World View: Germany, Russia Blamed for Cyprus Crisis

World View: Germany, Russia Blamed for Cyprus Crisis

This morning’s key headlines from

  • Cyprus president pleads for nation to accept bailout terms
  • Germany and Russia get blamed for the Cyprus crisis
  • Israel’s government turns hardline pro-settlement on eve of Obama’s visit

Cyprus president pleads for nation to accept bailout terms

 Cyprus President Nicos Anastasiades
Cyprus President Nicos Anastasiades

It’s now become clear that European financial negotiators vastlyunderestimated the widespread furious public reaction to the terms ofthe bailout of Cyprus’s banks that we reported yesterday.

Cyprus President Nicos Anastasiades went on nationwide television onSunday and called it the greatest crisis since the 1974 war withTurkey. It was just a month ago that Anastasiades won the election tothe presidency, and one of his promises was that bank deposits wouldbe completely safe. Now he has to explain that he has no choice butto renege on that promise or face collapse of the banking system andthe economy:

“The first option would have led to a disorderlydefault as a result of the decision by the European Central Bankfor the immediate stop of the emergency liquidity assistance tothe two major Cypriot banks.

The second is the option of a very difficult but controlled andmanageable situation that will eventually lead to thestabilization of the economy and to a rebound.”

Perhaps the biggest shock of all to the public is that small savingsaccounts were reduced by 6.7%. Accounts with totals up to 100,000 eurosare supposed to fully insured in many countries in the euro zone,including Cyprus, just accounts in American banks are supposed to beinsured up to $250,000, but now the safety deposit insurancethroughout Europe has been thrown into question, as it’s clear that agovernment can revoke the insurance on a moment’s notice.

Monday is a long-scheduled bank holiday in Cyprus, and the Parliamentwill debate on Monday whether to even accept the bailout on thoseterms. If not, then Cyprus’ banking system will collapse, unlesssome other solution can be found.

Banks will be closed on Monday, and are scheduled to reopen onTuesday. It’s expected that when the banks reopen, there will bankruns that will deplete all the banks of cash. For that reason, Cyprusis considering keeping the banks closed on Tuesday as well. Cyprus Mail and Kathimerini and Cyprus Central Bank

Germany and Russia get blamed for the Cyprus crisis

Opposition political parties are blaming the European Union,especially Germany, for “vindictive and neo-colonial” practices thatled to the current crisis. According to the leader of the communistAKEL party: “They are attempting to impose their political options onCyprus, leading out country and people to conditions that are similarto those in other countries of the European south.”

Russians are unhappy at being made scapegoats for the Cyprus crisis.A lot of what happened can be attributed to German animosity towardsRussia, particularly the fact that German officials refused to bailout Russian oligarchs who had “dirty money” in Cyprus banks.However, not all Russian money is “dirty,” as there are plentyof legitimate businesses, especially in the energy industry, thathave put money into Cyprus.

Some Russian businessmen are in a panic. Russian businesses andindividuals have deposited tens of billions of dollars in Cyprusbanks, and they are going to lose 10% of those deposits when the banksreopen. For that reason, some Europeans are hoping that Cyprus willreject the bailout, and get another bailout from Russia. Cyprus Mail and AFP

Israel’s government turns hardline pro-settlement on eve of Obama’s visit

After six weeks of tough negotiations, following the election where hedidn’t do as well as he had hoped, Israel’s prime minister BenjaminNetanyahu has assembled a new governing coalition, just two daysbefore President Barack Obama is scheduled to visit. However, much toObama’s likely chagrin, most of the key positions in the governmentwill be filled by pro-settlement hardliners. In particular, thehousing ministry has been given to Uri Ariel, an ultra-nationalistsettler in the Jewish Home party, which completely opposes aPalestinian state. Even the new Defense Minister, Moshe “Boogie”Yaalon, is a military veteran and staunch rightwinger known for hissupport of the Jewish settler movement. Israel’s aggressivesettlement policy has been a major source of world criticism forIsrael, and has substantially heightened tensions with thePalestinians. President Obama has urged Israel to halt West Banksettlement building. Arab News / AFP and Jerusalem Post

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