit

France pushes UK to stay and Germany to pay

UNICEF appeals for end to ‘war on children’ in Syria and Yemen

Replacement for United States on Human Rights Council to be elected ‘as soon as possible’

MEPs Anti-fraud votes for more votes?

We generate 125,000 jumbo jets worth of e-waste every year. Here’s how we can tackle the problem

Tributes for ‘role model’ former UN refugee agency chief, Sadako Ogata

‘Global clarion call’ for youth to shape efforts to forge peace in the most dangerous combat zones

EU to Telcos: Stop Mergers and Acquisitions but please help me urgently with 5G development

Two-thirds of employees would trust a robot boss more than a real one

Biggest ever UN aid delivery in Syria provides relief to desperate civilians

COVID-19: EU co-finances the delivery of more protective equipment to China

Is Eurozone heading for disinflation?

Eurozone economy desperately needs internally driven growth

EU and China seize momentum to enhance trade agreements in response to Trump’s administration

A jingoistic Spanish ‘war’ from the past

Lack of access to clean water, toilets puts children’s education at risk, says UN

How can we measure real progress on the Sustainable Development Goals?

EU-US to miss 2015 deadline and even lose Germany’s support in TTIP’s darkest week yet

On our way to China

Commission challenges Council over EU 2014 budget

Barriers to healthcare: are they real?

Victim-centred laws ‘paramount’ to combat online sexual abuse against children

Charges against Baha’i in Yemen must be dropped: UN experts urge release of detainees

Attack on Saudi facilities risks dragging Yemen into ‘regional conflagration’: UN Envoy

New legislation on transparency and sustainability of the EU risk assessment model in the food chain

How fintech is setting Southeast Asia’s SMEs free

Your morning cup of coffee contains 140 litres of water

It’s time for cybersecurity to go pro bono

UN food relief agency airlifts aid to DR Congo province hit by Ebola outbreak

What my transgender child can teach us about the workforce of the future

UN relief chief urges Security Council to back aid delivery, more funding for millions of Syrians hit by harsh weather

Italy should boost spending and strengthen cooperation and integration of employment services to help more people into work

We need to measure innovation better. Here’s how

EU Cohesion Policy invests over €1.4 billion in green projects in 7 Member States

The hidden downsides of autonomous vehicles – and how to avoid them

Ethiopia is Africa’s fastest-growing economy

More Stings?

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