M.E. Synon

Cyprus: This isn’t a tax, it’s a bank raid

Cyprus: This isn't a tax, it's a bank raid
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You know this levy on Cyprus bank deposits? It’s not a levy. A levy is a kind of tax, and what is happening to the people with bank deposits in Cyprus is no kind of tax, although today the European Commission spokesmen have been insisting it is.

How can it be a tax when the depositors are going to be ‘compensated’ with shares in the bank? I mean, when you pay your income tax, George Osborne doesn’t compensate you with shares in RBS.

No, what’s happening in Cyprus — assuming that the Cypriot parliament is just as gutless as the new Cypriot president, Nicos Anastasiades, in capitulating to eurozone demands — is nothing but the seizure of private assets for the benefit of the euro project (and for the benefit of Angela Merkel in the coming elections, which here in Brussels means the same thing).

But the seizure is even more than that: it is the nullification of the EU law which requires that all bank deposits up to the value of €100,000 be guaranteed. Which is why the eurocrats have been repeating today, ‘It’s a tax.’ They can’t admit that the eurozone finance ministers got together on Friday night and just cancelled the law guaranteeing bank deposits.

The eurocrats’ line is that taxes are the business of the governments of member states, and so this levy of €5.8bn in private bank deposits does not set aside EU law, it is merely the imposition of a tax by Cyprus.

Here is a euphemism doing the rounds in Brussels today: all that has happened is ‘the Cypriot authorities have decided to mobilise internal resources.’

The most questionable part of that is ‘have decided.’ The Cypriot authorities who 'have decided' were in fact just one man, Anastasiades. The report is that he was kept in a room near the top of the European Council building on Friday night. Two floors down the eurozone finance ministers met and decided what he would decide.

Either he agreed to gouge the bank deposits of everyone on Cyprus, or Mario Draghi would cut off the emergency liquidity from the European Central Bank. Cypriot banks would fail. Cyprus would be forced to leave the eurozone.

Anastasiades caved in.

Which does make you wonder if any eurozone president or prime minister has any manhood left at all. The correct response to such a threat from eurozone finance ministers is to open your jacket and display the explosives you have strapped to your waistcoat: eurozone bank failures, eurozone collapse, Merkel dead at the polls. ‘Tell Mario to make my day.’