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Tuesday, March 19, 2013

Cyprus Having Second Thoughts About Stealing Money From Citizens' Bank Accounts

By Susan Duclos

All hell broke loose in Cyprus when the news that Greek lawmakers were about to agree to a bailout deal which would require a one-off tax to be levied against bank depositors Accounts with more than €100,000 would have been taxed at 9.9%, those with less at 6.75%.

Citizens were not at all happy to realize that their government was about to literally steal money out of their bank accounts before the banks opened on Monday. Then it was announced the banks would not be opening until later in the week.

"I'm extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans," said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.

"They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple," said a pensioner.

Over the weekend, Russian energy giant Gazprom offered Cyprus a way out.

The proposal states that Gazprom will fund the restructuring of the country’s crippled financial institutions in exchange for substantial control over the country’s gas resources while Cyprus won’t need to take the harsh bailout package offered by the EU.

EU offered a 10 billion euros rescue package to Cyprus with the condition of raising 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in Cyprus. The originally proposed levies on deposits are 9.9 percent for accounts exceeding 100,000 euros and 6.7 percent on anything below that.

It appears that offer was not going to be excepted.

Cypriot President Nicos Anstasiades is not willing to discuss the Russian’s offer according to Newsit who cited an anonymous source close to the President.

“The president is not going to discuss this plan because he wants a solution that will come from the EU,” said the anonymous source.

Lawmakers now are having second thoughts about the deal:

As lawyers in Cyprus questioned the legality of both taxing deposits that are supposed to be insured up to 100,000 euros, and confiscating sums above that, Mr. Anastasiades postponed a parliamentary vote on the package until Tuesday, as signs emerged that lawmakers might not approve. 

In Brussels, the club of 17 euro zone finance ministers that had signed the bailout plan for Cyprus held an emergency conference call Monday evening and tiptoed back from terms of the arrangement, by agreeing to consider a new deal that could lighten the burden for less well-to-do Cypriots. 

In a statement, they said small depositors “should be treated differently from large depositors,” and said they were open to modifying the tax on those with less than 100,000 euros. It also appeared from comments made by officials that the I.M.F. was leaning that way as well.
In other words, the new plan would be to just steal money out of upper income citizens' bank accounts, despite having raised taxes on high-income earners, self-employed professionals and businesses, in January 2013.

Accoding to NBC World News, even that deal might be dying  slow death.

The widely criticized Cyprus bailout deal looked set to collapse despite a last-minute compromise attempt Tuesday, plunging one of the smallest European states closer to financial oblivion.

Lawmakers appeared likely to reject the unprecedented overnight tax on all bank accounts, CNBC reported, even after the government said smaller savers would be exempted.

More at CNBC News.

Trouble is brewing at this point even if the deal is rejected. Just the fact that lawmakers considered this an option for a second, preventing bank depositors from accessing their own money until lawmakers could decided how much they would simply steal and from whom, is going to cast doubt from citizens on how safe their money in any bank.