Cyprus bank bailout: the issues we must consider

Below are some provisional thoughts I’ve been publishing on my Twitter account on the decision taken by the Eurogroup on Saturday morning regarding Cyprus’ request for a bank bailout. I won’t go into the details of the decision because you probably all know what’s being proposed, suffice it to say that we must think beyond what the immediate economic impact of the bail-in/out would be – it is not just a question of taking seven and 10 percent from people’s savings – and consider the wider political and geo-political implications.  

As of 12:00 pm:

12. Melian dialgoue from Thucydides always comes to mind in circumstances in which Cyprus finds itself: http://bit.ly/RugF9n

11. Cyprus socialists announce they will vote against bail-in/out. Will demand renegotiation of terms.

10. In fact, what do Greece, Cyprus, Serbia, all devastated by the EU, have in common? They’re not quite ‘European’, are they.

9. Here’s an ugly truth. Cyprus has been hung out to dry because as Greeks and Orthodox Christians, Cypriots have no powerful allies in EU.

8. Everything Cyprus does must take into account Turkey’s occupation & continuing threats. As in 1974, Turkey sits there waiting for mistakes.

7. UK’s decision to compensate soldiers affected by Cyprus bank levy amounts to direct UK government contribution to Cyprus bail-in/out.

6. Anastasiades is a serial blinker. He blinked in 2004 and backed the Annan plan; and he has blinked again in 2013 over bail-in/out. 

5. Given Anastasiades is fatally damaged, implications for Cyprus issue serious. UN, Turkey and others will have noted his capitulation.

4. Anastasiades, given no depositor haircut promises, barely 2 weeks into presidency, is politically finished. Five years of lame duck.

3. Geopolitics of driving Russians out of Cyprus has also to be considered. EU & others irked by Cyprus’ political & economic links to Russia.

2. Also correct. Troika hitting large (foreign) savers is designed to wreck Cyprus’ economic model as financial centre: http://bit.ly/XNX37W

1. @Frances_Coppola is correct. Anastasiades hit small savers in (futile) effort to preserve Cyprus as financial centre. http://coppolacomment.blogspot.co.uk/2013/03/sowing-wind.html?spref=tw