The Cyprus drama has come to an end, for now. A twelfth hour deal was hammered out at one of those many twelfth hour meetings we have become so accustomed to since 2008. The deal was greeted with relief as another crisis and potential euro-exit was averted. But as critics point out, a small Rubicon has been crossed and a taboo broken.
Among the new measures imposed by the Cypriot government, capital controls is one of the most visible. People now can’t take more than €1,000 (£845) out of the country. Iceland introduced similar rules(and still have them) when they where in the deep shit a few years ago. But unlike Iceland, the government in Nicosia will not take on the bankers with law in hand.
Restrictions has also been introduced on bank withdrawals, limiting customers to a maximum of €300 a day and the national bank can no longer cash cheques. The free flow of capital is on the “five freedoms” of the European Union, so this must be some backlash for the freemarketeers.
Cypriot finance minister Michalis Sarris, who just quit his job today, is reported to have said that it will only be for a matter of weeks, but as the example of Iceland shows, that might not be the case. Banking for international customers has been big business in Cyprus and billions of legal and not so legal money has found it’s way to the tax-relaxed beaches of the island. The new restrictions on capital flow can easily put and end to this, as any other eurozone country would offer better conditions.
To reduce the amount of European taxpayers money used on the bailout, a one-off 9.9% levy was imposed on all deposits over the €100,000 threshold and a 6.75% levy on deposits under the threshold. This move is radically new, and can potentially lead to bad things. The EU ends up as some kind of pirate, grabbing a piece of every savers pie in Cyprus.
The raid on the bank account of ordinary people in Cyprus and severe austerity imposed by the Troika will drag the country down in depression as happened to Greece. Apparently no lesson has been learned.
Austerity policies imposed on several countries have devastating effects on life quality for millions. Full time work positions are being replaced by part time and “flexibility” causing economic uncertainty in many households. Severe cuts in public spending and sacking of millions of public sector workers only adds to the bill as new hordes joins the cue of people depending on benefits.
The growing discontent with the Euro and European Union in Britain and other countries should not be swept under the carpet as many of the political elites tries to do. It is not bigoted to worry about the impact a increasingly federal European Union have on democracy in the individual countries. In Britain, EU sceptisism has always had a strong presence in the public. When the crisis have hit, and the shaky economy put under pressure, the only answer from the EU bosses have been more integration, a bank union and a possible finance union in the future. The top brass have shown a remarkable resolve in their unwillingness to take a step back. They want more of what created this mess in the first place, it might be a quick fix but only lead to more trouble down the road.
On the eve of 2012 an Observer poll showed that 56% of Brits wanted to withdraw from the European Union and PM David Cameron have promised a referendum on the question if the conservatives are reelected in 2015.
There is a clear democratic deficit in the EU and the popular anger against transferring more powers to Brussels and Berlin is growing in several countries. Market liberalism has been the prime goal of the EU, now their policies have brought misery and poverty. Another Europe is possible, and indeed sorely needed.