Is EU Stealing Russia's Billions in Cypriot Banks?
Tuesday, 19 March 2013

Euro-zone finance ministers unanimously support the exemption of smaller depositors from a tax that Cypriot authorities are planning to levy on bank accounts to increase the fairness of island's bailout program, French Finance Minister Pierre Moscovici said Tuesday.

As part of a bailout agreement over the weekend with the European Union, the International Monetary Fund and the European Central Bank, Cypriot authorities decided a one-off tax on bank deposits that aims to raise EUR5.8 billion of the total bailout package. The rest of the money would come from the euro zone.


The bank levy, which in effect is stealing, euro-zone finance ministers are calling a "solidarity tax", was criticized for appearing to make savers with deposits up to EUR100,000 pay for the excesses of Cypriot banks, and the announcement of this sparked protests in the Mediterranean island.


Expectledy, Russia's President Vladimir Putin also weighed in on the matter, calling the move "dangerous" "illegal", and "unfair." The proposed move would affect Russian financial institutions, which hold more than $30 billion in accounts there, or roughly 30% of all Cypriot deposits.


Meanwhile, EU officials continued to play the game and pretend that this was a 'sudden' decision that was somehow brought by Nicosia, and not Berlin and Paris. "If the Cypriot government so wishes, we're ready to exonerate depositors with less than EUR100,000 ($129,000) of all taxes levied to finance this program," Mr. Moscovici told reporters Tuesday.


He said a "taboo" had been broken when the Cypriot government decided to tax deposits smaller than EUR100,000, a psychological threshold because this was the amount guaranteed by public authorities were a financial institution to be declared bankrupt.

To make up for the shortfall, Mr. Moscovici suggested Tuesday that higher rates be applied on larger deposits.

Residents in Cyprus own a total of EUR30 billion in deposits there, while non-residents own EUR40 billion, Mr. Moscovici said.

According to financial insiders, similar bank robberies sponsored by Governments are expected in Italy, Spain, even the US where  the FDIC security deposit insurance expired on December 31, 2012.


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