Cyprus: An EU Financial Coup?

Cyprus: An EU Financial Coup?

VN Gelis

April 2, 2013 at 3:58 pm

 

“The credit system, which has as its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner…” “The Acts of 1844 and 1845 are proof of the growing power of these bandits.”

Marx- Capital Volume Three (Chapter XXXIII):

 

 

From the bank bailouts in Greece (which have led to mass unemployment and immiseration not seen since the last German Nazi occupation) we moved on to the bank bail-ins in Cyprus. It is a small island, a still divided ex-British colony with around one million Greek Cypriots and having a massive British military base on it. It became an offshore tax haven for the Russian neo-capitalist oligarchy (due to the dominance of AKEL – the Cypriot Communist Party). It entered the eye of the storm of the continuing Euro crisis in 2013. The ensuing events created essentially a break up of the Euro, transforming it into a two-tier Eurozone, with capital controls re-introduced in Cyprus, initially “temporary”, but all the Troika measures of the last few years it ended up being permanent. Who is doing what to whom and for what ends are some of the issues to be analysed and what effect will they have on the Cypriot working class?

The bank heist was first announced for all deposits. But after the No vote of the Cypriot Parliament only for deposits in excess of E100k. More recently limits were placed on withdrawals less than this figure. It would thus take one person a full year to withdraw the ‘guaranteed’ deposit as withdrawals are limited to E300 daily. The official explanation was that Cyprus had 8 times too many foreign deposit holders, given the GDP of the country. The fact that Luxembourg has around 20 times for the same ratio raises the question as to why Cyprus was selected by the Eurogroup. Was it to warn Greece that if it goes against the EG that’s what happens to you? Two banks, Laiki and Bank of Cyprus were targeted to be shut down by the ECB by winding down liquidity. Surplus banks, with surplus debts are to go the way of surplus products in capitalism, straight to the scrapheap, a policy akin to a scorched earth approach, with no respect to who it destroys in its path.

In the Greek crisis, workers were chosen as the excuse to bring in massive anti-working class attacks by the corporate mass media; in Cyprus the excuse was the participation of the Russian Oligarchs. Whilst the Troika arrived in Cyprus under the previous government of AKEL it was under the new government of Anastasiades and his ex-Finance Minister Sarris that this bail-in was agreed. The idea was to hold everyone responsible for the banking collapse (i.e. anyone and everyone with a bank account). We had the obscene spectacle of the banking system being closed for two weeks, the longest time for any country anywhere since WW2, whilst the people at the top shifted money out to Cypriot outlets based in the UK.

 

No Vote

Cypriot politicians voted NO to the attacks on bank accounts in Cyprus in order then to propose to ‘save’ bank accounts i.e. the minimum EU guarantee, but to block access to them. This was just a political charade and it was continued when Finance Minister Sarris went to Moscow to ‘negotiate’ when in reality he did nothing of the sort. It has been reported since that his relatives shifted money abroad! These politicians have agreed to bankrupt Cyprus and hand over all gas exploration rights to foreign multinationals. The issue becomes who will get them as the Russians no longer have a look in, so the struggle is between American and German firms. The rapprochement of Israel and Turkey was overplayed alongside Obama’s visit as a counterweight to any ideas of not ‘belonging to the West’. So small Cyprus has re-entered a dark neo-colonial financial meltdown and the coming attacks will be immense:

GDP is estimated to fall by 8% though it may be higher if there were more than 100,000 Cypriots employed in financial services of one sort or another and the recent cost of the bailout has increased from E17B to E23B i.e. another E6B magically added out of thin air:

E70 million in new property taxes

Business tax up from 10% to 12.5%

4.5% wage reductions for wages up to E1k

6.5% wage reductions for wages up to E1.5k

8.5% wage reductions for wages up to E2k

Reducing the public sector

Privatisations to bring in E1.4B from 2013-16

VAT from 17% to 19%

The current mythology perpetrated by the ruling economic terrorists is that all these economic measures will lead to some type of future growth. If Greece is anything to go by this growth has only been in suicides, mass unemployment and depression: nothing else. The other mythology is that these policies aren’t a ‘beggar thy neighbour’ approach by the ECB to keep banks like Deutschebank standing last whilst everyone else is bled dry. Banks, like many consumer products under conditions of collapsing capitalism, are surplus to requirements. Cyprus was chosen on Greek Independence Day (25^th March) as a warning to Greece: swallow whatever the Troika throws at you otherwise the ‘Cyprus Option’ will hit your banks as well. The EU is aiming to destroy the social fabric of society with the aim of buying up the island for a pittance after turning the population into scavengers. How the Cypriot population reacts will determine the real fate of these measures over the coming period.