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What Does A 'No' Vote Mean For Cyprus And The Eurozone?
Originally posted at Open Europe,
All at sea – what does the 'No' vote mean for Cyprus and the eurozone?
19 Mar 2013
The Cypriot parliament tonight voted against a bill to introduce a tax on bank deposits, in return for a €10bn bailout offered to the country by Germany and other eurozone governments. Not a single Cypriot MP voted for the deal. The structure of the tax in the bill is shown in the table below. The vote leaves Cyprus’ place in the eurozone hanging in the balance and threatens the escalation of the crisis to a new level, though the most likely outcome is that the Cypriot parliament votes a second time, on a revised deal.
Results of the vote
The governing party (DISY) abstained (with one member absent), while the junior coalition partner (DIKO) voted against – this signifies the huge political divisions at work in Cyprus. Even if a bailout deal is eventually approved the government’s position continues to look untenable.
What does the vote against the deposit levy mean?
As we have noted before, this has the potential to be a very serious twist in the eurozone crisis. Previously, Germany and the eurozone have stressed that Cyprus has no alternatives to the deposit levy. Now, all eurozone partners are forced back into difficult negotiations.
What timeline are Cyprus and the eurozone working on?
Cyprus will run out of cash on 3 June, when it has to repay a €1.4bn international bond. However, the decision will need to be taken long before that. Cypriot banks cannot stay closed for long but they cannot be reopened until a decision is taken, otherwise there will almost certainly be a deposit run. While people can reportedly withdraw up to €700 per day from ATMs, businesses, large and small, cannot function without banks being open. We would expect some decision would need to be taken by early next week before the lack of liquidity and lack of economic activity begins to severely harm the Cypriot economy.
What are the possible outcomes?
Both sides have some serious decisions to make. Below we outline the potential scenarios (as highlighted here):
1. Cyprus votes again and approves a revised tax: The governing party pushed for the vote to be delayed and hence abstained. This may be seen as delegitimising the result, not least because they hold 36% of the seats in the Cypriot parliament. The deal could see a few small tweaks along with some additional cash (either from the eurozone or Russia – see below), which would then be put to another vote in parliament – after all, being asked to vote twice is a common practice in the EU. But such a decision and vote must come quickly. In addition to running out of government cash, banks would have to remain closed during the interim period, meaning businesses and the wider economy could not practically function. The vote would therefore have to take place by the start of next week to avoid another escalation of the crisis. In our view, this remains the most likely option (possibly in combination with part of option 2).
2. The eurozone blinks: With the possibility of a country exiting the eurozone becoming very real and the “irreversibility” of the single currency coming under direct threat the eurozone may present Cyprus with a more palatable deal. After all the cash in question – €5.8bn – is only 0.06% of eurozone GDP. The real issue will be how to provide this cash while keeping Cypriot debt sustainable.
Options include:
-
providing the full €17bn loan but with very long maturity and low rates;
-
linking the repayment of the loan to future gas revenues;
-
using the ESM or another vehicle to recapitalise banks directly;
-
restructuring domestic bonds to extend maturity;
-
accepting losses on some of the official loans.
None of these is perfect but if push came to shove, one or several could be moulded to make the deal look viable – at least on paper.
The main issue here remains political. It would be very tricky to push any increased bailout / relaxed conditions through the German, Finnish and Dutch parliaments, who don’t want to be seen to prop up a bloated Cypriot financial sector dominated by Russian interests. After all that is partly why we got here in the first place. Such a deal would be also reliant on the ECB agreeing to continue providing liquidity to Cypriot banks.
3. Cyprus looks to ‘other plans’ (i.e. Russia): Cypriot President Nicos Anastasiades suggested that Cyprus is considering “other plans” in case the parliament voted down the deposit levy and no new bailout deal was forthcoming. As of now, it is not clear exactly what these plans are, however, it is a decent bet that many, if not all, involve Russia in some way.
Cypriot Finance Minister Michalis Sarris will be in Moscow tomorrow to discuss the situation with his Russian counterpart. As we have argued before, Russia has significant self interest in helping Cyprus out – it could reduce the losses for the reported €20bn in Russian deposits held in Cyprus, it could gain favourable terms for future contracts on gas exploration in Cyprus (and therefore the future revenues) and it could also improve its geopolitical foothold in the region (as we have highlighted before, there is speculation that Russia has previously sought to move its naval base from Tartus, Syria to Cyprus).
