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25 March 2013
Methinks the wind hath spoke aloud at land;
A fuller blast ne’er shook our battlements;
If it hath ruffian’d so upon the sea,
What ribs of oak, when mountains melt on them,
Can hold the mortise? What shall we hear of this?
Othello, Act II, Scene I, Lines 5 to 9. The New Clarendon Shakespeare series published in 1968 by Oxford University Press. Montano, Othello’s predecessor in the Government of Venice, is on the quay in a Cypriot port witnessing a terrifying storm which threatens to sink all ships at sea that day.
So, inevitably, back we go to Cyprus. And it won’t be the last time. This sorry saga is going to run and run.
We are referring, of course, to the financial “agreement” forced down the throats of the Cypriot people by the triad – the European Commission in Brussels, the European Central Bank in Frankfurt and the International Monetary Fund in Washington – with the connivance of the newly elected rightwing President of Cyprus Nicos Anastasiades.
Let us make a number of simple points:
1. The “agreement” was thrashed out last night (Sunday 24 March 2013) in emergency last-minute talks in Brussels between the triad and the Cypriot Government. It was subsequently adopted by the finance ministers of the 17 states belonging to the euro currency zone.
2. The agreement was approved by the Cypriot Parliament last Friday (22 March 2013). We shall repeat that. The agreement thrashed out last night was approved by the Cypriot Parliament last Friday. Hence, there is no need for the Parliament to consider the agreement again since it has already done so. Last Friday the Cypriot Parliament okayed an agreement that did not exist until last night. The Cypriots have a clever Parliament. It is stuffed with clairvoyants.
3. We also learn that key details of the agreement have not yet been decided. So an agreement has been reached – but not key details of that agreement. These details include the percentage that is to be stolen from Cypriot bank depositors who have the misfortune to have savings of over € 100 000 ($ 129 000 or £ 85 000). So this agreement that the Cypriot Parliament has agreed in advance of its existence is an agreement lacking in the details of what has actually been agreed. Has the Cypriot Government given the triad a blank sheet of paper?
4. The Cypriot banks are in trouble because they had substantial outstanding investments in Greece when that country became bankrupt last year. The first result of the Greek bankruptcy was that banks that had given the Greeks credit, including the Cypriot banks, were forced by the triad to take a hair-cut: some of the money owed to them was simply written off. The second result was that the austerity imposed on Greece by the triad in exchange for a bail-out resulted in an economic depression. Cyprus is not only a major investor in Greece. It is also a major Greek trading partner. Cypriot exports, therefore, were badly hit by the Greek depression and many of its commercial loans turned sour. Hence, the triad’s earlier attack on Greece was directly responsible for the current straits of Cyprus.
5. A substantial percentage – the exact figure has yet to be decided – of Cypriot bank deposits of more than € 100 000 are to be stolen by the Cypriot Government in order to reduce the amount of the bail-out that Cyprus needs from the triad. A substantial portion of these deposits are owned by Russians. Apparently, it’s okay to steal Russian deposits. The argument is that this is all laundered money that was secreted out of Russia to avoid tax. Well, if that is the case, why, for years, did the European Union regulatory authorities – not least the European Central Bank, which is part of the triad – allow Cyprus to build up a huge banking sector based on laundered Russian money? Of course, in reality as opposed to propaganda, the money is not all laundered nor is it all owned by Russians. Cyprus is bound to have a significant number of non-Russian investors and, in any case, there are a substantial number of wealthy Cypriots with bank deposits of over € 100 000. All these are now to have a substantial portion of their savings confiscated. What message does that send out to international investors in the eurozone? What has happened in Cyprus, could it not happen to those with bank deposits in other eurozone countries that are in trouble, for instance, Portugal, Spain or Italy? In fact, only today 25 March 2013 Jeroen Dijsselbloem, Dutch finance minister and chair of the group of eurozone finance ministers, suggested that the Cypriot deal, involving a levy on bank deposits, could form a template in any future bail-out. Europe and US stock markets fell on hearing the news. Potential investors in Europe will think twice in future before committing.
6. As the richest country in Europe, Germany is expected to stump up most of the funds needed in any bail-out. Hence, Germany is naturally concerned to limit the amount of any bail-out to a minimum. However, there is a growing feeling, particularly in the peripheral countries of the eurozone, that Germany has taken too readily to wielding the big stick. Germany seems to think that everybody should act like Germans. And if they do not, they should be made to act like Germans. Unfortunately for the Germans, Europe is a diverse continent, its constituent states having different traditions, different cultures, different economies. The pressure from northern Europe to strong-arm these diverse states into becoming mini-Germanies could easily provoke unfortunate nationalist reactions, some of which we have already seen in austerity-hit Greece. With its own 20 C history to reflect on, Germany of all countries should, in its own interest, be exercising the maximum degree of diplomacy in these trying times. Attempts to stigmatise the peoples of southern Europe as lazy and corrupt and hence deserving to be punished by austerity will undoubtedly be counter-productive and work against the long-term interests of those northern Europeans who, unlike the inhabitants of the periphery, have gleaned lasting benefits from the existence of the eurozone.
Readers interested in this subject might like to check out some of our earlier posts in this connection:
Spectacular bank heist in Cyprus
Germany gets a new Land – Griechenland
You might perhaps care to view some of our earlier posts. For instance:
1. Why? or How? That is the question (3 Jan 2012)
2. Partitocracy v. Democracy (20 July 2012)
3. The shoddiest possible goods at the highest possible prices (2 Feb 2012)
4. Capitalism in practice (4 July 2012)
5.Ladder (21 June 2012)
6. A tale of two cities (1) (6 June 2012)
7. A tale of two cities (2) (7 June 2012)
8. Where’s the beef? Ontology and tinned meat (31 Jan 2012)
Every so often we shall change this sample of previously published posts.