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It is official: The European Union now owns Cyprus

By LUIS MIRANDA | THE REAL AGENDA | MARCH 25, 2013

The agonizing struggle between Cyprus and the euro zone is coming to an end. Cornered by the European Central Bank’s ultimatum to sign a bailout before midnight Sunday, the President of Cyprus, Nikos Anastasiades, tried to turn the situation to its European partners threatening to resign, leaving in the air the possibility of an uncontrolled outflow of euro zone countries.

The blackmail, the threat of failure, was the only card left to Cyprus after the help they expected to receive from Russia never materialized. But the cracking has not softened its European partners. Last night again the Eurozone put on the table the same requirements as a week ago: make banks depositors pay for debt created by the banks themselves (investors and depositors who had over 100,000 euros in their bank accounts will pay 40% of those savings to the EU) for the mistakes that had the country on the verge of bankruptcy.

Just a week ago, the Cypriot government refused to apply such punishment to its people after the streets of Nicosia and other cities was taken over by thousands of depositors who wanted their money back in full. So the Cypriot government decided to impose an exceptional rate on all bank deposits, a move that Parliament refused to approve and which had caused great concern throughout Europe.

Last night, however, the Cypriot government agreed to return to the original plan: pass a severe restructuring of its banking sector to force investors and depositors of troubled institutions to take massive losses. Those who had investments or savings below 100,000 euros seem to have been spared for now.

Time was short. The ECB had announced that it would cut the tap of liquidity to Cypriot banks if the government did not accept the proposal from Brussels in its entirety.

Without that artificial respiration tank, Cyprus would have fallen into bankruptcy, which as we have informed before, it is the route chosen by Iceland, the only country that refused to bend the knee before the bankers’ requirements. Instead, Cypriot President Anastasiades broke down during the negotiations with the troika, a group composed by technocrats like Jorg Asmussen and Mario Draghi from the ECB, Barroso and Olli Rehn from the European Commission and Christine Lagarde from the IMF.

The evening did not start well. The Cypriot government, far from returning to Brussels resigned to assume the conditions of the troika, tried to play back the blackmail letter. The International Monetary Fund tightened its requirements on the bank restructuring plan, calling for the closure not only of Laiki Bank -second most important entity in the country- but also the number one, Bank of Cyprus.

“You’re pushing me to resign”, said Cypriot President Anastasiades to Christine Lagarde, according to sources. The IMF director did not flinch.

Before landing in the EU capital, the president had made a stop in Athens to halt the sale of the subsidiaries of Cypriot banks in Greece, reversing a decision made over the weekend, and cut the risk of transmission of the crisis to the neighboring country.

Germany also was insensitive to pressure from Cyprus’ maneuvers. “We can reach an agreement but that requires that Cyprus sees the situation with some realism”, claimed the German Finance Minister, Wolfgang Schäuble. “It doesn’t depend on us, but on Cyprus”.

His allies in the North (Netherlands, Finland, Austria) reiterated that the conditions in the euro area have not changed over the last week: They would lend Cyprus 10,000 million euros only if the nation pledged 7,000 million euros. How does this work, you may ask. In reality, the EU isn’t lending Cyprus any money. Cyprus is confiscating money from its citizens -7,000 million euros- to bribe its way out of an European liquidation of its banking system, and in doing do, it is prolonging the pay for its financial system and its people.

Any solution to increase public debt, Cyprus argues, reduces the chances that the country can return the loan, hence the refusal to offer more money or accept a lower contribution.

The Spanish Economy Minister Luis de Guindos, however, stressed the need to reach an agreement that guarantees the stability of Cyprus and the rest of the Eurozone. Although he considers that there is no risk of contagion, he also admitted that this possibility “would be revealed if the monetary union, the Eurogroup, was not able to make a decision that was conclusive.”

According to sources present at the meetings the European Union has also mandated that the plan negotiated with the country is not submitted for approval in the Cypriot Parliament.

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In Cyprus your money is not really yours

By LUIS MIRANDA | THE REAL AGENDA | MARCH 24, 2013

Banks in Cyprus has imposed a daily limit of cash withdrawal of 100 euros at ATMs, reports Reuters. The measure, advanced by the Laiki Bank, which allowed out until now 260 euros, will now blocking customers from accessing their savings should they decide to withdraw more than 100 euros at a time.

