European Union madness clear with Cyprus tax levy?
About Norman RampartI am an Englishman, originally from a small village in Lancashire where everyone looks the same - even, slightly worryingly, the sheep. I have been residing reluctantly in the general area of London for 38 years. I came here for three weeks, ran out of money and couldn't afford the coach fare home. I believe that an Englishman's home is his castle. Even if it is only a small end of terrace pile of bricks.
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The good people of Cyprus have reacted with shock to the startling news of a one-off levy of up to 10% on personal savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.
Savers could be seen queuing at cash machines amid resentment at the charge.
The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages.
President Nicos Anastasiades defended it as a “painful” step, taken to avoid a disorderly bankruptcy.
The Cypriot leader, who was elected last month on a promise to tackle the country’s debt crisis, will address the nation on Sunday.
While Cyprus may be one of the eurozone’s tiniest economies – its third smallest – there could be serious repercussions for other financially over-stretched economies, such as those of Spain and Italy.
The point of the levy is as a caution to lenders to banks that they should take care where they place their funds, and avoid banks that overstretch themselves – as Cypriot banks apparently did
Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region’s debt crisis.
It appears that the heavy presence of Russian money in Cypriot banks was a factor in imposing the levy.
People in Cyprus with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said.
Those with greater sums will lose 9.9%.
Depositors will be compensated with the equivalent amount in shares in their banks.
Reports suggest that depositors will be able to access all of their money except the amount set by the levy.
The levy itself will not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.
Co-operative banks, the only ones open in Cyprus on Saturday, closed after people started queuing to withdraw their money.
At one bank in the Limassol district, a frustrated man parked his bulldozer outside and threatened to break in.
Alan, a British expatriate saver in Cyprus, told BBC News: “This is robbery and we must get the EU to stop this.
“We retire and bring our savings to a bank in Cyprus and they can just take our money away without permission and then say we have shares in a bankrupt bank.”
Maria Zembyla, from Nicosia, said the levy would make a “big dent” in her family’s savings and “erode the investor confidence”.
“Russians that currently keep the economy afloat will leave the country along with their money,” she added.
According to Reuters news agency, almost half of the depositors in Cyprus are believed to be non-resident Russians.
There has also been speculation that Russia could help finance the bailout by extending a 2.5bn-euro loan already made to Cyprus.
The new rule of the eurozone is that you can confiscate 10% from investors without hesitating”
Cyprus Finance Minister Michael Sarris will travel to Moscow for meetings on Monday, reports say.
“My understanding is that the Russian government is ready to make a contribution with an extension of the loan and a reduction of the interest rate,” said the EU’s top economic official, Olli Rehn.
Some Russian-language bloggers reacted angrily to the news of the levy.
“At first, I could not believe this possible in a civilised country,” wrote one on Twitter.
Another commented: “Cyprus is cruelly punishing private investors. The new rule of the eurozone is that you can confiscate 10% from investors without hesitating.”
In Berlin, German Finance Minister Wolfgang Schaeuble called the levy part of the “fair” distribution of the bailout’s burden.
“Profit expectations and risk have to coincide again, this gap [between the two] was one of the grave mistakes of the financial bailout [in 2008], and we have learned the lesson,” he said.
Oh boy. There are STILL people in Britain who think we should stay in the EU? I’m led to believe that President Obama is also keen that we stay in the European Union. I’m so sorry to say this as I quite like the chap, but if that is true he is a dick. If it isn’t true then I will carry on liking him.
Mad as bloody hatters the lot of them….
God Save The Queen and my pension
Thanks to the BBC for story contributions.
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Joe Hagstrom
March 18, 2013 at 2:55 pm
Looks like we’re on opposite sides of this Norman. That doesn’t make you a dick though. Just means you’re incorrect.
Norman Rampart
March 18, 2013 at 5:08 pm
The Mafia are criminals. They know we know it. The Yardies are criminals. They know we know it. The Tongs are criminals. They know we know it.
Now The European Union are criminals but they’re too up their own asses to realise we know it.
You take ordinary peoples money away from their bank account without their permission you are a robber. End of.
Anyone form of Government that comes near my bank account deserves to be removed – by force if necessary.
Calling it a ‘tax’ is bullshit.
Cyprus is being bullied and it’s morally outrageous and, quite possibly, illegal.
Thank God (or the deity of your choice) that Britain never joined the Euro – and pray God (or the deity of your choice) we get the hell out of the EU as soon as possible!!!