Russia may therefore step up and provide additional financing, potentially to cover the circa €2bn which may have come from Russian depositors under the tax. Reports have also suggested that Sarris may propose a 20% tax on Russian deposits in Cyprus in exchange for a stake in a future Cypriot national gas company and board positions at Cypriot banks.
However, the EU will not want to see one of its members become so closely intertwined with Russia, so could actually strengthen Cyprus bargaining chip.
4. Cyprus exits the eurozone: No compromise can be found under any of the scenarios above (at least not within the necessary timeline – see above). With the largest Cypriot banks going without a recapitalisation, the ECB could be forced to follow through on its threat to withdraw liquidity from Cypriot banks – not just to reduce its risk exposure but also to ensure its threat of action remains credible to the rest of the eurozone and financial markets. If so, the ECB Governing Council would also probably promptly vote (a 2/3 majority is needed) to turn off the Emergency Liquidity Assistance to Cyprus leaving the banks illiquid and insolvent.
This combined with the previous threat of a deposit tax would likely lead to a deposit run on the banks and their likely collapse. In the face of all this, without an ECB or eurozone backstop, Cyprus would find it impossible to bail out its banks or support the guarantee of deposits – it would be forced to exit the eurozone and print its own currency.
The logistics are messy, but as we suggested with respect to Greece, some use of Article 50 in the EU Treaty to exit the EU would be the most likely option.
The new Cypriot currency would have little international trust, particularly in financial markets – not least because it would have just defaulted on a significant amount of its debt, particularly foreign-held debt. This would be worsened by the Cypriot Central Bank having to print massive amounts of liquidity to keep the banks afloat and backstop deposits. It would likely also have to monetise the government deficit, which is due to be 4.5% of GDP this year, or Cyprus would have to enforce massive austerity. In any case, this scenario has all the hallmarks of an inflation spiral and collapsing GDP.
This could be combined with option 3 to some extent. Russia could offer Cyprus a significant bailout, particularly of the banking sector. Alternatively some currency link could be envisaged. In either case this would help increase trust in the new currency and the Cypriot economy.
Would the ECB really pull the plug on liquidity to Cypriot banks?
The key turning point here will be whether the ECB cuts off Cypriot banks. It is to some extent the vital difference between option 2 and 4, while keeping liquidity on could help facilitate option 1. To pull the plug on ELA the ECB needs a 2/3 majority (15 out of 23 votes) at the ECB Governing Council. Although the Bundesbank and maybe the Dutch and Finnish central banks might vote to turn off the ELA a 2/3 majority is not certain. In fact since Mario Draghi took over the ECB it has not been particularly hawkish. Bloomberg reports that the ECB said after the vote: “The ECB reaffirms its commitment to provide liquidity as needed within the existing rules”. The crisis has shown so far that the rules of the ECB are incredibly malleable, so what exactly that statement means is unclear, but the vote could certainly go either way.
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It not how many division Merkel has. The "others" have a lot less.
Dude, CAPS MEANS YOU ARE YELLING. Chill.
Definitely a possibility. However, Germanys economy will tank because the DM will be too strong. Their banking sector will also eat shit, though they could mitigate the effects through money printing.
I think the Eurozone will eat shit. The cat is out of the bag now, though. Anyone who trusts brussels is a fool.
everyone needs to "think local".
edit: and, everyone's "banking sector" needs to eat shit and die.
"IT HAS MANUFACTURED THIS CRISIS FOR THIS END RESULT. "
Stability is what keeps them in power. I do NOT see this as a goal/policy as much as I see it as pure desperation.
Again let me remind people:
1) EU is BROKE;
2) EU has very little natural resources, especially energy.
The REAL negotiations are with the Russians, who DO have MONEY and who do have energy (in this case they're trying to get access so they can lock it down, just like the US did with oil over in the ME [era of sanctions being the key part]).