According to some sources, this decision, which hardens the playpen that seeks to prevent a bank run, remains in effect until the banks reopen, which is scheduled to occur on Tuesday, but could even be kept afterwards negotiations between Cyprus and the EU which will continue past Sunday’s meeting (ECB).

The measure has been taken as the Cypriot government is negotiating with the EU, IMF and the troika to obtain a bailout in a parallel meeting at the Eurogroup finance ministers.

In this situation, the Eurogroup will try to close a deal on the Cypriot bailout to avoid financial collapse in the Mediterranean country, whose president, Nikos Anastasiades, negotiated with the leaders of the European institutions and the IMF to pave the way for a consensus.

The Cypriot leader arrived at the headquarters of the European Council at 13.00 GMT from Nicosia to meet with the presidents of the European Council and the European Commission (EC) Herman Van Rompuy and Jose Manuel Barroso. The purpose of the meeting is to find a path for negotiations that unlock alternative rescue conditions for Cyprus ahead of the meeting of finance ministers of the Eurozone.

Finance ministers from the eurozone try to refine the elements of the rescue plan, which is expected to take intense and long discussions about the pressing needs to close a program before Monday.

The negotiations between Cyprus and the troika -the EC, the ECB and the IMF have moved to Brussels and, after a Saturday night failed attempt to achieve a definitive agreement in Nicosia on an alternative rescue, putting the Eurozone in “a delicate situation and with very little leeway,” according to the Cypriot government.

 

The looting of Cyprus by the EU will follow the Greek model

By LUIS MIRANDA | THE REAL AGENDA | MARCH 24, 2013

The Government has reached an agreement with the troika to seize 20% of the deposits that hold more than 100,000 euros that are in the Bank of Cyprus, the country’s largest bank and also the one that is preferred by Russian oligarchs. “How do you think it will be? Tomorrow I will lose 25,000 euros,” replied the waiter in a bar where a customer shouted how are you?

This measure, which still must be approved by Parliament, joins the two taken on Friday: The Laiki settlement, the second largest and the one with the biggest problem when it comes to capital controls. His liquidation was negotiated as necessary to prevent panic next Tuesday, when Cypriot banks reopen. The restructuring of a bank that has been both the growth engine of the island and the head of its economic sinking is completed at a discount of 4% for all other banks.

Cyprus has had to swallow his pride showed on Tuesday when MPs overwhelmingly rejected the bailout custom designed by Germany, which required the smallest euro economy to steal 5,800 million euros from its savers.

The Plan B hastily designed by political forces will not be so different from Plan A: depositors will have to pay to avoid the bankruptcy of the country, and perhaps in addition leave the euro. But now, those who will take the deepest haircut are those who have 100,000 euros, an  amount theoretically untouchable according to European standards, an idea that has faltered this week. Of the nearly 68,000 million euros euros in Cypriot bank accounts, 38,000 banks exceed this amount.

If leaders want to avoid bankruptcy, they do not have much time, according to European leaders. For the plan of salvation to succeed, Parliament in Cyprus will need to vote in favor of it after Cypriot leaders and finance ministers of the euro zone met on Sunday.

The European Central Bank has warned that if no agreement is reached by Tuesday, the Union will close the tap of liquidity to institutions of the island, which would mean the collapse of the banking system within hours. The domino effect in the government accounts would be very fast. This scenario was seen in Iceland, where the government refused to pay the debt created by the same banks who are now feeding on Cyprus. In Iceland, the government and the people stood up against banker bullying and kicked the bankers out.

A parliamentary source quoted by the Greek daily Kathimerini noted that the Cypriot deputies could wait for the Eurogroup meeting to conclude to vote the final agreement. It would be only after this vote that Cyprus would step away from the abyss that has approached this week. That does not mean the country is safe or that things will improve rapidly.

One only needs to take a look at Greece, where the bankers took over the country and its people are still suffering the pain of closing deals with the bankers. Cyprus will also pay a very high cost for the financial rescue: the collapse of confidence in its banking system and a black economic outlook, with a sharp drop in GDP and a rise in unemployment, according to several analysts, will make things even worse than in Greece.

If savers at Bank of Cyprus have suffered a severe punishment, Laiki’s have suffered even more. At midnight on Friday and Saturday, Parliament gave its approval to split the bank, converting it into an entity that takes control of more modest and healthy deposits and loans, while also bearing responsibility for the bad and large toxic assets.

