The second deal on Cyprus reached at the weekend is another bank robbery
covered with a fig leaf: It does not repair the damage done by the
first deal, which is irreparable, but de facto puts Cyprus out of the
Eurozone while claiming to have "saved" its membership in the euro, and
is prelude to more bank robberies in Euroland.
The whole thing
has accelerated the disintegration of the euro system. As the former
Central Bank Governor of Cyprus Athanasios Orphanides, told
the Financial Times on March 23
"the
European project is crashing to Earth. This is a fundamental change in
the dynamics of Europe towards disintegration and I don't see how this
can be reversed."
"We have seen a cavalier attitude towards the expropriation of property and the bullying of a people," Orphanides said.
The
new deal over Cyprus has
lifted the levy on bank deposits up to EU100,000 Euros (the fig leaf),
but it is going to extract up to 40% on larger deposits, as part of the
liquidation of Laiki bank (Cyprus Popular Bank).
There is a geopolitical aspect in this.
According
to Bloomberg, one-third of all the money deposited in Cyprus banks is
owned by Russian nationals. Most of the deposits larger than EU100,000
are Russian. This is because Russian firms have used Cyprus as financial
basis for their commercial operations, due to its very low tax regime
(similar to Ireland, for instance). Thus, Cyprus has become the third
largest "foreign" investor in Russia. By deciding to put most of large
deposits into the "bad bank" part of the liquidated Laiki bank, the
Troika has consciously targeted Russian investors.
This explains
enraged reactions from Russian leaders, from Prime Minister Medvedev to
economist Sergei Glazyev (see slug). That Russian investors are the big
losers, and that the targeting of Russia was no innocent choice or just
an objective result of an "equal" correction of the deal, is shown by
the central role played by the British government. On March 23, a
high-level British team was flown into Cyprus to "advise" on the terms
of the deal. The team was led by U.K. Treasury mandarin Tom Scholar, who
is the Treasury's second permanent secretary and the official who
managed the bailouts of Northern Rock, Royal Bank of Scotland, and
Lloyds Banking Group. We know how those bailouts ended up: The banks
were nationalized and the entire speculative debt was backed up by
British taxpayers.
It is not to be excluded that the anti-Russian
gambit was an aspect deliberately pushed by the City of London
gamemasters, in the context of the British Empire's overall anti-Russian
policy at strategic level. British-controlled or pro-British media are
the ones who have created the image of Cyprus as a "money-laundering"
base, characterizing Russian
investments
as "mafia" money. This has provided a "moral" justification for the
Troika decisions. In reality, Cyprus has not been a money-launderer any
more than other offshore financial centers, such as British Isle of Man
or the City itself. And speaking of an "overblown" financial sector
relative to GDP, Cyprus with its 8:1 ratio is way behind Luxembourg,
which has a 24:1 ratio! In this context, the
sudden death of fugitive oligarch Boris Berezovsky on March 23 in London, is seen by someone as "the first victim of the Cyprus crisis."
Another big lie pushed by the Troika is that the new deal
represents an "Icelandic solution" for Cyprus. This is a totally
superficial and deeply wrong comparison. First, Iceland had its own
national
currency and could devalue it. An Icelandic solution for Cyprus would be a return to a national currency.
But that is exactly what the Troika wanted to prevent. Secondly,
Iceland separated the domestic debt from the foreign debt. De facto,
this was a separation between a debt somehow linked to the real economy
and a fictitious
financial debt. For Cyprus this would mean to separate a fictitious debt related to the EU bubble
carry trade from London and other places into insolvent Greek bonds, for instance from the
commercial debt.
Most of Russian investors' money would probably fall into the second
category. The Cyprus deal consists in refinancing the rotten debt,
liquidating one bank (Laiki) at the expense of Russian investors, and
keeping one bank (Bank of Cyprus) alive with revenues from the bank
robbery. At these conditions, the Troika will guarantee a EU10 billion
loan which will be used to refund foreign lenders in the Eurozone.
However,
since the damage has been already done, and nobody feels any longer
that his money is secure in any bank, Cyprus will introduce capital
controls in the attempt to prevent capital flight. This will de facto
establish a second-class "euro" currency in Cyprus, a currency you can get into, but you cannot get out of. And will not prevent capital flight anyway.
Source -
LaRouche