FacebookTwitterGoogle+RedditEmail

So Much for the Sanctity of Bank Deposits

by SERGE HALIMI

Paris.

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 Serge.Halimi@monde-diplomatique.fr

Notes.

(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 mondediplo.com. 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

More articles by:
Weekend Edition
July 29, 2016
Friday - Sunday
Michael Hudson
Obama Said Hillary will Continue His Legacy and Indeed She Will!
Jeffrey St. Clair
She Stoops to Conquer: Notes From the Democratic Convention
Rob Urie
Long Live the Queen of Chaos
Ismael Hossein-Zadeh
Evolution of Capitalism, Escalation of Imperialism
Margot Kidder
My Fellow Americans: We Are Fools
Phillip Kim et al.
Open Letter to Bernie Sanders from Former Campaign Staffers
Ralph Nader
Hillary’s Convention Con
Lewis Evans
Executing Children Won’t Save the Tiger or the Rhino
Vijay Prashad
The Iraq War: a Story of Deceit
Chris Odinet
It Wasn’t Just the Baton Rouge Police Who Killed Alton Sterling
Brian Cloughley
Could Trump be Good for Peace?
Patrick Timmons
Racism, Freedom of Expression and the Prohibition of Guns at Universities in Texas
Gary Leupp
The Coming Crisis in U.S.-Turkey Relations
Pepe Escobar
Is War Inevitable in the South China Sea?
Norman Pollack
Clinton Incorruptible: An Ideological Contrivance
Robert Fantina
The Time for Third Parties is Now!
Andre Vltchek
Like Trump, Hitler Also Liked His “Small People”
Serge Halimi
Provoking Russia
David Rovics
The Republicans and Democrats Have Now Switched Places
Andrew Stewart
Countering The Nader Baiter Mythology
Rev. William Alberts
“Law and Order:” Code words for White Lives Matter Most
Ron Jacobs
Something Besides Politics for Summer’s End
David Swanson
It’s Not the Economy, Stupid
Erwan Castel
A Faith that Lifts Barricades: The Ukraine Government Bows and the Ultra-Nationalists are Furious
Steve Horn
Did Industry Ties Lead Democratic Party Platform Committee to Nix Fracking Ban?
Robert Fisk
How to Understand the Beheading of a French Priest
Colin Todhunter
Sugar-Coated Lies: How The Food Lobby Destroys Health In The EU
Franklin Lamb
“Don’t Cry For Us Syria … The Truth is We Shall Never Leave You!”
Caoimhghin Ó Croidheáin
The Artistic Representation of War and Peace, Politics and the Global Crisis
Frederick B. Hudson
Well Fed, Bill?
Harvey Wasserman
NY Times Pushes Nukes While Claiming Renewables Fail to Fight Climate Change
Elliot Sperber
Pseudo-Democracy, Reparations, and Actual Democracy
Uri Avnery
The Orange Man: Trump and the Middle East
Marjorie Cohn
The Content of Trump’s Character
Missy Comley Beattie
Pick Your Poison
Kathleen Wallace
Feel the About Turn
Joseph Grosso
Serving The Grid: Urban Planning in New York
John Repp
Real Cooperation with Nations Is the Best Survival Tactic
Binoy Kampmark
The Scourge of Youth Detention: The Northern Territory, Torture, and Australia’s Detention Disease
Kim Nicolini
Rain the Color Blue with a Little Red In It
Cesar Chelala
Gang Violence Rages Across Central America
Tom H. Hastings
Africa/America
Robert Koehler
Slavery, War and Presidential Politics
Charles R. Larson
Review: B. George’s “The Death of Rex Ndongo”
July 28, 2016
Paul Street
Politician Speak at the DNC
FacebookTwitterGoogle+RedditEmail