Tuesday, March 19, 2013

More on Cyprus

Over the weekend, the EU / IMF blackmailed Cyprus' president into robbing his own citizens to protect German bondholders in the country's corrupt, money-laundering banks. The NeoLiberal Eurocrats were hoping for a nice, clean job, done under cover of a holiday weekend, so that Cyprus' people would wake up to a fait accompli. Its turning out rather differently:

Cyprus took the unprecedented step on Monday of closing its banks until Thursday as officials scrambled to renegotiate the terms of a controversial bailout that threatens to force savers to take a €5.8bn (£5bn) hit to their deposits.

Finance ministers from the 17-country eurozone were holding an emergency video conference call amid recriminations over the aid package, particularly in Moscow, where a spokesman for Vladimir Putin attacked the plan as "unfair, unprofessional and dangerous".

There's no parliamentary majority for the plan as dictated, so the government is having to renegotiate it on the fly to have less of an impact on small savers. Meanwhile, public anger is growing, with Cypriots taking to the streets to denounce Germany, bankers, politicians, and the EU. Its pretty clear that any politician voting for the robbery is risking a political lynching at the next election (and maybe a real one too); the question is whether they will listen to their people, or to a bunch of unelected Eurowankers in Brussels.

The long-term impact of this is going to be unpleasant - and not just on Cyprus. The EU has basically destroyed public faith in its own banks, and created incentives for a bank run in other European countries. Meanwhile, its also fatally undermining itself as an institution. After all, if the EU means austerity and German robbery, imposed against the wishes of the local people, why would any country want to remain a member?