Agree SEER the EU is very energy dependent. I do not think they are so broke. Falak hit the nail on the head but I do not think the European countries are going to give up their soverignty to form a fiscal union and later a governmental union. Hell even in Germany the northern germans dislike the southern germans and vis versa.
The Euro by design was to force countries to come to the table to force them into a Dictatorship of Europe in my mind. We are not dealing with several countries that totally dislike others. FALAK do you think Europe can overcome their differences and actually form a fiscal and goverment union or the United States of Europe?
"I do not think they are so broke."
Not in the sense that they couldn't shake themselves down for a Cyprian bailout (though, come on, it's never just once, is it?). Taken in the larger sense, Spain, Italy and France pretty much going to implode, yes, they're broke. And, as someone else mentioned (I'd been stating it for at least a year), Germany isn't sitting as pretty as most might think (where are the growth markets for them?).
"The Euro by design was to force countries to come to the table to force them into a Dictatorship of Europe in my mind."
I don't believe so, though I cannot proclaim that it was all about benevolence. Internationally speaking, dealing with these many countries was a mess. It was international forces that pushed all of this; and, as is always the case, the egotistical, opportunistic bureaucratic types were quite willing to ride the euphoria up the flag pole (as support from international corporations provided all the punch and party hats); but, alas, that which cannot continue forever won't... BAD systems need not reach clusterfuck proportions in order to fail; they are, at the core, already doomed for failure (BAD = FAIL).
Oh I agree Seer that most are broke and Germany will not be sitting pretty. Actually Germany is making out like a bandit with the Euro I lived in Europe for 5 years. You hit the nail on the head with the money mess in Europe. I lived there without the Euro and left before they implemented it a year later. I was there reading the sceptics and they thought as I did it lead to central everything.
Alot of these countries were solvent and had no problems with their economies until they became fiscally constrained joining the Euro. The producers are making a killing on the Euro.
doggis, I think you are essentially correct but with a slightly different twist. Merkel has come to the conclusion that the current EU structure with the North bailing out the deficit spending South is unworkable and is now pulling down the North. Up to this point, there has been no way to force the South to actually change their ways. They make promises, but nothing happens, and the bailout money keeps flowing to keep kicking the can. Merkel wants to stay in the Euro because her banks want it. And like any politician, she is beholden to the bankers. But the election a few weeks ago when her party was shellacked was a wake up call. She realizes the German people are fed up with the bailouts, and if something doesn't change, she will lose in September and an Anti-EU coalition will probably win. This is why she pushed this game changer. A hail mary pass punish the South to change the trajectory. At the same time, I think she sent the message that if it fails, it's every country for themself.
Well, it failed. What's worse for Germany, is that it is more likely now that more bailout funds will have to flow to Cyprus to kick the can. That means more pissed off German voters to vote against Merkel. So I think the outcome you outline is correct, but it's happening for a slightly different reason. The bottom line is West Germany absorbed East Germany with all their problems, and a united Germany came out once again the dominant power in Europe. By leaving the EU and Euro, Germany will be fine going back to the DM.
all caps = unread
What are the possible outcomes?
5. obama comes out of the closet.
Not before his Israeli bathhouse tour is over, though.
The interesting thing with this event is that all of the other activities allowed the can to be kicked down the road. However, this "tax" on bank accounts doesn't appear to be something that can be proposed and then pulled back. The EU will not only have to come up with the money it was trying to take from the depositors but they will need to come up with some type of incentive for people to keep their money in the banks. That is the real issue that they are trying to work out right now.
What will it take for people to leave their money in these banks???
Exactly. They'll need to ringfence the banks in Cyprus and make sure whatever debt they owe to other banks is still paid. The name of the game continues to be "protect banks at all costs" just like it has been since 1913.
The sheeple awaken to see the emperor has no clothes
Easy one: Spiderman beach towel. Works every time.
And you can be sure that the employment levels are going to drop, in which case any money that people have in the banks is going to be drained. Yeah, even 20% interest (ring a bell?) is going to fail here...
+1000 for noting this!
Cypriot parliment has the EU and Germany by the balls. No way EU will let the banks go under as the domino effect would collapse all EU banks. All that needs to be done is to get the banks open and allow depositors enough time to bail. The EU will have no choice except to find the "money" to bail out both the gov't and the banks.
