Large Depositors Now Decapitated to 77.5% of Savings!
E.U. “Stealth” Raid on Russian, Eastern European Wealth
The Long Reach of the E.U. Banksters To Grab up to 77.5% of Depositor’s Funds in Romania, Serbia, Ukraine, Malta, China, Russia
The thing to remember is that the Cyprus banks did business in many countries other than Cyprus. The Bank of Cyprus has branches in the Ukraine, Romania, Russia, the UK, and the Channel Islands, as well as representatives in many other cities in the Eastern European area. The people in those areas who thought they were outside of the EU bankster’s area of influence were wrong, as they are finding out, much to their distress. Their deposits will lose, just like the people who actually live in Cyprus.
The Laiki Bank, or Cyprus Popular Bank, the second largest in Cyprus, was turned into a “bad” bank by the EU who illegally and fraudulently seized the bank. Laiki was stuck with all the bad Greek Bonds, derivative and other similar debt. The accounts under 100,000 euros were moved to the Bank of Cyprus, while those accounts over 100,000 euros were held in the “bad” bank and readied for the guillotine, and what now is reported by the N.Y. Times, a 77.5% beheading, converting their cash money into frozen shares, or “equity” that cannot be sold for years or maybe never.
Phoney propaganda reports in the U.S. press tried to convince readers that the people getting screwed were a bunch of foreign mobsters – mainly Russian mobsters who were “hiding” vast amounts of money in these “secret” Cyprus Banks. Let’s take a look at the reality of this and a short history of the Laiki Bank that has been eviscerated by the EU Banksters.
The Laiki Bank started in 1901 in Cyprus. We are not going to go through every moment of their history, just the highlights that bear on this article. But this is not a “newcomer”, it is a very old bank and was certainly respected in many places in the world. In 1972, the Hong Kong Bank, one of the largest banking groups in the world, thought enough of Laiki to acquire 21.16% of the Bank. They held this all the way until 2006 when the HSBC, the successor to Hong Kong Bank, sold their shares.
In 1983, Laiki Bank bought Grindlays Bank, the oldest and largest foreign bank in Cyprus and the third largest bank there. In 1992 they opened their first European office in Athens, paving the way for expansion. By 1995 they were opening offices in South Africa and Canada, and 1997 saw expansion into Yugoslavia and Russia. In 2001, they opened 5 Branches in Australia; in 2005 they expanded to the Channel Islands and bought the CentroBanko in Serbia. 2007 saw expansion to the Ukraine, Malta and Russia; 2011 saw an office in Beijing, China and investment from major banks and big investors. In fact, the Marfin group pumped in a huge 488.2 million euros in 2011.
The bottom line is that this was a world-class operation, a bank operating around the world, with 439 branches and with 8,464 staff servicing one million three hundred fifty thousand customers. So much for the phoney news from mainstream American media that it was just a few Russian mobsters that got clipped in this operation. No, it was people from Australia, China, Serbia, Greece, Ukraine, Romania, Malta and other countries who are getting thrown under the bus. The burgeoning business communities in the former “Eastern Block”, the up and coming middle class around the world, these are the true victims of this complete scam perpetrated by the Central Bankers of Europe and their partners, the world-wide net of operatives from banks like Goldman Sachs.This is the legacy of the Banksters who are now feasting on the deposits of innocent people around the world like a pack of wild jackals tearing apart an antelope on the plains of Africa.
Massive Demonstrations Rock Cyprus – E.U. Banksters Steal Billions From Depositor’s Accounts – Parliament Shut Out of Process
The “Troika of Doom”, the European Central Bank, the European Union, and the International Monetary Fund (IMF) Sign A Deal With the President of Cyprus Nicos Anastasiades.
The bullies of the so-called “Troika” have signed a piece of paper that they are calling an “agreement” with the new rightist President of Cyprus, Nicos Anastasiades that reorganizes the banking system of Cyprus. The Cypriot Parliament was totally shut out of the process – the voice of the peoples’ representatives silenced and ignored in one of the most heavy-handed operations yet mounted by the European banks and Bilderberg ruling class.
And in one of the most cynical statements made yet this year, Daniel Gros, from the Centre for European Policy Studies, in an interview with Euronews, said that “It was necessary to have some theatre”, letting the Cypriot Parliament to say “no” to the first bailout offer. Then a second deal was signed by the President with the “Troika”, with no vote from the Parliament at all. This is a cynical admission that the entire process is being stage-managed by the euro banksters.
