Tuesday, 19 March 2013

Cyprus shows MEPs useless but Putin holds the whip hand

Del Young pointed out to me why the LibDem flame haired chair person of the MEP economic committee was so miffed on Monday's Daily Politics. She thinks she is a big cheese in EU economic policy and she obviously had not been consulted by the Eurocrats. Quite, the Eurocrats are talented, well qualified and clear in their policies, everything La Bowles is not.

Putting the boot into the Russians was not a smart move by the Germans. Have they forgotten how the Russsians re-modelled Berlin in 1945? Have they also forgotten where the EU gas comes from and that Putin can turn off the gas any time he chooses!

Reuters today  report:

(Reuters) - Russia's envoy to the European Union likened a proposed tax on Cypriot bank deposits on Tuesday to forceful expropriation and said it could lead to the collapse of the Cypriot banking system.

The bank deposit tax, part of a bailout for Cyprus agreed by the euro zone on Saturday, "seems similar to forceful expropriation", , Vladimir Chizhov told reporters in Brussels, in a video conference from Moscow. "The principle ... is wrong."

"This decision is dangerous because of possible social repercussions in Cyprus and it is dangerous in terms of triggering possible domino effects in euro zone countries," he said, speaking through an interpreter.

"And there is another threat. When the banks open, people will rush to withdraw their deposits - that's another threat - and then the whole banking system can collapse," he said.

Russians account for much of the billions of euros held in Cypriot banks by foreign depositors. It banks are heavily exposed to the island.

Although it is not formally on the agenda, Chizhov said he expected the Cyprus issue to be raised in talks between the Russian government and the European Commission in Moscow on Thursday and Friday.

end quote

There is also the question of the promised Russian loan which may not now materialise. The Russians have been big players in Cyprus in recent years, something the EU ruling Franco Prussian elite resent but the sooner they realise Putin has the whip hand the better. If they think they can take Russian mafia money and nothing will happen to them or their families they are mistaken. The mafia has its own way of   extracting payment when it is wronged.

Russian authorities have denied rumours that the Kremlin might offer more money, possibly in return for a future stake in Cyprus's large but as yet undeveloped offshore gas reserves, which have raised the island's strategic importance. Unlike the UK they are not going to throw good money after badf

It was inevitable that at some stage EU geo political ambitions would collide with a real super power state. I did not think it would happen in Cyprus but that is what is happening and that is the real danger in the EU's ambitions. They will take on a real super power and lose.

The BBC ran a report on their 6 pm news prior to the Cypriot parliament vote against the backdrop of a hostile group of demonstrators making their feelings about the EU, its officials and particularly Germans very clear. The organisation set up to bring peace to Europe has failed and we are only at the begining of this process of this failure. The EU have waived the rules many times without punishment. This time the markets will punish them severly and as always its the ordinary people who will have to take the pain.

Sky at 7pm reported the Cypriot MPs had voted overwhelmingly to reject this tax raid. A few abstained and no one voted in favour. They interviewed one Cyprus MP who said the Germans were responsible for the two world wars and were now starting a third by economic power and when challenged on his back up plan repliedthat whatever it cost he would stand up for their countries freedom. Would that our political elite would make similar statements and give us something to get behind.

The Spanish equity index fell 2.5% today. Sterling rose 0.5% against the Euro. These trends will continue tomorrow unless there is a real rethink by the EU. 12 bn euro is peanuts by EU standards but this is now being driven by German electoral considerations. Merkel has a general election in the Autumn to win.

Enough for now. 

1 comment:

Jake said...

Of Course you are right about Spain, the country is in a right mess at the moment, in some cases bucking the market on property prices didn't help, empty properties everywhere and a lot of lost equity on property they can't sell, young people in rural areas are finding it difficult to get work, they need driving licences to travel, it's become to expensive like in the UK, they are all being ripped off by thses transport departments due to legislation, I see little hope of change for ordinary people in spain at the moment.