Cyprus = Iceland
Scheissland, in German parlance.
At LAST ....NONE of the politicians voted for theft from the people
Time for everyone to move to Cyprus?
Blood from a turnip...
All I know is what the ECB, IMF, Merkel et al pulled is the equivalent of walking in on your parents fucking. You can't unsee it afterwards and you never look at each other quite the same from that point on.
So sorry to hear that that happened to you.
Why exactly is "make those who made bad bets eat their own losses" not an option?
This is way better than TV. What about Turkey? I haven't heard anything about the other half of the island yet? Since Turkey has the apparent power to thumb their noses at the ECB and the US, it seems to only matter how their relations are with Russia. In my simplistic non worldly point of view mind you.
Turkey was just recently begging for Patriot missiles from Nato to defend against Syria. And Russia?
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I notice ZH now has a toilet paper commercial running at the top of the page. Any connection. Are we all going to be "wiped out".
I doubt it --- but come to think of it, I am feeling a little flushed.
I get PMs , minxes and milfs. Excellent!
Putting on my tin foil hat a second, I'll bet 1 million pieces of govt paper that ECB lets Cypress Hill default, and another million soon-to-be toilet paper sheets that this was the plan all along. WHY? The hatred of the Euro and ECB has been growing all over Europe. What better way to get the sheeple to get back in line than by showing the consequences if it doesn't? Given Cypress' puny actual GDP, it's shaping up to be a perfect example...
And when Cyprus flushes the toilet it'll be able to re-load with its NG. The rest of the EU?
I think that this is a bad example. They have nothing to rebound with. And THAT is why this is a big deal- TPTB are trying to skirt around the energy angle lest it really trigger massive social unrest (when people finally realize what matters).
"...the EU will not want to see one of its members become so closely intertwined with Russia"
I'm not so sure. That view is based upon the assumption that the EU is a believer and striver in free market economics. It is not. It's stuffed full of old commies, neo-fascists and miscellaneous assorted socialists. Thus, there are plenty of EU-crats - including Barreloso,Junkett,The Garden Gnome and Merkel herself - who quite like Russia and have long standing ideological attractions to it. They've had long term plans to invite Russia to join the EU to create a giant new socialist empire.
The issue about Cyprus becoming entwined with Russia probably stretches no further than "who" gets to control the levers in the energy relationship. Merkel will want that power. So will Putin. They'll discuss and agree it in Russian.
The cenbtral banksters don't give up that easily. They'll be back. Brussels wants to financially rape Cyprus and all the other countries.
It's about increasing debt and slaves to it.
Easier done by printing. But the problem with printing, it is too broad. You don't exactly know who you're fucking with.
"...the ECB said after the vote: “The ECB reaffirms its commitment to provide liquidity as needed within the existing rules”. The crisis has shown so far that the rules of the ECB are incredibly malleable, so what exactly that statement means is unclear, but the vote could certainly go either way."
lol...no doubt.
Perhaps this is part of the problem? No hard and fast rules with definite consequences (enforced) for breaking them? Always the squishy this is it, the rule/law of the land! (kinda...sorta, unless it suits our immediate purpose to change the law of the land...read the fine print)
As my old Grandpappy nmewn used to say..."Son, never kick a fresh cow patty on a hot day"...now there was some serious consequences for not abiding that rule, for myself and everyone around me ;-)
Right, by the original rules the ECB wasn't supposed to do ninety percent of what it's been doing to prop up member states, so when it talks about rules it means as much as the cyprus business or anything else--the only rules are what supports brussels and those who still cling to european unity. In reality, all economies are confidence games and necessary ones for human survival. But when people at large start to realize that the only tangible security between them and perdition is as thin as the curtain between the people of Oz and their wizard, well, then Katy bar the door as the old saying goes, or head for the hills. We're not there yet, but Cypriots are and it ain't going to be pretty no matter what strings are pulled from here on out.
"Son, never kick a fresh cow patty on a hot day"
As much as I like country metaphors, things is a bit different. It's like KNOWING that this isn't what you do but someone is holding a loaded gun to your head and telling you to kick.