Good Bank vs Bad Bank
The deal as forced on Cyprus is the most onerous that can be imagined for the middle class, the poor, and small business, as well as some of the wealthy and foreign investors. The “Troika” has seized the Second largest bank in Cyprus, the popular Laiki Bank, and divided it into 2 parts, a “good bank” where all deposits under euro 100,000 were transferred and will be given to the remaining Bank of Cyprus, and a “bad bank” which will carry all the debt and derivitives, plus all the accounts that have over euro 100,000. The depositors who have money in the “bad bank” will be subject to a loss of their funds of up to 40% of their accounts. ECB appointed Bank Gov. Panicos Demetriades, who is also on the ECB board, said that the funds transferred to the “bad bank” will be used to pay off bad debt. In addition, the bond-holders of the Laiki Bank will likely suffer a 100% loss and the bond-holders of the Bank of Cyprus will also take a heavy loss.
Food Markets Slump 50%
The fresh fruit and vegetable markets have dropped 50% in sales. A Euronews video reported that the poor people have been hit hard, now only affording to buy potatoes, just the basics. The banks were completely shut down on March 16th, throwing the population into chaos, with no money to buy anything. On Sunday, March 24th, currency controls allowed a withdrawal of only 100 euros per day. Not only have mass demonstrations rocked the island, but the employees of the now closed Laiki Bank tried to storm the bank. Police kept the employees out by using force. These employees will now be out of work permanently.
In a recent interview, Eurogroup Chief Jeroen Dijsselbloem, said that Cyprus is being used as a “model” for future operations of the ECB that might be put on to other countries, probably referring to the problems of the “P.I.G.” nations. This admission caused an uproar in the E.U. as the ruling elites were upset that the Eurogroup Chief had let the cat out of the bag, so to speak.
With the collapse of the financial system, Cyprus now faces a rolling crises, poverty, unemployment, business failure, and a total dissolution of trust in the banking system. Now the entire world knows that their deposits in any bank can evaporate in an instant. Likewise the investors in the banks themselves, the shareholders and bondholders can easily be hung out to dry by the big Central Banks. Meanwhile, the Wall Street derivatives peddlers who caused all this get off scot free.
As the global economic crisis—now in its sixth year—drags on, the rich and powerful are still sticking with the same old formula: Do whatever is necessary to save the banks and make poor and working people pay, one way or another. In recent days, a looming financial collapse in the Eastern Mediterranean island country of Cyprus emerged as the latest flashpoint.
In February 2012, a second bailout for Greece included a partial default of the country’s debt, called—euphemistically—a “haircut” and also “private sector involvement.” This was supposed to help make the debt sustainable and avert Greece’s exit from the Eurozone, which would likely have far worse consequences for the finance capitalists involved in the deal.
Last year’s default imposed major losses on Cyprus’s biggest banks, which had used large amounts of its depositors’ money to “invest” in Greek bonds. Cyprus then became the fifth country in the Eurozone—the 17 countries that use the euro currency—to seek international assistance for bailing out its banks. The bailout money required—eventually amounting to 10 billion euros (about $13 billion)—was to be provided by the “troika”—a bloc composed of the International Monetary Fund, European Central Bank and European Union.
Cyprus—outside of the Turkish-controlled northern section of the island—has close political, economic and cultural ties with Greece, almost to the point of being a protectorate. The Cypriot banking sector has been teetering on the verge of collapse ever since the effects of the partial default began to be felt. The fear among the rulers of Europe is that this would cause a full sovereign default and force Cyprus out of the Eurozone, a politically unprecedented development that would have potentially devastating ripple effects.
Cyprus, with a population of roughly 1 million, is among the smallest countries to use the common currency. Since 2009, the Eurozone has been consumed by what has been termed a “debt crisis” that has sent unemployment rates, poverty and general misery skyrocketing across Europe. Although the corporate media portrays the situation as a consequence of out-of-control social spending, the Eurozone is suffering from the generalized effects of the world crisis of capitalism exacerbated by high levels of government borrowing, financial speculation on that debt and the highly uneven development of member states.
From 2008 until the end of February, Cyprus was led by President Dimitris Christofias of the Progressive Party of Working People (AKEL). Although AKEL refers to itself as a communist party—Christofias himself received his doctorate in the Soviet Union—it has adopted a bourgeois electoral and parliamentary approach to dealing with the island nation’s debt crisis. Christofias put through three austerity packages but was unwilling to accept the troika’s terms for a bailout deal.
Nicos Anastasiades of the right-wing Democratic Rally party promised in the lead-up to the February election to negotiate an acceptable deal with the troika. This enabled him to beat the AKEL candidate and become the new president of Cyprus. Anastasiades signaled his intention to finalize a bailout deal as soon as possible and immediately began intensive negotiations.
