In a dramatic address to the nation, Cyprus President Nicos Anastasiades tried to explain the reason forcing the country to accept such an unprecedented bailout. Trying to sweeten the bitter pill for depositors’ levy of 6.75%-9.9%, Anastasiades promised to compensate depositors with the equivalent amount in shares in their banks that those who kept deposits in Cypriot banks for the next two years would be given bonds linked to revenues from natural gas once they would come.
Promise here and promise there, the reality is that as of Tuesday, depositors will have to pay a levy, thanks to German pressure for a bailout.
One should no wonder that Cypriots carnivalists spent hours for a special dedication to Chancellor Angela Merkel – she is presented as a vampire holding president Anastasiades in her arms. She is surrounded by many small devils.
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BBC on Anastasiades Sunday address to the nation
Cyprus leader Nicos Anastasiades ‘fights EU on bailout’
Cyprus President Nicos Anastasiades says he is battling against eurozone demands that all bank customers pay a one-off levy in return for a bailout.
Mr Anastasiades said he shared people’s unhappiness with the terms, whereby all bank customers would pay a levy of 6.75% or 10% on their bank deposits.
The EU and IMF have demanded the levy in return for a 10bn-euro ($13bn; £8.6bn) bank bailout.
An emergency session of parliament has been postponed until Monday.
Mr Anastasiades said it was the worst crisis since Turkey invaded in 1974.
“I fully share the unhappiness caused by a difficult and painful decision,” he said.
“That’s why I continue to fight with the eurogroup to amend their decisions in the coming hours to limit the impact on small depositors.”
The president said Cyprus had had to choose between stabilising its finances or the eventual collapse of its financial system and exit from the eurozone.
Under the bailout’s terms, people in Cyprus with less than 100,000 euros in their accounts would have to pay a one-time tax of 6.75%. Those with sums over that threshold would pay 9.9% in tax.
Cyprus announced the discovery of a field containing between 5 and 8 trillion cubic feet of natural gas under the Mediterranean Sea in 2011 but Turkey disputes its drilling rights.
It is believed that eurozone leaders, particularly in Germany, insisted on the levy because of the large amount of Russian capital kept in Cypriot banks, amid fears of money-laundering.
The speaker of the European Parliament, Germany’s Martin Schulz, has called for the levy to be revised to protect small-scale bank customers.
It is now clear that negotiators of the bailout in Brussels drastically underestimated the reaction in Cyprus, says the BBC’s Mark Lowen.
A tiny eurozone economy feels it is being blackmailed by the most powerful, and the growing resentment will do nothing to foster European solidarity, BBC correspondent added.
I wonder how many Russians who lost money in Cyprus may not be too happy about this. Maybe they go and take money somewhere else now. Brazil much safer place to keep your money in bank, Europe now washed up.
This is like taking sweets of a child while allowing it to keep the wrappers because they are pretty…Who wants shares in a bankrupt banking system? You can’t eat shares. You could burn them, probably more valuable as fuel than as shares…
While, like in Greece, the small man is getting hit hard, and rightfully makes a lot of noise about it, the rich are using this system to get their ducks in line for the next money making scheme, already announced;
Meaning, they will be given thousands worth of bonds in gas/oil deposits, which are getting more valuable by the day because the world wide supply is dwindling and pushing the prices up, as we all know. One of the reputable economic watchdog/forecasters issued a statement not so long ago in which they expect the price of a barrel of oil to top $200 by 2016. Not a bad return on a 10% “haircut” on “illegal money” is it? And much better than some piddly interest rate from a bankrupt bank. Also, much more secure.
And what’s the bet that as soon as this is pushed through, the same rich will be buying those “shares” and “bonds” of Joe soap for a song, knowing full well that Joe Soap doesn’t have the resources any more (because they just took them of him!) to hold out for the guaranteed financial bonanza to materilaize?
Furthermore, if, as they say, the reason for this tax is suspected money laundering, then why not simply tax the suspected money launderers. Again, as they say, they are foreigners. So tax the foreigners. Surely the bank computers can distinguish between locals having a normal deposit account for everyday use, or a bona fide savings account, and a foreign “investor” laudering millions if not billions?
This crisis has been well thought out and executed.
To quote A. Tsipras in London yesterday:
And invent it they did.In such a way that they make lots of profit from it, while the people pay a very heavy price. but hey, who cares, as long as money is being made…
For what it’s worth: There are reports where I am now, that first there was a higher levy on the plus 100K bank accounts and non on the lower ones. But the Cypriot government did not want that, because they did not want to scare the huge amount of black money off the island. But ultimately it was a joint decision and responsibility. Would be nice to hear why the Greek government went along…
And something else: Everybody is screaming about “trust” that has been broken. What about all those “trusts” that have been broken already in the last three years?
When you have 10K euro in the bank and they take 700 from that as a levy. That’s called “the biggest bank robbery in history” and “unprecedented!!!”.
If you have a house with a value of 100.000 euro. A government comes along and slams a levy of 1000 euro on it. Retroactively as well. And then goes on to take that amount in every year from now until…? How would you call that then?