I still want to know why no one is mentioning the need for subsequent bailouts. I wonder whether it's because they are going to lock up the NG resources in bonds? (and then watch demands on energy production not meet expectations because everyone is broke, which fucks up the bonds, which make people MORE broke)
Actually, the Russian gambit is pure genius.
OK, Europe, here comes the Bear chomping on your southern flank. The dream of the czars to have year-round warm-weather naval ports - and the nightmare of the Western Europeans that this must be contained at all costs - is about to come true. The Russians get their dream - the Western Europeans get their nightmare.
This puts the entire issue into a very different light. It isn't just about the western banksters any more - it is also about European survival. As someone who has had the thrill of watching these types up-close, I can assure you that tonight there are some extremely angry politicians chewing the ass of the central bankers for getting them into this mess.
This event will go down as one of the most idiotic gambits ever played by the banksters. It is the point when they have overplayed their hand - believing their own lies about themselves and their intelligence, they have told - and sold - themselves on the idea that anything they do will work to their advantage. They are - in their own eyes - the most brilliant people ever to walk the Earth.
Let me see if I can give you a bit of an analogy, although the extreme situation of this is not the same in magnitude - but it will give you the idea:
This is like the moment when Germans in WWII realized that their Nazi leaders had totally messed up. It had been a great ride - gigantic deomonstrations with thousands of like-minded supporters, bonfires, Jews trotted out as the scapegoats for everything (much as I all too often see on ZH . . . ), then the glorious victories of war - one country after another falling before the Panzers.
It was a great time to be a German. But finally the Nazi leadership took on one country too many - it wasn't just Russia that overtaxed them, there were the Brits, and through manipulation of the neutrality laws, the Americans, who were eating at them from both ends.
The German army stopped, exhausted, unable to go on in the dead of the Russsian winter. Over stretched supply lines, troops physically depleted, the machines of war worn out and unable to function from lack of repair and replacment, the skies filled with Allied bombers raining down tons of incindiary devices to burn their homeland to the ground - yes, the Nazis went too far, with too much belief in their own lies that they were the decendents of a Master Race, ordained by God to rule - or to put it in terms that will strike a recent chord - they were doing God's work.
It all came apart, didn't it? The collapse was brutal and finite.
Now we are witnessing the same occur to the current "Master Race" - the intelligensia of the EU and the Banking Cartel. They have rolled across one nation after another, celebrating thier superior intellect and plans for society. They have raped, and pillaged, and burned everything they could to the ground in their relentless pursuit of self-gratification and greed.
Now it is coming to an end. The supply lines of the ponzi fractional reserve system are stretched too far, the machines of finance are worn out and lack the creation of true wealth to keep them functioning, the army of planners, beaurucrats and politicians are exhausted from too many meetings that resulted in nothing but sleepless nights knowing that it is all a lie, and the inevitable is coming.
Soon there will be a true New World Order. The one envisioned by the Banking Cartel will be replaced by something else - and they will be tried for their crimes against humanity.
It's winter, 1943, and the frozen tundra is just now beginning to extract its price . . .
-30-
The analogy is not usable because the current war is fought with electronic money printing, not physical.
The Brits were toasted. The US really didn't enter the war (front in Europe) until the Germans' were already pretty much too far extended. The Germans dead end was ALL about rushing into Russia (and even though it was the most insane time of the year, they'd have been stalled no matter).
I don't think the aim of total occupation is really believed by anyone anymore to be the game big chess board strategy that it was in the past. The US does it via corporate infiltration (and then levers in banking), this is THE model: influence rather than by administrative force. Russia only really cares to keep the West from controlling the Cyprian NG fields (yeah, a warm port would also be OK, as that would mean that absence of the US); as a matter of fact, they are better served just sitting on the fields.
The Brits were toasted, but not destoryed. That is the key. You are missing a bit of history that is significant. The truth is the Brits took all Germany could throw at her during the Blitz. That was before Germany turned against Russia. The fact is that Radar and the Spitfire is what saved Britain. The air losses that Germany suffered were simply too great during the blitz.. all because of radar and the spitfire. Hitler decided he needed easier conquests, so he turned against Russia... to his great mistake. So the original poster talking about supply line over extended, and machinery lost... is accurate. It happened first against Germany during the blitz against Britian, and broke Germany's back in Russia.
