Saturday

25th May 2019

EU defiant over €5.8bn raid on Cypriot savings

EU officials remained defiant on controversial plans for a Cypriot bailout on Monday (18 March), the most tumultuous day for the euro so far in 2013.

Following an emergency conference call of eurozone finance ministers on Monday evening, the Eurogroup refused to backtrack on a deal which includes a one-off raid worth €5.8 billion on deposits held in Cyprus' stricken banks.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Dutch finance minister Jeroen Dijsselbloem, who chairs the 17-member euro club, said the deal on offer is fair.

"Cyprus would have faced scenarios that would have left deposit holders significantly worse off," he noted.

However, while the Cypriot government is expected to exempt savers holding less than €20,000, it is still expected to raise the €5.8 billion demanded by creditors one way or another.

This increases the prospect of harsher levies on the wealthiest depositors.

EU sources indicated that a 15.6 percent levy on savers holding more than €100,000 was mooted to protect smaller savers.

Djisselbloem urged Cypriot politicians to make a "swift decision" and to "rapidly implement the agreed measures."

He added that the levy could be applied with more flexibility "provided that it continues yielding the targeted reduction of the financing envelope and….not impact the overall amount of financial assistance up to €10 billion."

The Cypriot parliament is set to vote on the package on Tuesday.

The vote was initially scheduled for Sunday, was postponed to give the government more time to negotiate.

With his centre-right coalition holding 29 of the 56 seats, the newly elected centre-right President Nicos Anastasiades faces an uphill battle to secure a majority after opposition parties signalled they would oppose the deal.

Meanwhile, Cypriot banks will remain closed until Thursday in a bid to prevent a bank run from anxious savers.

In a volatile day for the single currency, the euro on Monday fell to 1.29 against the US dollar, its lowest level in three months, on fears that the Cypriot deal might spark panic among savers in other crisis-hit countries, such as Italy.

Recriminations also intensified as eurozone politicians and central bankers denied responsibility for imposing the deposit levy, which, in its original form, would tax 6.75 percent of savings under €100,000 and 9.9 percent on savings over €100,000.

The bailout plan was condemned by Russia, with billions of euros of Russian money said to be Cypriot banks.

A spokesman for Russian President Vladimir Putin attacked it as "unfair, unprofessional and dangerous" ahead of a visit to Moscow on Wednesday by Cypriot finance minister Michalis Sarris.

For its part, the US government urged the EU to reach an agreement that is "responsible and fair and ensures financial stability."

And the UK government, which was not party to to the euro-using countries' talks, became the first to say it will compensate 3,000 British soldiers stationed on the Mediterranean Island.

It also announced plans to temporarily suspend pension payments to the estimated 18,000 retired Britons in Cyprus, with treasury minister Greg Clark saying that "a normal payment service will resume as soon as the situation in Cyprus becomes clear."

Cyprus heading for bank run after bailout deal

The Cyprus bailout deal on losses for all bank savers - from pensioners to Russian oligarchs - is turning into a bank run, with dangerous implications for other crisis-hit countries.

EU top court backs Canada trade deal in ruling

The European Court of Justice ruled on Tuesday that the EU-Canada free trade agreement, and its controversial dispute settlement mechanism, is in line with the bloc's rules.

News in Brief

  1. UK's May announces June 7 resignation date
  2. Ireland votes for EU election and divorce referendum
  3. Report: May to announce resignation plan on Friday
  4. Leading politicians: time for EU to have female leaders
  5. Poll: Finland's Green party to surge in EU elections
  6. High demand for postal voting in Denmark
  7. Some EU citizens turned away at UK polling stations
  8. Switzerland unlikely to sign draft EU deal

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Latest News

  1. EU election results to trigger top jobs scramble This WEEK
  2. Don't tell the Dutch - but Timmermans 'won'
  3. EU says goodbye to May with 'respect'
  4. Strache scandal: how big a hit will Austrian far-right take?
  5. Italy train row exposes competing views of EU
  6. Dutch socialists on top in first EP election exit poll
  7. No usage data kept for EU parliament's 'Citizens' App'
  8. EU sanctions regime cannot be an 'EU Magnitsky Act'

Join EUobserver

Support quality EU news

Join us