Friday, March 22, 2013

Doubling down in Cyprus

So, having had their bank-robbery plan thrown out by the Cypriot Parliament, the EU/IMF have doubled down in Cyprus, issuing an ultimatum that they will crash Cyprus' banks unless it agress a deal with them by Monday. Note that that's a deal with them; the EU/IMF does not want Cyprus to cut a deal with the Russians. Meanwhile, a top Eurocrat mutters darkly about "unrest" in Cyprus. Its called "democracy", and once upon a time the EU was committed to it.

So its the EU's road or the highway. Cyprus will become a German economic colony and no negotiation will be entered into. And they wonder why people vote Eurosceptic... the EU really is its own worst enemy (and on this front, its worth noting that Cyprus' main opposition party is mildly eurosceptic; I expect that will be a lot less mild come the next election).

The irony here is that Cyprus's banks are in this position because they played along with previous EU demands on Greece. But as always, "solidarity" is a one-way street, code for "subservience".

Cyprus' Parliament is currently working on a solution - but its unclear at this stage whether anything will be good enough for the EU/IMF - or whether it will be able to solve the problem the EU/IMF has now created. Their attempts to take advantage of a newly-elected president and blitzkrieg policy through in his first week on the job has caused a bank run and likely destroyed Cyprus's financial services industry (which is 20% of its economy). As a result, Cyprus will probably need another bailout in a year or two's time. A less dictatorial solution would have been a lot less damaging.