Cypress: the bankster's Stalingrad?
One can hope.
Where's the column for non-resigned?
Ferris Buller Sing's - Twist And Shout
http://www.youtube.com/watch?v=tgd46QiHz4I (2:41)
The Isley Brothers - Twist and Shout
http://www.youtube.com/watch?v=NhN-GhH5oxU (2:42)
The FED prints about $4 billion a day.
I'm sure Uncle Ben can slip in an extra 2 days of printing to bail out the IMF without anyone noticing. We wouldn't want the EU to collapse, would we?
No idea why you'd be down-arrowed on this. It's irrelevant whether anyone thinks that he/she wouldn't want the Fed to do something like this; I think the question is still valid:
Does the Fed have the legal authority to buy up NG bonds (lets just pretend that Cyprus is busy making them up as we speak)?
THAT would plug the banking hole AND save face with the EU clowns. Of course, we'll leave out the part where these things seem to require repeated application (bailout n...infinity). BUT it could very well be the ONLY way for the EU and West to force Russia out. (which would also raise question number 2: could the Fed make demands on operations concerning the NG bonds?)
That doesn't solve the problem with the bank run that is surely coming the minute those banks open their doors. Do you suppose Ben will make all of those depositors whole, all of those shady Russians and heaven only knows who all else? What if the amount actually is orders of magnitude greater than admitted, as is rumored? I suppose he could. After all, it's only funny money and doesn't cost him anything, but then there is the issue of broken trust, and I note that several other countries appear to be talking about depositor haircuts as a viable solution to their own current difficulties. Just the thought of it makes me twitchy. If some are speaking openly about it, I imagine many more are quietly considering it, not wanting to tip their hands prematurely. I'm sure the US is among them. Those who see the way the wind is blowing are going to start withdrawing their funds and Hell take the hindmost. After all, he who panics first panics best.
Where the HELL is Herman Van Rompuy?!?
He's the only one that has the intellect, the focus, and the charisma to pull things together and arrange a solution satisfactory to all.
"Where the HELL is Herman Van Rompuy?!?"
aka the Garden Gnome... Barreloso dug a whole in the garden and dropped him in.
This impacts Syria in an indirect way...the Syrians host the Russians last naval base with access to Mediterranean....this cyprus move reminds them more than ever to not leave the Mediterranean....
$10 billion lousy euro's and a $65 Trillion rehypothecation scheme is a shameless act of avarice... 109 v. 65 (10)12 {1 : 65,000 ratio}
do you know what i mean?
Maybe it's all show and the intent is to bail? Maybe the Russians have all the inside info and would be willing to leak a lot of what's cooked up in that jumble unless they get their way?
Much of politics is just to paint the story to be recorded. What matters is what's recorded, not any reality... And if you go through a long and all-over-the-place drive to get there people will be so mixed up that they'll just accept the story line.
Cyprus should hold out.. and say no.. EU & US cant let their Aircraft carrier to the Middle east go to Russia..
The PROBLEM is that there WILL be a run on the banks and things just plain melt down.
Cyprus needs to set up the responses necessary to close off from the EU while keeping their people from stampeding, knowing that they're making a deal with the Russians and that the threat of melt down will be mitigated (for the people as well).
Again, the "trigger" has to be pulled. It'll be show, but they're looking for a direction to shoot it such that it doesn't really hit people while at the same time appearing to be full-force.
Maybe someone else has a bead on whether Cyprus could actually strike a deal with Russia while still being a member of the EU and not have this tie up the transaction in any legal knots. I just figure that a full divorce gets them full disconnected from any such threats and allows them to get on with "dating" Russia...
I really do believe that Russia's hand is far stronger than anyone else's. The wildcard might be whether the Fed could bail by way of slurping up NG bonds (maybe that's being cooked up?).
Under 2: "linking the repayment of the loan to future gas revenues".
Yes, that should have been the plan from the beginning. Give Cyprus the bailout with the gas and oil reserves as collatoral. And what about them Russians? Make a list of who they are, blackmail them into paying a levy under the threat of revealing who they are to the FSB and the Russian tax authority (Russian government officials are not allowed to have foreign bank accounts and for sure many Russian government officials have foreign bank accounts).