Last week, Anastasiades announced that he had reached a jarring agreement with the troika. In return for the troika’s bailout money, Cyprus would have to conduct a “bail-in” and seize 6.7 to 9.9 percent of all bank deposits in the country to raise 5.8 billion euros (about $7.5 billion). Doing away with the veneer of “competitiveness,” “restructuring” and “fiscal adjustment” that other austerity measures have been cloaked in, the troika proposed outright theft that would be felt most by poor and working people.
However, the prospect of such blatant robbery was rejected by virtually all sections of Cypriot society. The working class was outraged that what little savings they had managed to scrape together would be diminished to pay for the capitalists’ crisis. But the ruling class in Cyprus also feared losing their recognition as a tax haven for offshore millionaires and billionaires—a cornerstone of the Cypriot economy.
The parliament of Cyprus bowed to this near-unanimous domestic pressure and refused to endorse the plan—President Anastasiades’ deputies abstained and every other lawmaker voted no. The crisis reached its peak as the country’s banks were closed to prevent massive withdrawals and capital flight.
Referring to German Chancellor Angela Merkel, the Cypriot president reportedly told European Economic and Monetary Affairs Commissioner Olli Rehn: “When I warned you that there would not be a parliamentary majority to pass the agreement, you didn’t want to listen. Give my regards to Mrs. Merkel.” At a subsequent meeting of European finance ministry officials, a French representative lamented, “The [Cypriot] parliament is obviously too emotional and will not decide on anything.”
The government of Cyprus, scrambling to avert a default and Eurozone exit, pursued a multifaceted bargaining strategy in an attempt to force the troika to soften its demands. It proposed stealing pension funds and publicly owned state assets to create an outrageously named “solidarity fund,” which would also include assets from the Church of Cyprus. This was supposed to raise the 5.8 billion euros required by the troika and render the “bail-in” unnecessary.
The Cypriot government also attempted to leverage the hundreds of billions of cubic meters of natural gas recently discovered in the waters south of the island nation. It was prepared to offer large stakes in future gas production to capitalists willing to immediately put up the money. Many portrayed the sale of gas reserves, which rightfully belong to the Cypriot people, as Cyprus’s ace in the hole.
However, there are several problems that made this proposal ultimately untenable. First of all, the necessary infrastructure—which would cost at least $36 billion—would not be in place until at least 2018 to begin production. At that point, the market will likely be flooded with gas from the United States, Australia and parts of Africa, largely due to the explosion in the practice of hydraulic fracturing or “fracking.” Finally, Turkey, which has effectively controlled Northern Cyprus since a war in 1974, is likely to launch an immediate and aggressive legal challenge to the South’s right to exploit the gas reserves.
President Anastasiades hoped to play Russia and the European Union against each other to strengthen his own bargaining position, weakening the troika by exploring the possibility of a Russian-financed bailout.
Politically, President Anastasiades hoped to play Russia and the European Union against each other to strengthen his own bargaining position, weakening the troika by exploring the possibility of a Russian-financed bailout. These two world powers have conflicting geo-strategic interests, finding themselves on opposite sides of major developments like the civil war in Syria and NATO’s “defensive” missile shield in Eastern Europe. Russia sees in the Eurozone debt crisis an opportunity to expand its influence. It already extended a $3.3 billion loan to Cyprus in 2011, and Russian state energy company Gazprom has made moves to acquire the Greek national gas company DEPA, which is, ironically, slated for privatization under orders from the troika.
Russian deposits larger than GDP
Many Russian oligarchs stash huge sums of money in Cypriot banks to evade taxes—amounting to $26 billion, which is larger than the Cyprus’s entire GDP. This gives Russia a tangible economic interest in the stabilization of Cyprus’s economy. The Russian ruling class bitterly opposes the idea of a deposit tax, especially on large accounts
However, Cypriot overtures to Russia were ultimately unsuccessful as diplomats were unimpressed at offers of partial control over the island country’s gas reserves. Some members of the Russian capitalist class also seemed to be confident that they could avoid losing up to 40% of their deposits. Prominent millionaire Alexander Lebedev dismissed the issue as “not worth talking about.” He added: “Cyprus was always a transit jurisdiction—money would pass through and then go to Lithuania, Latvia, Belize, Switzerland, everywhere. There are plenty of ways [to avoid capital controls]. … Certain schemes can be put into place.”
The Russian government nevertheless continues to take a politically assertive stance, warning the troika that it may swap a part of its foreign reserves held in euros for another currency.
