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.

Advertisement

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.

 

Kerry offers $450 million to rescue Egyptian economy

By LUIS MIRANDA | THE REAL AGENDA | MARCH 4, 2013

Shortly before ending his first visit to Cairo, the new Secretary of State of the United States, John Kerry, said that in his meeting with President Mohamed Morsi he pledged to provide 450 million dollars (350 million euros) in aid to the Arabic country. With various regions declared in default, the government and the opposition unable to resolve their differences, and an economy on the brink of bankruptcy, the troubled Egyptian transition is going through one of its most delicate phases.

In a statement, Kerry linked financial assistance to the promise of the Islamist President to accelerate negotiations to close a loan with the International Monetary Fund (IMF) worth 4,800 million dollars. “In light of the dire need and confirmation of President Morsi who aims to complete the process with the IMF, the U.S. will now provide the first $190 million of our promise of $450 million in budget support”, read the text.

As we have already informed readers, the so-called Arab Spring was simply an attempt to seize non-aligned nations to bring them under the debt-based system that governs most of the world. Egypt is the first nation to succumb under the IMF plan to further destroy economies as it did with other third wold nations. The IMF plans to destroy economies was revealed by former insider, Joseph Stiglitz and reported on by investigative journalist Greg Palast.

The funds lent by the U.S. are said to come as rain in May for the Egyptian public coffers. The most populous Arab country has a soaring budget deficit exceeding 10%, and foreign exchange reserves have reached a critical level. Kerry described the aid as “a good faith effort to encourage reforms and help the Egyptian people at this difficult time.” But in reality, the loan is a down payment to guarantee American rights to exploit Egypt for all it has gotten.

During the past two months, the Egyptian pound has depreciated by 10%. If the country does not increase its foreign reserves soon, Egyptians believe the country will face a sharp devaluation of its currency, which could cause a social explosion. Egypt is the largest importer of wheat in the world, so a slump in the Egyptian pound would lead to a price increase of basic products such as bread. The decay of the Egyptian economy, just as it has been done with many other third world and developing nations is part of the calculated, preplanned and controlled destruction orchestrated by the IMF.

Besides a battered economy, Egypt suffers a serious political and social stability, as Kerry could experience in his own flesh. His departure from Cairo had to be delayed about two hours because a group of amateur football club fans of Ahly blocked the road leading to the airport. The action was intended to pressure the court which issued a verdict on the slaughter of Port Said Stadium, which resulted in the death of  74 fans. It is important to remember that Egypt’s current situation is a result of Western interventionism, after countries such as the United States and a handful European powers fully supported the overthrow of their former puppet Hosni Mubarak. The same script was followed later in Libya and is now being used in Syria.

Protests in Port Said are not new. In fact, the city has become the epicenter of a recent wave of protests. Yesterday clashes escalated  between police and protesters, leaving three civilians and two policemen dead and hundreds wounded, according to the Egyptian Ministry of Health. The port city has been experiencing a general strike for the past two weeks as a result of police brutality that claimed the lives of 40 people back in in late January.

The new head of U.S. diplomacy tiptoed by the country’s internal political conflict. “Clearly, we need to work harder and make compromises to restore unity, political stability, and good health of the Egyptian economy,” Kerry said at the end of a visit that has had a busy schedule. Besides President Morsi, the former senator met with the army chief, the Foreign Minister and representatives from the opposition and civil society.

The Real Agenda encourages the sharing of its original content ONLY through the tools provided at the bottom of every article. Please DON’T copy articles from The Real Agenda and redistribute by email or post to the web.

Argentina freezes food prices to avoid higher inflation and mass hunger

By ALMUDENA CALATRAVA | AP | FEBRUARY 5, 2013

Argentina announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation.

The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine market, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported.

The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1.

Polls show Argentines worry most about inflation, which private economists estimate could reach 30 percent this year. The government says it’s trying to hold the next union wage hikes to 20 percent, a figure that suggests how little anyone believes the official index that pegs annual inflation at just 10 percent.

The government announced the price freeze on the first business day after the International Monetary Fund formally censured Argentina for putting out inaccurate economic data. The IMF has given Argentina until September to bring its statistics up to international standards, or face expulsion from the world body in November.

President Cristina Fernandez and her economy minister, Hernan Lorenzino, responded over the weekend with a flurry of attacks on the IMF, saying the agency’s data-gathering efforts had lost credibility in the lead-up to Argentina’s historic 2001 debt default. They said IMF advice is leading Europeans astray by favoring big banks over measures that can grow economies out of crisis.

However, Lorenzino also said that the government will begin using a new inflation index starting in fourth-quarter 2013 — just in time for the IMF’s decision.

IMF issues plan to starve Portuguese people even further in 2013

By LUIS MIRANDA | THE REAL AGENDA | JANUARY 10, 2013

Portuguese Prime Minister Pedro Passos Coelho warned a month ago: The Portuguese, that bears a progressive and growing cut in services for the last year and a half, intends to save another 4,000 million euros a year starting now. For ideas on where to do it, the Portuguese Executive requested a report to the International Monetary Fund (IMF). The report was released on Thursday and immediately sparked controversy (and fear) in the Portuguese population, as cuts and adjustments will be constant and repetitive in the months to come.

Technicians at the Washington-based institution advised Portugal to, among other measures, fire workers, increase working hours for government employees, reduce (more) unemployment benefits and cut (even more) pensions. Only then, they say, will the country reach 4,000 million euros in savings that the Liberal government of Passos Coelho considers necessary to reform the state so that, in his opinion, the Portuguese nation becomes efficient and competitive.

To begin, the IMF experts say the Portuguese system of social protection “is directed disproportionately towards the wealthier and the older.” It adds that the system “pushes out younger workers while keeping the older inside.” To solve that problem, the IMF suggests that unemployment insurance, which now provides subsidies for 26 months and that has already been cut, should be cut even further, and that once it gets to  ten months, it is reduced further to become simply a payment of social allowance of just over 400 euros.

The IMF also recommends reducing the wages of civil servants in an amount which can range between 3% and 7%, and get rid of up to 120,000 public employees (from 10% to 20%), focusing mainly on teachers , health professionals and low-skilled employees. In addition, Fund staff recommend ending the discrimination suffered by other employees, who work 40 hours a week, with respect to staff, whose working week is 35.

According to the IMF, the payment for doctor visits (already implemented in Portugal) could be increased up to a third of the expense involved in supplying such service. Right now, going to the emergency room in a hospital in Lisbon costs 20 euros. If the government accepted the IMF’s recommendation, the same visit would cost 50 euros. A mammogram can cost 15 euros and a GP consultation would cost around ten euros.

Pensioners, whose payments have been greatly cut, will experience even more cuts. According to the IMF, for starters, Portugal should raise the retirement age from 65 to 66 years, reduce the amount received by pensioners by 20% so that all payments are equally low.

The report has raised considerable media dust. The left accuses the government of Passos Coelho of thoroughly dismantling the country piece by piece, and establishing a process that will cost more than a mere private insurance scheme. Portuguese State Secretary, Carlos Moedas, has clarified that the report is “very good”  and that it will be considered by the Government.

The Portuguese government plans to present in February its own savings plan, which is why it requested the report from the IMF. Now, Portugal plans to include almost all of the recommendations in the report as its own since the IMF itself has now called for such measures.

The Real Agenda encourages the sharing of its original content ONLY through the tools provided at the bottom of every article. Please DON’T copy articles from The Real Agenda and redistribute by email or post to the web.