The bailout deal for Cyprus has been greeted by Ireland’s Minister for Finance, Michael Noonan as a “positive development for Cyprus, the euro zone and Ireland”. Mr. Noonan is showing his true colours, as the only people for whom this is good news are the senior bondholders who have transferred their debt directly on to the shoulders of Cypriot families.
The IMF has given an ultimatum to the Cypriots to impose a tax on small savers to pay for the banking crisis. Savings over €100,000 will pay a 10% tax and those under €100,000 will be forced to pay 6.7% of their savings to bailout the banking system. This measure has been greeted with opposition from the people of Cyprus.
This so-called ‘stability levy’ will prove to be anything but stable, as queues of people gathered this weekend at ATMs throughout the country, to withdraw their savings. In response the banks have now closed their doors until Thursday amid fears of public opposition and a run on money.
The international media are attempting to cloud this development with suggestions that dodgy Russians, involved in money laundering, own the savings in Cypriot banks. This is a red herring, even if this was the case what does it say about the EU banking system in the first place. The truth is that the small savers of Cyprus, for whom this money represent a lifetime of saving, are now being asked to pay the penalties while bondholders will contribute nothing.
The irony here is that like in Ireland, the people are told these ‘emergency’ measures are essential for stability. Small savers in the EU are guaranteed up to €100,000 in savings deposits. No doubt this development will be met with fear across Europe as people wonder how safe their savings really are.
Those who have argued in favour of austerity measures across Europe told us that there would be no money in the ATMs if we did not accept the terms of the Troika; now it is the Troika who have incited a run on money and are effectively emptying the ATMs and undermining the very system we are sacrificing so much to bailout.
Yet again we are witnessing the transfer of banking debt from where it belongs (the banks) on to the shoulders of ordinary people. Just as we witnessed here in Ireland, through the implementation of austerity measures, USC and home taxes. In Cyprus the IMF has imposed a more blatant tax that reaches directly into peoples pockets.
The small savers of Europe now look on in fear wondering if they are next. The banking system is yet again undermined, not by those who argue against austerity, but by the greed of the system itself. An honest and serious debate about nationalising the banks is now more necessary than ever. A Nationalised banking system is the only way to protect small savers and the domestic economies of Europe. Only a publicly owned banking system committed to state investment can reverse the austerity which has done much to damage European society.
At the time of posting Cyprus has twice suspend a vote on this bailout plan. It remains to be seen if this can get the support of the Cypriot parliament. It will not have the support of the Cypriot people.
Update: Tuesday 18:00hrs With protests outside, not a single member of parliament voted in favour of this deal. Remember on Sunday the Irish government welcomed the agreement, describing it as a “positive development for Cyprus, the euro zone as a whole, and Ireland”.
Read also – The Great Cypriot Bank Heist — a moment in the crisis by Kevin Ovenden for Left Flank.