Cyprus evolves a solution - or revolution?

So Cyprus has decided to shaft the rich Russians in preference to the poor Cypriots, preserving deposits under €100K while completely screwing deposits in excess of that amount by setting up a "bad bank" which is going to return cents in the Euro to the large depositors. Apparently this will disproportionately affect rich Russians who bank in Cyprus, and one can only speculate about how well these gentlemen will take the asset confiscation. Belgian poet Herman van Rompuy brokered the deal on behalf of the EU, and so I assume that he doesn't plan to travel to Russia on vacation any time soon.

The Streetwise Professor points to Germany as the ultimate determinant of the direction of the Cyprus settlement and wonders:

So why is Germany so insistent on doing something that inflicts large losses on Russia-and elite Russians? Can the impending German election explain it? Or does Germany think that the fate of the Euro is on the line, and if saving the Euro p*sses off the Russians, so be it. Or is it something else? I wonder.
Now that spring has started in Europe, presumably the Germans aren't too worried about Russia cutting back on gas supplies in retaliation for taking a few €bn from Russian depositors in Cyprus. I do wonder, however, how wise it is for Germany to try playing a long-term strategy game against a country who a) control a significant proportion of the reliable fuel source for Germany and b) play international-level chess when they're in kindergarten. If Russia arranges for an unfortunate drop in gas supply to German in, say, late December, who's going to cover the power deficit?

No comments:

Post a Comment

All comments are subject to retrospective moderation. I will only reject spam, gratuitous abuse, and wilful stupidity.