Grand Theft Cyprus: Part II

Stephen Lendman

Protesters chant slogans outside the Cypriot parliament against a
plan to seize a part of depositors' bank savings, in central Nicosia.

Stephen Lendman: Grand Theft Cyprus (Part I)

Cypriot legislators rejected Plan A. At issue was taxing savings accounts over 100,000 euros 9.9% and small depositors 6.75%. Plan B followed.

On March 21, the Financial Times headlined "Cyprus targets big depositors in bank plan," saying:

On Friday, Cypriot legislators will "debate a 61-page bill on the banking system….(L)awmakers (say) they need more time…."

Seven other bills were tabled. One included banking activity restrictions. Issues regarding check cashing and other transactions were addressed.

The Wall Street Journal headlined "Clock Ticks on Cyprus," saying:

Legislators will consider a plan "to restrict noncash transactions, curtail check checking, limit withdrawals and even convert checking accounts into fixed-term deposits…."

Time is short. On March 21, the ECB said emergency liquidity (ELA) ends Monday. It'll do if agreement isn't reached on raising billions of euros internally.

Eurocrats greeted Cyprus' new initiative cautiously. A statement said:

"The eurogroup stands ready to discuss with the Cypriot authorities a draft new proposal, which it expects the Cyprus authorities to present as rapidly as possible."

"The eurogroup would subsequently, on the basis of a troika analysis that needs to be undertaken, be prepared to continue negotiations on an adjustment programme, while respecting the parameters defined earlier by the eurogroup."

A Wall Street Journal editorial was blunt. Cyprus Popular (Laiki Bank) and Bank of Cyprus are insolvent. They're the island state's two largest banks.

"Let them go bust," said the Journal. Instead of negotiating how to inject capital, "time would be better spent arranging for their bankruptcy."

Cyprus is sick and failing. Eurocrats demand their pound of flesh. Stealing is their favorite way. Bailing out bankers matters most. What Cypriots face could happen anywhere. Grand theft is Western policy.

Ellen Brown said Cyprus' plan "was long in the making." Confiscation schemes aren't limited to Cyprus. She quoted Martin Hutchinson saying:

If insolvency concerns "become really serious….(s)mall savers will take their money out of banks and resort to household safes and a shotgun."

Haircut schemes like Cyprus date from "the 1997 Asian financial crisis," said Brown. At issue are expensive bank failures. Governments balk at bailing out lenders on their own. Creditors are easy pickings. They include "customers with cheque and savings accounts and term deposits."

Banks get bailed out. Savers get sold out. They get IOUs. They're stuck with problems they didn't cause. It can happen anywhere. In America, FDIC deposit insurance doesn't matter. It's worthless. Government diktats have final say.

Financial tyranny overrides promised safety. Profiteers "get off scot-free." Sovereign debt holders and other investors lose nothing. Grand theft reflects policy. Force-fed austerity makes ordinary people pay.

If Cypriot bankers steal depositors' savings, others anywhere can do the same thing. "Precedent will be established," says Brown. Governments can make ordinary people bear burden sharing responsibility. Lots of dirty schemes can be imposed.

"The push to confiscate the savings of hard-working Cypriot citizens is a shot across the bow for every working person in the world…."

It's "a wake-up call to the perils of a system in which tiny cadres of elites call the shots and the rest of us pay the price."

It reflects money power in private hands. It's corrupt and ruthless. It's a cancer endangering freedom. It can't co-exist with democracy. Technocrats control things. Ordinary people are fleeced. They're easy prey. They have no say.

Russian Deputy Prime Minister Arkady Dvorkovich said Cyprus' scheme undermines global banking.

"If such a solution is possible in Cyprus, it's possible everywhere." It "mean(s) there's no place to keep money and that the banking system has stopped working."

He's worried about Russian nationals. Of 68 billion euros in Cyprus banks, about one-third's from non-EU countries. Much comes from Russian depositors.

Economist Howard Davies says "Cyprus exposes (the) folly of eurozone banking union."

"Over the past three years, the EU has shown a remarkable facility for turning problems into crises into catastrophes."

Europe remains "a long way from financial stability." Globalized economies won't escape. Desperation measures are wrongheaded. Responsible solutions aren't chosen. Depositors think savings are safe. Once they learn otherwise, they'll take their money and run. Europe's a house of cards. Money printing madness solves nothing. Robbing ordinary people reflects tyranny. Cyprus is a wakeup call. Most people don't pay attention. They do so at their own risk.

On March 21, Cypriot authorities announced a National Solidarity Fund. It's a thinly veiled scheme. It involves stealing personal savings and pensions. It's about playing fast and lose with state resources. Reports say Eurocrats reject nationalizing state pension funds.

They're against bonds based on future offshore gas deposit revenues. They want insolvent Cypriot banks recapitalized. They prioritize "bail-ins." They favor targeting uninsured depositors. Many are foreign account holders. Thousands of Russians have Cypriot accounts.

Cyprus is more than a small Mediterranean island state. It's a well-known tax haven. It specializes in incorporating offshore companies. European investors and businessmen take full advantage. Companies nominally pay 10% of profits. Clever accountants and lawyers assure lower amounts. Withholding taxes don't apply to dividend payments. No wealth tax is assessed.

Low taxes make Cyprus ideal offshore accounts. Cyprus International trusts are advantaged. They're tax free on income earned offshore. Dividends and interest aren't taxed.

Privacy is guaranteed. Bank employees and others associated with Cypriot banks swear secrecy oaths. Cyprus' central bank requires them.

Cyprus is business friendly. It advantages investors, debt holders and offshore depositors. They enjoy low tax liabilities legally. They do so as long as hairbrained schemes don't target them.

Things are up for grabs. They're in flux. Legislators will decide what's next. Eurocrats must approve it. They demand their pound of flesh. Expect ordinary Cypriots to be hit hardest. It always turns out that way.

Force-fed austerity is policy. When will people harmed say no more? Things that can't go on forever, won't. Economist Herb Stein once said so. It's just a matter of time.

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: Associated Press/


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