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So Much for the Sanctity of Bank Deposits



Everything was becoming impossible. It was impossible to increase taxes because that would discourage “entrepreneurs”. It was impossible to protect a country against commercial dumping by low wage countries, as that would contravene free trade agreements. It was impossible to impose even the tiniest tax on financial transactions; most states would need to support it in advance. It was impossible to reduce VAT, as Brussels would have to agree to that.

On 16 March, everything changed. Those orthodox institutions, the European Central Bank (ECB), the International Monetary Fund, the Eurogroup and the German government led by Angela Merkel forced the reluctant Cyprus authorities to take a step which, had it been taken by Hugo Chávez, would have been deemed dictatorial, tyrannical, a blow to liberty, and would have prompted angry editorials. The step? Automatic withdrawals from bank deposits. The rate of confiscation, initially set at 6.75% to 9.90%, was almost a thousand times as much as the Tobin tax that has been a hot topic for 15 years.

So in Europe, where there’s a will there’s a way. Provided of course that the right target is chosen: not shareholders, not creditors, but the holders of deposit accounts in debt-ridden banks. It is so much easier to rob a pensioner in Cyprus (on the pretext that the real target is a Russian mobster hiding in a tax haven) than it is to extract money from a German banker or a Greek armaments manufacturer or a multinational with dividends tucked away in Ireland, Switzerland or Luxembourg.

Angela Merkel, the IMF and the ECB are forever talking about the imperative need to restore creditors’ “confidence” and the impossibility of increasing public expenditure or renegotiating sovereign debts: the financial markets would come down on any deviation. But how much confidence is it possible to have in the single currency and the sacrosanct guarantee of bank deposits when customers of a European bank can wake up to find that part of their savings has disappeared overnight?

So the 17 member states of the Eurogroup took the unthinkable step. And they will do it again: all citizens of the European Union must realise they are the target of a financial policy determined to rob them of the fruits of their labours on the pretext of balancing the books. Local puppets in Rome, Athens and Nicosia appear resigned to carrying out orders from Brussels, Frankfurt or Berlin with the reward of public rejection (1).

But events in Nicosia should have left the people in Italy, Greece and Cyprus with more than a deep sense of bitterness: they now have the liberating knowledge that, for them too, anything is possible. Perhaps the embarrassment of some European ministers after their attempt to use force betrayed a fear that they had unwittingly obliterated 30 years of lectures that government should be powerless. Now we have been reminded government can act forcefully, we are free to contemplate other harsh measures. Germany might not like them. Their targets might be wealthier than modest savers in Nicosia.

SERGE HALIMI is director of Le Monde Diplomatique. He has written several books, including one  on the French press, Les nouveaux chiens de garde and another on the French left in the 20th century – Quand la gauche essayait – both are fine works.  He can be reached at


(1) See “Fate of Island Depositors was Sealed in Germany”, Financial Times, London, 18 March 2013. None of the Cypriot members ofparliament voted for the Eurogroup plan.

This article appears in the excellent Le Monde Diplomatique, whose English language edition can be found at This full text appears by agreement with Le Monde Diplomatique. CounterPunch features two or three articles from LMD every month.

Serge Halimi is president of Le Monde diplomatique

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