But this is more than about bailing out a small country (we are only talking about 17 billion Euros which is small change). It is all about establishing dominance (Germany and German banks are the biggest king) and about pushing an authoritarian EU down people's throat.
Cypriot parliament decided to refuse EU bail-in condition "the mandatory wealth tax", instead Cyprus now is heading to Moscow for talk upon Russian help.
It will be very interesting to watch the outcome and its consequences to the Bank Cartel Alliance.
Meanwhile, the widely circulated trumpet service by The Oligarchy's major mouthpiece from the other side of the Atlantic, AFP, carried out the story as below.
Notes the interesting lines voiced by AFP - Agence France-Presse:
"Putin had Monday lashed out at the proposed levy as "unfair, unprofessional and dangerous" -- a position highlighting the links between the Kremlin and the Russian oligarchs."
"Local media have speculated that one proposal on the table in Moscow was for the Russian natural gas giant Gazprom to come in and infuse Cypriot's banks with cash in exchange for interest in the island's offshore energy fields."
Read the full wired news here:
Cyprus seeks Russia's help after deposit tax fails
MOSCOW, March 20, 2013 (AFP)
Cypriot Finance Minister Michalis Sarris will seek Russian assistance on Wednesday after his island's parliament rejected the terms of an EU-IMF bailout that slapped an unprecedented levy on bank accounts.
Sarris will meet his Russian counterpart Anton Siluanov in the hope of easing the terms and winning an extension of a 2.5-billion-euro loan that Moscow afforded Nicosia in 2011.
The visit comes the day after furious Cypriot lawmakers flatly rejected a highly unpopular measure that would have slapped a one-time fee of up to 9.9 percent on bank deposits as a condition for an EU-led 10-billion-euro ($13-billion) loan.
Cyprus's banks were left heavily exposed to the Greek debt crisis and their failure would leave the country on the verge of bankruptcy and in danger of going into default.
That in turn would put immense pressure on the euro and once again place the unity of the European Union in doubt.
Cyprus is now scrambling for a Plan B that includes the option of going to Russia with cap in hand.
Russians -- many of them wealthy tycoons seeking to avoid taxes back home -- hold between a third and half of all Cypriot deposits and have $31 billion in private and corporate cash buried in the island's teetering banks.
The Kremlin said that President Vladimir Putin received a telephone call late Tuesday from his Cypriot counterpart Nicos Anastasiades in which the two leaders discussed what Russia could do to help.
Putin had Monday lashed out at the proposed levy as "unfair, unprofessional and dangerous" -- a position highlighting the links between the Kremlin and the Russian oligarchs.
"The leaders analysed the economic situation in Cyprus in the context of the Eurogroup's proposal on ways of getting out of the crisis," Putin's spokesman Dmitry Peskov told Interfax.
"Putin once again expressed his concern in connection with the adoption of any measures capable of harming the interests of Russian individuals and companies," said the spokesman.
Local media have speculated that one proposal on the table in Moscow was for the Russian natural gas giant Gazprom to come in and infuse Cypriot's banks with cash in exchange for interest in the island's offshore energy fields.
Gazprom has refused to confirm that this offer -- also reported by Cypriot media -- is under discussion.
Russian officials have so far ruled out the possibility of extending Cyprus credits beyond the 2011 loan.
Where did the proposed law come from? The media act like it just magically appeared for a vote. Somebody must know where the bill originated from.
Eurogroup Chairman Jeroen Dijsselbloem Should Resign For Trying To Confiscate Bank Savings. Long Live the Individual Financial Liberty And Freedom of all Cypriotic and European citizens and foreigners no matter the size of the savings!
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http://www.facebook.com/pages/Dijsselbloem-should-resign/410669842362350
Screw the EU.
well, if they can't confiscate they will print. the austerity talk is bullshit, budget deficits cannot be cured. the governments are hungry for moar money all the time. as for fringe countries like cyprus they have to leave the euro causing the toxic derivatives to go contagious and collapse the big dominoes on their way. the entire financial system is fubar.