Those who have money in Laiki will not recover it in the next few years, and when they do, it will be an amount much lower than they had.

This is what is feared by hundreds of employees at Laiki, who have been demonstrating against the plans of the Eurogroup. European governments have made it clear that one of the conditions of the bailout of Cyprus is that country reduces the size of its financial sector, especially the part that attracts large amounts of money at high interest rates.

Besides restructuring Laiki, lawmakers approved the creation of a ‘solidarity fund’ which will feature contributions from private citizens and businesses, as well as state assets and the Orthodox Church. The money contained in this fund will be directly managed, not to say stolen, by the European government, which has also said that pension funds will not be touched right now, but that refused to say what will happen with people’s retirement funds in the near future.

Attack on Sovereignty: The United States is the New World Order

By PAUL CRAIG ROBERTS | PCR.ORG | JANUARY 16, 2012

Those concerned about “The New World Order” speak as if the United States is coming under the control of an outside conspiratorial force. In fact, it is the US that is the New World Order. That is what the American unipolar world, about which China, Russia, and Iran complain, is all about.

Washington has demonstrated that it has no respect for its own laws and Constitution, much less any respect for international law and the law and sovereignty of other countries. All that counts is Washington’s will as the pursuit of hegemony moves Washington closer to becoming a world dictator.

The examples are so numerous someone should compile them into a book. During the Reagan administration the long established bank secrecy laws of Switzerland had to bend to Washington’s will. The Clinton administration attacked Serbia, murdered civilians and sent Serbia’s president to be tried as a war criminal for defending his country.

The US government engages in widespread spying on Europeans’ emails and telephone calls that is unrelated to terrorism. Julian Assange is confined to the Ecuadoran embassy in London, because Washington won’t permit the British government to honor his grant of political asylum. Washington refuses to comply with a writ of habeas corpus from a British count to turn over Yunus Rahmatullah whose detention a British Court of Appeals has ruled to be unlawful. Washington imposes sanctions on other countries and enforces them by cutting sovereign nations that do not comply out of the international payments system.

Last week the Obama regime warned the British government that it was a violation of US interests for the UK to pull out of the European Union or reduce its ties to the EU in any way.

In other words, the sovereignty of Great Britain is not a choice to be made by the British government or people. The decision is made by Washington in keeping with Washington’s interest.

The British are so accustomed to being Washington’s colony that deputy prime minister Nick Clegg and a group of UK business executives quickly lined up with Washington.

This leaves Great Britain in a quandary. The British economy, once a manufacturing powerhouse, has been reduced to the City of London, Britain’s equivalent to Wall Street. London, like New York, is a world financial center of which there are none in Europe. Without its financial status, there wouldn’t be much left of the UK.

It is because of the City’s financial importance that the UK, alone of the EU member states, kept the British pound as its currency and did not join the euro. Because the UK has its own currency and central bank, the UK was spared the sovereign debt crisis that has plagued other EU member states. The Bank of England, like the Federal Reserve in the US, was able to bail out its own banks, whereas other EU states sharing a common currency could not create money, and the European Central Bank is prohibited by its charter (at Germany’s insistence) from bailing out member states.

The quandary for the UK is that the solution to the sovereign debt crisis toward which the EU is moving is to strip the member governments of their fiscal sovereignty. For the individual countries, the spending, taxing and, thereby, deficit or surplus positions of the member countries’ budgets will be set by EU central authority. This would mean the end of national sovereignty for European countries.

For Britain to remain an EU member while retaining its own currency and central bank would mean special status for Great Britain. The UK would be the only member of the EU that remained a sovereign country. What are the chances that the UK will be permitted such exceptional status? Is this acceptable to Germany and France?

If the British are to fold themselves into Europe, they will have to give up their currency, central bank, their law, and their economic status as a world financial center and accept governance by the EU bureaucracy. The British will have to give up being somebody and become nobody.

It would, however, free the UK from being Washington’s puppet unless the EU itself is Washington’s puppet.

According to reports, sometime this year Scotland, a constituent part of the UK, is to vote on leaving the UK and becoming an independent country. How ironic that as the UK debates its dismemberment the country itself faces being merged into a multi-national state.