Tue Mar 26, 2013, 07:50 AM
Ghost Dog (13,904 posts)
(WSJ:) Bailout Strains European Ties
... Monday's agreement capped a 10-day psychological drama. Cyprus's president struck an initial deal that would have seen the country raise its share of the bailout funds by requiring all account-holders in Cypriot banks to pay a tax on their deposits, only to see the plan struck down by parliament. Cyprus went hat-in-hand to Moscow for help, to no avail. Cyprus also raised eyebrows in euro-zone central banks by allowing several hundred million euros to be wired out of the country in the past week, despite an official freeze on outflows on all but a few exempt categories, such as funds for humanitarian purposes.
On Thursday morning, the European Central Bank threatened to cut off liquidity to Cypriot banks—condemning them to instant bankruptcy—if no deal was reached by Monday... In the end, this deal ended up looking like a more severe version of an early proposal floated by Germany and the International Monetary Fund to close the country's two biggest banks—a plan that had been rejected by Cypriot president Nicos Anastasiades 10 days earlier... On Friday morning, Ms. Merkel's patience was running out. She angrily briefed lawmakers from her ruling center-right coalition and told them Cyprus was trying to face Europe down, according to people present. Cypriot leaders haven't understood yet that their "business model" of outsize offshore banking has failed, she said. Europe had to stick to its principles, she added: Aid is only for countries that were prepared to reform, she said...
... Tensions were running high Sunday in Brussels as key officials—including IMF chief Christine Lagarde, ECB head Mario Draghi, EU President Herman Van Rompuy and other top EU officials—met Mr. Anastasiades over a lunch of lamb and baby potatoes. Mr. Anastasiades complained that his country was being treated more harshly than any of the euro zone's other bailout victims. He backtracked on an earlier agreement to wind down Cyprus Popular Bank. According to a senior Cypriot official, Mr. Anastasiades was appalled by the way he was spoken to at the lunch. The president threatened to resign. Mr. Dijsselbloem told him he didn't care about the president's political future, only the future of the euro zone, the senior official said...
... Germany's Finance Minister Wolfgang Schäuble grew particularly irascible, officials said. At one point, Ms. Lagarde went to calm him down. She also tried to raise spirits in Mr. Van Rompuy's fifth-floor suite, where top EU officials were meeting with Mr. Anastasiades. The IMF chief handed out M&Ms, as officials say she often does at late-night European negotiations... As the evening dragged on, Mr. Schäuble and French Finance Minister Pierre Moscovici consulted their respective leaders by phone. Then they conveyed a Franco-German message to the Cypriot leader: Mr. Anastasiades should give up hope that a summit of euro-zone leaders would lead to an easier deal. Even if a summit were to be called, the deal facing Cyprus would be the same one as now.
Shortly before midnight, the Cypriot president came back with a new proposal, which officials said backtracked on the closure of Cyprus Popular. At that point, the EU leaders calmly told Mr. Anastasiades "to pack up and leave" if he wasn't ready to cooperate, one official present at the meeting said. The president signed off on the broad deal—one more costly than the one its parliamentarians rejected last week. "There is no doubt in the government that the first deal was far better," said a senior Cypriot official. "We bluffed and we lost. The whole thing was a fiasco."
/Source (text)... http://online.wsj.com/article/SB10001424127887323605404578382943506534114.html?mod=wsj_share_tweet
/See also (images)... http://www.telegraph.co.uk/finance/debt-crisis-live/9953844/Cyprus-bailout-live.html , http://www.guardian.co.uk/business/2013/mar/26/eurozone-crisis-cyprus-banks
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(WSJ:) Bailout Strains European Ties (Original post)
|Ghost Dog||Mar 2013||OP|
|Ghost Dog||Mar 2013||#3|
|Ghost Dog||Mar 2013||#4|
Response to Demeter (Reply #1)
Tue Mar 26, 2013, 08:20 AM
Ghost Dog (13,904 posts)
3. So it would appear.
This confirms another source on that, probably ZH, I saw yesterday.
It seems clear to me (quelle surprise), that many of the politicians involved here are or have been primarily concerned about their own personal financial interests, and those of powerful 'friends', and only care about the fates of the majority, the citizens they purport to represent, insofar as outcomes could threaten their own positions.
Response to Ghost Dog (Original post)
Tue Mar 26, 2013, 03:44 PM
Ghost Dog (13,904 posts)
4. Disturbingly in this context,
Center-left Bavarian newspaper Süddeutsche Zeitung writes:
"This drastic infringement of property rights was possible due to the unique constellation in Cyprus: Cyprus is the third-smallest country of the European Union, so its political weight isn't very relevant. Cyprus set up a dubious business model that attracted dubious people; they're now being punished, so the burden isn't necessarily hitting the wrong people. The expropriation satisfied the sense of justice of most Germans, and not just them."
"Thirdly, a remarkably poor set of Cypriot politicians refused to see reason for much too long, and in the last week displayed an unpleasant gambling mentality. Anyone who manages in just four days to alienate the entire euro zone, discredit the Euro Group chief, tries to involve Russia in a circumventing maneuver and welds together the German government and opposition in an election year has failed to understand a few basic rules on transparency and policymaking in Europe."
"In this unique combination, Cyprus will remain a unique case. But Europe has changed a lot as a result of this rescue drama. The readiness to show solidarity is eroding by the minute. The euro zone has long since stopped being a brotherhood for increasing prosperity and mutual stability. It has transformed itself into a school of gladiators in which everyone fights for his own advantage and his survival."
Hmm. Let's see.
The first paragraph says that the drastic infringement of property rights in Cyprus was possible because Cyprus's political weight isn't very relevant. Isn't very relevant to whom? It is certainly of primary relevance to Cypriot voters. There is a very patrician attitude on display here. Then we are presented with a logical fallacy: Just because some (but possibly not all) dubious characters participating in Cyprus's dubious financial system (not to mention, heaven forbid, some other places' financial systems one could mention) are being "punished", it is not posssible to infer that the "burden" isn't necessarily hitting some perfectly legitimate, entirely transparent, non-dubious savers as well. The "expropriation", however, satisfied the sense of justice of most Germans, we are told. Uh huh. So what? The protagonists here are Cyprus and the European Union, are they not? Stated thus, we perceive German arrogance.
The second paragraph refers to a need to "understand a few basic rules on transparency and policymaking in Europe", without specifying them beyond a reference to "seeing reason" (see above). See ref. 1 below.
Finally, in the third paragraph, we are told that "(Europe's) readiness to show solidarity is eroding by the minute." What is clear is that there is a lack of willingness amongst elites in Germany and those under their influence, fanned on by the anglo media, to respect principles of transparancy, democratic sovereignty and solidarity in the European Union where this is perceived to be detrimental to elite (sold to the 'marks' as 'national') interests.
Ref 1: Policy-Making and Diversity in Europe: Escape from Deadlock
By Adrienne Héritier, Adrienne Windhoff-Héritier