Greater Grand Theft Cyprus
by Stephen Lendman
Cyprus' economy is being destroyed. It's heading for perhaps the most extreme depression in modern times.
Hit 'em again harder is policy. Cyprus is Exhibit A. It's pound of flesh demanded got greater. " Could it possibly get any worse ," headlined Cyprus Mail?"
Weeks after agreeing to Eurocrat terms, six billion more euros are demanded. A leaked European Commission " Assessment of the public debt sustainability of Cyprus " report revealed it.
At issue are "needs for the recapitalization of the banking sector, the redemption of maturing medium and longterm debt, including loans and fiscal needs," it said.
Another 600 million euros will be raised through higher corporate taxes. Gold reserves sales may raise another 400 million. Eurocrats demand they be sold. Their public debt sustainability report mandates it. Clause 29 states:
"Sale of excess gold reserves: The Cypriot authorities have committed to sell the excess amount of gold reserves owned by the Republic. This is estimated to generate one-off revenues to the state of 400 (million euros) via an extraordinary payout of central bank profits."
Privatizations and privately held debt rollovers will raise more cash. How much remains to be seen.
Cypriots are learning the hard way. Eurozone straightjacket rules entrap them. One size fits all doesn't work. Losing control of monetary and fiscal policy assures disaster. It's just a matter of time. It's hitting Cypriots full-force.
The original 17 billion bailout rose to 23 billion. It exceeds economic output. It's unheard of. According to Eurasia Group group director Mujtaba Rahman:
"There are absolutely no winners from the Cyprus agreement. Every major country and institutional constituency has been hurt, creating the potential for even more toxic and difficult" conditions ahead.
Cypriot officials have to raise more cash than expected. Eurocrats agreed to a nine billion euro bailout. IMF terms add another billion.
Cyprus has to raise 13 billion. It's over double the original amount. Depositors will bear most of the burden. They're already hit hard. Those with over 100,000 euros stand to lose 60% or more of their savings. Some may lose everything.
Small depositors are protected. At least they are so far. Perhaps not going forward. Accounts of all sizes are vulnerable. Bailout terms override promises. They're made and broken.
London's Guardian explained more. Cyprus has to contribute to its own bailout. It's entirely responsible for bearing the extra cost.