Question Joe? (and thanks for saying I’m not a dick)…;-)
If, let’s say, the British Government or perhaps the German Government said they were going to take up to 10% from the bank accounts of American servicemen and women serving in those countries what would your thoughts be? Just wondering mate
James Smith
March 18, 2013 at 3:08 pm
This is the kind of move that brings down governments and promotes revolutions.
Norman Rampart
March 18, 2013 at 5:11 pm
At this rate Europe will see more unrest than it has since WWII never mind the last war in former Yugoslavia.
The ‘Euro’ enforced on so many European countries has been an unmitigated disaster – part of me is delighted as I’m not European, but part of me is very sad for those people.
The EU was a ‘con’ from the start. I think I’ll post why or this comment could go on forever!
Linh
March 18, 2013 at 9:51 pm
Not even considering the morality of just taking everyone’s money, what exactly do they think are going to be the short-term and long-term effects are going to be? Investors are going to completely blacklist Cyprus entirely. The a lot of foreign money they had is going to leave. The effect is going to compound on the banks who have all their cash cows taking their money and leaving. The terms of a foreign bailout shouldn’t cripple them in the process. Sometimes it seems to me like Germany is just sending its economic tendrils everywhere it can.
Joe Hagstrom
March 18, 2013 at 11:56 pm
If England took our deposits we would at most file a protest and condemnation. That’s all anyone does other than England. Venezuela nationalizes oil taking loads of money from American companies. So did Argentina. Argentine just did it to Spain’s Repsol. Nothing happened.
On the other hand, if they had imaginary weapons of mass destruction I guess we’d invade them.
On the other other hand, England went and kicked shit out of Argentina over the Falkland Islands. I guess I better not mess with a Brit.
You are a man of character and intelligence Norman. I would never diss you or try to take one of your islands.
Norman Rampart
March 19, 2013 at 9:04 pm
I’m rather starting to like you old bean which may be a worry eh Mike?
I’m not very good with politics or ‘grey areas’ mate.
There’s ‘right’ there’s ‘wrong’ and no middle ground.
Just me.
Man hug
Bill Formby
March 19, 2013 at 3:30 am
Nah, Norman you are OK. In this country the bankers just take everything they want through politics and redistribute to the politicians as campaign donations. Then they pay themselves through stock options so their income is taxed at the lowest rates possible. The little guys in this country get hit with all kinds of of tricky fees just to put their money in the banks. The rich avoid those fees because they keep large balances there. It is a cute little song and dance they have and the Republicans in this country fight very hard to make sure the status quo is maintained.
Norman Rampart
March 19, 2013 at 9:07 pm
I’m a ‘little guy’ Bill. As a former Union Rep I fought for the ‘little guys’ and I guess i will always say what I think for the little guy.
Cypriots are very much ‘the little guys’.
What’s wrong is wrong and there’s nowt wrong with saying it’s wrong and I will.
Cheers old bean
James Smith
March 20, 2013 at 7:26 am
You are a man after my own heart. I believe in telling the truth as far as I know it. If people don’t like the truth, it’s still the truth.
I often invite others to prove I am wrong. After all, that’s how we learn and grow as people. Disbelief and dislike, I warn them, are not proof.
Bill Formby
March 20, 2013 at 2:03 pm
James, there is no question that the mortgage bankers crashed the economy in 2007 but no one really held them accountable for doing doing so. There is no question that the Bush Administration screwed the federal debt situation up by going into two wars and giving a tax cut at the same time. The problem is that the politics are such that everyone are now saying forget about the truth we want everything fixed now.
Bush and Chaney are, for all intents and purposes, war criminals. That I believe to be the truth, however, no one can or will hold them accountable for it. I firmly believe that had leaders of another less developed country authorized torture and rendition on the same scale as they did we would calling for sanctions against that country and trials of those officials. It would be easy to prove, but that isn’t the point. The point is getting them to trial.
Norman Rampart
March 20, 2013 at 8:31 pm
James is THE MAN here and, much as I really like you Bill, you are wandering off the point a wee bit. Although Bush as a war criminal along with our own Blair is certainly a true point – but not exactly relevent to Cyprus mate ?
What you say may well be true and, I suspect is very true but, frankly, so what?
The IMPORTANT people are US. The ordinary peeps. Politicians and bankers and such only count in THEIR worlds, not ours although unfortunately they always have a DEVASTATING effect on OUR world.
Arguments aside. The EU is wrong.
Anyone who disputes that is clearly insane.
The EU is wrong and can’t be allowed to get away with it.
Even if it means the point of a gun.
There’s ‘right’ and there’s ‘wrong’
The EU are ‘wrong’ and nobody with any common sense could dispute that.
Love n hugs from England x