Grand Theft Cyprus

Stephen Lendman

Steve Lendman: Grand Theft Cyprus: Part II (Part I)

Cyprus is tiny. Its population numbers about a million. Its GDP is miniscule by Western standards. It's 0.2% of Europe's economy. It's entrapped under Eurozone straightjacket rules. They impose financial tyranny. Dissimilar countries surrender monetary and fiscal control. Doing so abandons effective ways to combat recessions.

They can't devalue their currencies to make exports more competitive. They can't print money freely. They can't spend, spend, spend. Euro policy expert Bernard Connolly is considered the foremost European economic, monetary, and political integration expert. In his 1995 book titled, "The Rotten Heart of Europe: The Dirty War for Europe's Money" he explained and said the euro system a harebrained idea. It's doomed to fail.

Before the euro's 1998 introduction, he said one or more of Europe's weakest countries would face rising budget deficits, troubled economies, and a "downward spiral from which there is no escape unaided." "When that happens, the country concerned will be faced with a risk of sovereign default."

In 1979, Europe's Exchange Rate Mechanism (ERM) was introduced. It's part of the European Monetary System (EMS). It was intended to propel the continent to one European currency unit (ECU). ERM never worked. ECU failed. Connolly's views were prescient. His book explained. His central thesis is that

"the ERM and the EMU (European Monetary Union, the mechanism which ultimately brought the Euro into technical existence) are not only inefficient but also undemocratic: a danger not only to our wealth but to our freedom and ultimately, our peace."

"As we shall see, in France, the long arm of the authoritarian state pressurized dissident economists and bankers, deployed financial information programs on international TV channels, threatened securities houses with loss of business if they questioned the official economic line, and shamelessly used state-owned and even private-sector banks, in complete contradiction with their shareholder's interests and Community law, to support official policy."

"The economic profession in Europe organized literally hundreds of conferences, seminars and colloquia to which only conformist speakers were invited; and the Commission's 'research' programs financed large numbers of economic studies to provide the right results from known believers."

In other words, a system doomed to fail was fraudulently reengineered to look workable.

Europe is banker occupied territory. So is America. Finance is a new mode of warfare. Banking giants run things. Economies are strip-mined for profit. Communities are laid waste. Ordinary people are impoverished. They're marginalized and left out. Corrupt governments go along. Bankers control them. They're more powerful than standing armies. They inflict greater damage. John McMurtry describes a money sequencing cancer system. Banker controlled money power is hugely destructive. It assures disproportionate private enrichment. Co-existence with democracy is impossible. Bankers hold nations hostage. They turn crises into catastrophes. They create mass impoverishment, high unemployment, neo-serfdom, and human misery. Austrian economist Ludwig von Mises (1881 - 1973) once said:

"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Greece is a failed state. It's plundered for profit. It's a zombie country. It awaits its obituary to be written. Southern Europe is troubled. It's crumbling. It faces protracted Depression.

Cyprus now makes headlines. It's troubled. It's been so for months. Last June, Moody's and Standard & Poor's downgraded its debt to junk. It's practically worthless. Depression conditions exist. Economic output is shrinking. It's banks are troubled. It's solution is grand theft. It wants ordinary Cypriots' bank accounts taxed.

If legislatively approved, savings accounts over 100,000 euros will be taxed 9.9% tax. Small depositors face a 6.75% one. It's a one-off levy. Sovereign debt holders and other investors are exempt. At issue is agreeing to troika terms (the EU, ECB and IMF). Debt peonage comes with strings. It reflects financial terrorism. Eurocrats proposed taxing deposits above 100,000 euros 15.6%. Many are held by Russians. Moscow's Finance Minister, Anton Siluanov objects, saying:

"The EU took action to levy a tax on deposits without consulting Russia, and for this reason we will further consider the issue of our participation from the point of view of restructuring the earlier loan."

Prime Minister Dmitry Medvedev compared it to Soviet-era private property confiscation. The Economist calls it "unfair, short-sighted and self-defeating."

