It is official: The European Union now owns Cyprus


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.


1 Trillón de dólares Robado de los Contribuyentes para Salvar los Bancos

Por Luis R. Miranda
The Real Agenda
Mayo 11, 2010

Los estrategas políticos europeos dieron a conocer un paquete de préstamos sin precedentes por el valor de casi $ 1 trillón de dólares  y un programa de compras de valores, para detener una crisis de deuda soberana que amenaza con destruir la confianza en el euro. El Euro fue sacudido la semana pasada después de 14 meses de altos rendimientos de los bonos en Portugal y España, los gobiernos de las naciones acordaron conceder préstamos de hasta 750 millones de euros (962 mil millones dólares) a los países que fueron atacados por especuladores.  En realidad, estos dineros no serán dados a los gobiernos, sino transferidos a los grandes bancos que originalmente causaron la crisis a los que los gobiernos de Grecia, Islándia, España y Portugal deben billones en interéses y capital.

Además, el Banco Central E uropeo se embarcará en “operaciones muy importantes”, dijo a la Unión Económica y Monetaria, Olli Rehn, la periodistas en Bruselas después de la reunión de 14 horas. “El BCE ha adoptado una decisión de intervenir en los mercados secundarios de valores gubernamentales.”

Bajo la presión de los EE.UU. y Asia para estabilizar los mercados, los gobiernos europeos apostaron a que la demostración de fuerza financiera podría prevenir una crisis de la deuda soberana y la especulación por las que el euro podría colapsar.

El fracaso de Europa para contener la crisis fiscal de Grecia provocó una caída del euro de 4,1 por ciento en la última semana, la mayor caída semanal desde las secuelas del colapso de Lehman Brothers Holdings Inc. ‘. Se le pidió al presidente Barack Obama que llamara a la canciller alemana, Angela Merkel y el presidente francés Nicolas Sarkozy para instarlos a adoptar “medidas enérgicas” en Europa para evitar que la crisis se extienda en todo el mundo.

En el marco del paquete de préstamos, los gobiernos de la zona euro se comprometieron a disponibilizar € 440 000 000 000, con 60 billones de euros más del presupuesto de la UE así como 250 billones de euros del Fondo Monetario Internacional, dijo el ministro de Economía español, Elena Salgado.

“Estamos poniendo sumas considerables en aras de inestabilidad en Europa”, dijo Salgado a los periodistas tras presidir la reunión.

Sin embargo, estas medidas han tenido poco efecto en la recuperación o estabilización de la economía mundial y los mercados.  Después de dos días, la fiesta por la aprobación del paquete de prestamos desapareció.  Los mercados bursátiles volvieron a caer y ahora los baqueros que provocaron la crisis parecen haberse quedado sin opciones para detener una crisis que según expertos será mucho peor que la de 1929.