And then I am not even talking about pension and social security funds that are empty, pensions that are slashed, salaries that are cut retro-actively, business levies over past years and so on.
Furthermore: for decades there were (still are?) countries that taxed ‘wealth’. ON your tax-declaration you had to fill in how much you had in which bank. Over this capital was a percentage calculated that was put up on your income tax.
Can anybody explain to me what the fundamental difference between all these things is?
as I just stood up from Clean Monday table I am not able at the moment to answer any questions whatsoever. Later…
In America we call that feeling, “stuffed like a Christmas goose”.
The difference Antonis is this. In principle (not always in practice mind you) a tax is levied to fund the proper functioning of a society. It is accepted by society that if we want things like waste collection, pulbic transport etc, something has to pay for it, and we call that tax. Nobody disputes the principle, most people would dispute the fairness of its implementation, often with reason.
this bank heist has nothing to do with the above. This bankheist is levied to save the a$$es of those who gambled and lost vast amounts of money, they didn’t have in the first place, but borrowed from other gamblers, not from those who have a deposit in their institutions. If you run your business, as you do, and you decide tomorrow to put all your capital (not just profits) on a punt in Cheltenham, people declare you mad. If you lose, it’s well deserved. Not with the banks. It suddenly because the probelm of society. How many bond holders have been called to task over this bank debacle?
As for the contention of black money, this is based on the “no smoke without fire” principle, and “but everybody knows” reasoning. As long as there is no hard proof that this Russian money is indeed black/illegal money, it must be considered legitimate and the property of the person/company/organization who deposited it. furthermore, under EU banking law, EVERY DEPOSIT up to 100k is GUARANTEED for 100% I wonder how this is going to pan out now that the EU breaks it owns guarantees. Instead of creating diversion and smoke screens and going after alleged Russian mafia moneys, the EU and the respective governments would do a lot better in going after the known internal mafias, like those with known bank accounts in Switzerland with a knkown outstanding tax bill of 70 billion +. Or would that be a little to close to the bone for comfort?
Thanks for the explanation Ephilant although my question was meant to be a rhetorical one…
It seems that Cyprus has the same dismal quality of elected officials as Greece has. An analysis in Kathimerini concluded with:
And reading their analysis and seeing it confirmed what I had read earlier this weekend, I have to agree.
The Cypriot president was hell bent on protecting his cronies and opted for scr****g his own population, just like in Greece happened.
(I don’t know if you allow this link KTG? http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_18/03/2013_488446 Otherwise, just remove it please)
Well yes, he is there to ensure proper levels of brown nosing of the elite, what else? The usual story you know, kiss the left cheek, and now kiss the right one before mr money junkie pulls up his pants…
You really did not think that any political representative currently in power in the EU, at any level, elected or appointed, is there to represent the people of his/her country, do you now?
They are there for one reason, and one reason only, to secure the wealth of “those that matter”, and those that matter or neither you or I. The days of sovereign countries, independent parliaments, autonomy, etc are all gone.
What started as a good idea, the EEG of many years ago, was hijacked by a bunch of rich, self serving you know whats who saw this as a vehicle for further enrichment of themselves. The problem with people like this is that it is never enough. Many years ago I was told by a good friend and mentor to remember one thing in life. Rules are there to be bend. Bend them as much as you can, it’s a test or their effectiveness and your creativity.
If you break them, the rules are no good, those that make them are corrupt, or you are dishonest. In the context of the current political situation in the EU and also in the individual member states, all 3 of the above apply, in copious quantities..
It is really high time that we, as a people, take control over our society back from those who are hell bend on abusing that society for their own personal gain, to the detriment of society as a whole, and who simply do not care…
As for the EU officials blaming Anastansiades, I have my doubts about their sincerity too. As far as I am concerned, they are all of one and the same frame of mind, and will indeed stab each other in the back if that happens to serve their own private agenda.
Stournaras declaring this will not happen in Greece, guaranteed? Reason enough to run down to the bank and clear the account.
Schauble playing the good, fair, honest German politician card? Come off it! That species is not extinct, it never existed to start with…
Anastansiades has shown he cannot the deliver the goods as demanded, and is now dispensible. So the knives are out. That, as far as I am concerned, is the simple reality of this. I’m just wondering who they have lined up to replace him…
Isn’t it a simple case of politicians being like you and me? Just trying their best and kept hanging in the air by the ever declining quality of the support they get from their civil servants due to the ever declining standard of education?
In my experience it almost always is and a juicy conspiracy is always way more interesting.
If that were the case, why is it that EVERY case of large scale corruption, anywhere in the world, invariably involves politicians and big business, and equally invariably victimizes those least able to defend themselves.
Be it through poverty, lack of education, or simply because they happen to be taxpayers who can’t escape the net and end up paying for the damages done…
And I do take exception with being put on the same level with the Schaubles, Merkels and Lagardes of this world. I may have fallen low, but not THAT low…