An alternative bill was drafted. Legislators are considering it. Savers with less than 20,000 euros will be spared. Doing so won't meet Troika demands. It falls about 300,000 million euros short. Eurocrats remain adamant. They want savers taxed 5.8 billion euros. Getting an agreed 10 billion euro bailout depends on it.

A bank holiday continues. Banks remain shut. They'll stay closed through March 20. Extending it may follow.

Savers rushed to ATMs. Lines formed. Cash machines were emptied. Cypriots resent having their money confiscated. Those unable to act in time are stuck. So are overseas depositors.

On March 19, the Financial Times headlined "Cyprus braces for defeat on deposit levy," saying:

Cypriot President Nicos Anastasiades said "Parliament is destined to reject this bill because (it's) considered unjust. We didn't expect such demands from our European partners."

Other ways to raise revenue may be considered. Parliament won't do anything unfriendly to international business. It wants burden sharing done by ordinary people. Robbing poor Peter to pay rich Paul is policy. Expect other proposed measures. They reflect IMF terrorism. They include mass layoffs, wage, benefit and social spending cuts, other tax increases on working households, and selling state assets at fire sale prices. Bailout out bankers matters most. So does protecting large investors. Eurocrats are adamant. They want ordinary people bearing the burden.

Significant risks are involved. Capital flight may follow. Greece, Portugal, Ireland, Italy and Spain risk trouble. Last year, a run on its banks nearly brought Spain to its knees. Cypriot depositors aren't safe. If they flee, banks have to sell assets to raise cash. They're under-capitalized and troubled. Systemic collapse is possible. Southern Europe's at risk. Contagion affects the continent.

What harms Europe hits America. Contagion spreads. Debt peonage, banker occupation, and austerity undermine every debt-entrapped country.

Cyprus' loan has other strings. Force-fed austerity is mandated. It's public debt will rise from 90% of GDP to about 140%. It's unsustainable.

A race to the bottom will follow. Public debt will rise. GDP will decline. More loans will be needed. Poverty will increase. So will unemployment and human misery.

Taxing depositors is grand theft. At stake are bank deposit guarantees across Europe. Perhaps America's next.

Bad policies beget bad results. At best they buy time. They solve nothing. They assure eventual greater trouble. Connolly was right. The euro's doomed to fail. It's just a matter of time.

Historians one day will reflect. Why did hairbrained policies replace sensible ones? Why wasn't something done to prevent it? Why was so much pain and suffering inflicted? Why aren't responsible policies considered now? Why isn't sustained public rage demanding it? There's no other way to change things. The alternative assures endless pain and suffering.

A Final Comment

On Tuesday, Cyprus legislators overwhelmingly rejected taxing bank deposits. They voted 36 nay, 19 abstentions and one absence. It's anyone's guess what next. Government officials are working on Plan B. It involves Russian support. Observers call it a long shot.

Obvious steps aren't taken. They include exiting the Eurozone, regaining sovereignty, shutting or nationalizing insolvent banks, and forcing debt holders to take a haircut. Expect it sooner or later. Whether Cyprus acts remains to be seen. It's high time other troubled Eurozone countries did. It's the first step to recovery. Delay assures greater trouble.

Stephen Lendman lives in Chicago. He has devoted his time and efforts to progressive causes and organizations, all involved in working for a more humane and just world for all people everywhere, but especially for the most needy, disadvantaged and oppressed. His efforts since summer 2005 have included writing on a broad range of vital topics ranging from war and peace; social, economic and political equity for all; and justice for all the oppressed peoples of the world like the long-suffering people of Haiti and the Palestinians. He also co-hosts The Global Research News Hour, gives occasional public talks, and appears frequently on radio and at times television. He is a Research Associate of the Centre for Research on Globalization. Also visit his blog and listen to The Lendman News Hour on Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening. His new book "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War" can be ordered HERE. He can be reached at

Photo: Katia Christodoulou/EPA. URL:


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