‘Bail-in’ retained in modified form
With the European Central Bank threatening to cut off massive cash infusions, called Emergency Liquidity Assistance, the Cypriot president turned back to the troika for the desperately needed bailout money and finally reached a deal on March 25. The “bail-in” deposit tax was retained in the final version but in a modified form- affecting up to 40% of deposits of more than 100,000 euros (about $128,000). While this may seem like a pro-worker decision, it simply sets the stage for the kind of devastating attacks on the rights of poor and working people in Cyprus that have already been seen across Europe. The capitalist rulers of the Eurozone also seem to have wanted to punish Russia for meddling in its sphere of influence.
Under the deal, the second largest Cypriot bank, Laiki, is to be dissolved and split into a “good” bank composed of its profitable assets and a “bad” bank made up of its nonperforming investments. The “good” bank is to be absorbed by the country’s largest bank, Bank of Cyprus, which will now enjoy nearly unchallenged monopoly status—further proving the Marxist assertion that capital consolidation intensifies during periods of economic crisis.
As usual, European politicians and corporate media commentators refer to the bailout deal as a conclusive settlement to the crisis. This, however, is far from the truth. The Cypriot economy is likely to be plunged into a severe recession as a result of this financial meltdown, further weakening the banking sector and calling into question the effectiveness of the agreement that was just reached. As European Union Economic and Financial Committee Chairman Thomas Wieser bluntly put it at a Eurozone meeting a few days prior to the finalization of the bailout agreement, “The economy is going to tank in Cyprus no matter what.”
As capitalist politicians use the livelihoods of poor and working people in Cyprus as bargaining chips, the only available avenue for struggle is militant, persistent and organized mass action. The rulers of the Eurozone hold all the cards at the negotiating table, but the people have the power in the streets.
Helga Zepp-LaRouche Warns of Chain-Reaction Collapse of the E.U. and Hyper-Inflation. Run On E.U. Banks May Be Next as UK Pensioners Told To Pull Their Funds From E.U. Banks as Currency Controls Loom.
Helga Zepp-LaRouche, in an Emergency International Webcast warned that the crisis in Cyprus is threatening to unravel the entire European Union. She also considers the possibility that this crisis is being created to lead Europe into a “Political Dictatorship” by collapsing the Euro and forcing the people of the European nations into a dictatorship. The present “bank robbery” of the accounts of the average citizens who are asked to take a so-called “hair cut”, meaning that the Central Bank wants to steal 6.75% of their bank funds, is really nothing more than one of the largest bank robberies in history, committed by the European Central Bank and their plutocratic owners. Even more money would be stolen from larger accounts over $100,000. These would be hit with almost 10%.
It is interesting to note that Cyprus is a place where many grey area depositors have money stashed. Rumors abound that both the Russian and Israeli mobs have millions in bank deposits there. It is also rumored that various mafias from the Middle East, Lebanon, Palestine, and France use Cypriot banks. Are these folks going to stand for a “shakedown” by the even bigger mafia – the European Central Bank – Rothschild Axis? Or will there be hell to pay for this act? The Russian, Israeli, Lebanese, and other mobs could easily begin a “pay back” for this treachery. If you see the strangled bodies of E.U. bankers floating down the Seine, you will know that the biggest mob war in modern history has begun.
In addition, any “currency controls”, meaning that depositors will be limited in their ability to withdraw the full amount of funds from their own accounts, will also trigger a complete loss of faith in the E.U. banking system. Indeed, it may already be too late to stem the loss of faith in the system. According to Zepp-LaRouche, the British government has warned its citizens living overseas in European countries to withdraw their pension funds since looming currency controls, bank closures, and bank “holidays” may limit their access to their own funds needed to pay rent, eat, and otherwise survive.
Helga Zepp-LaRouche also warns these arrogant bankers that any planned dictatorship in the European Union is doomed to failure. Millions of people are not going to stand for it. Click on the link below to hear the complete web cast:
Could This Happen Here? The E.U. Wants To Take Money Out of Depositor’s Accounts Without Their Permission! These Are Thieving Banksters Who Should Be Escorted To The Nearest Prison.
Here’s a snip from Ellen Brown’s latest article chronicling the criminal activities of the European Union:
If these worries become really serious, . . . [s]mall savers will take their money out of banks and resort to household safes and a shotgun.
– Martin Hutchinson on the attempted EU raid on deposits in Cyprus banks
The deposit confiscation scheme has long been in the making. US depositors could be next . . . .
Retirement. (Photo: Loz Pycock / Flickr)On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout. Reuters called it “a stunning setback for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, “The voice of the people was heard.”
The EU had warned that it would withhold €10 billion in bailout loans, and the European Central Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks, unless depositors – including small savers – shared the cost of the rescue. In the deal rejected by the legislature, a one-time levy on depositors would be required in return for a bailout of the banking system. Deposits below €100,000 would be subject to a 6.75% levy or “haircut”, while those over €100,000 would have been subject to a 9.99% “fine.”