Saturday

30th Sep 2023

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

IEA says: Go green now, save €11 trillion later

The International Energy Agency finds that the clean energy investment needed to stay below 1.5 degrees Celsius warming saves $12 trillion [€11.3 trillion] in fuel expenditure — and creates double the amount of jobs lost in fossil fuel-related industries.

Opinion

How do you make embarrassing EU documents 'disappear'?

The EU Commission's new magic formula for avoiding scrutiny is simple. You declare the documents in question to be "short-lived correspondence for a preliminary exchange of views" and thus exempt them from being logged in the official inventory.

Latest News

  1. EU women promised new dawn under anti-violence pact
  2. Three steps EU can take to halt Azerbaijan's mafia-style bullying
  3. Punish Belarus too for aiding Putin's Ukraine war
  4. Added-value for Russia diamond ban, as G7 and EU prepare sanctions
  5. EU states to agree on asylum crisis bill, say EU officials
  6. Poland's culture of fear after three years of abortion 'ban'
  7. Time for a reset: EU regional funding needs overhauling
  8. Germany tightens police checks on Czech and Polish border

Stakeholders' Highlights

  1. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  2. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  6. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Join EUobserver

Support quality EU news

Join us