Cyprus has certainly shaken up the world.
Our Congress is now addressing concerns over the European Union demands that a percentage of Cypriot deposits be seized before it bails-out the banks on the Mediterranean island. There are reports that Cyprus still may seize bank accounts, but restrict the seizures to large depositors — but even that is unclear at this moment.
When the Cypriot troubles became international news, Professor Jacobson took a reader poll with eye-popping results. Between the “Yes” and the “Lean Yes” options, nearly 90 percent of respondents believe a similar act could happen here.
Now, one representative has offered a “Sense of the House” resolution to assuage American worries.
[Rep. Billy Long (R-Mo.)] Long said Wednesday that his resolution, H.Res. 129, was introduced to ensure the United States never considers a levy on deposits.”The government should not tax people’s private savings accounts, which they have already paid taxes on, especially for the purpose of funding more bailouts,” Long said. “I was shocked by the news that some countries might be considering these kinds of taxes, and I think Congress should say that this kind of tax won’t happen in America.”
At this point, the Missouri representative remains the only sponsor of the resolution.
Meanwhile, Cypriot President Nicos Anastasiades is in a series of emergency meetings in Brussels in an desperate attempt to get a bailout.
Cyprus needs to raise 5.8bn euros (£5bn) to qualify for a 10bn bailout and avoid bankruptcy.The EU’s economics chief Olli Rehn said the island had only “hard choices left” and must agree terms on Sunday.Cypriot leaders are struggling to agree how to raise the money.
Anne Sorock had earlier reported that the lawmakers in Cyprus wisely rejected the original EU proposal to seize assets. However, the political leaders of Cyprus are now massaging the language and proposing to offer Parliament a new alternative for funding the bailout with a “levy”.
Mr. Anastasiades had also briefed Cypriot political leaders on the outline, which is said to call for imposing a hefty one-time tax on bank deposits above 100,000 euros, or about $130,000. Whether that will pass Parliament, whose signoff is needed, remains to be seen.“The situation is very difficult,” the president said in a statement issued early Sunday.
Difficult, indeed. German Finance Minister Wolfgang Schaeuble said that the crisis in Cyprus has, “if anything,” grown worse over the last week and the euro has slipped 0.7 percent against the dollar (the most since the period ended March 1).
And, as the Cypriot president travels to Belgium, it must be noted that some of the island’s citizens view Moscow as a counter to Brussels, especially because Cyprus provides important financial services to wealthy Russians:
Cyprus has until now frozen out Russian interests from offshore gas concessions, snubbing a low bid by Novatek, a Russian company whose directors include Gennady Timchenko, a wealthy oil trader and judo club acquaintance of President Vladimir V. Putin’s. In talks last week in Moscow over a possible loan to Cyprus, Russia made clear that it expected a piece of the gas pie for its own companies, according to Cypriot officials and politicians.
…The Moscow talks yielded no deal and dashed hopes that Russia might ride to the rescue. But many Cypriots still view Russia as a useful counterweight to bullying by Brussels. “We are not a Trojan horse for Russia in Europe, but we are trying to protect our interests like everyone does,” said Petros Zarounas, a diplomatic adviser to the Democratic Party, part of the governing coalition.
Plainly, all eyes remain on Cyprus.
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