Saturday, March 23, 2013
‘Euro is a house of cards waiting to topple’- Nigel Farage
UK Independence Party leaderel Farage (Reuters / Paul Hackett)
According to Nigel Farage, leader of the UK Independence Party,
northern EU leaders realize they risk vast losses if they allow Cyprus,
Greece or any other southern member to fail. To prevent this, they have
resorted to extreme measures - even theft.
RT: Every bailout comes with strings attached. But can Cyprus afford the price the EU has set?
Nigel Farage: What is really happening here is we are having a reconcilable split between the North and the South of Europe. In the North of Europe – Germany, the Netherlands, and Finland – there are very strong political voices saying “We do not want to go on bailing out southern European countries.” And bear in mind that Cyprus is now the fifth country out of 17 that has needed to be bailed out. And that is why the Germans extracted the terms that they did. But I must say that even in my direst predictions in this parliament over the years about the way the EU bosses were behaving, never did I think that they would in a completely unprecedented manner resort to stealing money from people’s bank accounts.
RT: But is that because Europe can’t afford Cyprus to fail?
NF: Well, It can’t afford Cyprus to fail, it can’t afford Greece, Portugal, Spain or Ireland to fail. They know that once one country goes the whole deck of cards will come tumbling down. And countries like Germany will realize absolutely vast losses – possibly as much as one trillion euro.
So, they are prepared now to do literally anything to try to keep the Euro afloat. And that is why they have now resorted to what can only be described as theft.
Now they’ve done it in one country, they are quite capable of doing it in Italy, Spain, Portugal, or anywhere else.
And the message that sends to people who have got savings in banks in those countries – certainly if I was them is “get your money out while you can.”
RT: In 2010, almost twice as much British money went to Cyprus as transfers from Russia - according to the country's official website. Haven't you got a responsibility to safeguard your constituents’ interests there?
NF: The government has had nothing to say on that subject whatsoever. And what the government ought to do is to help the British people living down there – mostly pensioners.
But what the British government needs to do is to say to the hundreds of thousands Brits that are living Southern Spain, that “For goodness sake, get your money out of that country and have a monthly transfer to pay your bills. And that is what I’d like to see [Britain's Chancellor of the Exchequer] George Osborne do in budget statement in the House of Commons tomorrow.
RT: And what sort of message is this sending to foreign investors? Essentially, are not they being taxed to cure a crisis they had no part in causing?
NF: Don’t invest in the Eurozone! Do not invest anywhere in Eurozone. You’ve got to be mad to do so, because it’s now run by people who don’t respect democracy, who don’t respect the rule of law, who don’t respect the basic principles upon which western civilization is supposed to be based.
I think that this German-dominated and led decision is the worst decision we’ve seen so far in this whole Eurozone crisis.
RT: Various EU leaders have said recently that they are not happy with the way tax havens work. Is something being done about that now?
NF: The EU has been unhappy about so-called tax havens for a very long time. Ironically, whilst continuing to turn a blind-eye to many activities that go on in Luxemburg. I mean Cyprus finds itself right now in a very difficult, desperate position. But I would say that it is better to officially go bankrupt, to default on international bond obligations. And to do that best to keep a banking industry and to keep some confidence in that country.
RT: Every bailout comes with strings attached. But can Cyprus afford the price the EU has set?
Nigel Farage: What is really happening here is we are having a reconcilable split between the North and the South of Europe. In the North of Europe – Germany, the Netherlands, and Finland – there are very strong political voices saying “We do not want to go on bailing out southern European countries.” And bear in mind that Cyprus is now the fifth country out of 17 that has needed to be bailed out. And that is why the Germans extracted the terms that they did. But I must say that even in my direst predictions in this parliament over the years about the way the EU bosses were behaving, never did I think that they would in a completely unprecedented manner resort to stealing money from people’s bank accounts.
RT: But is that because Europe can’t afford Cyprus to fail?
NF: Well, It can’t afford Cyprus to fail, it can’t afford Greece, Portugal, Spain or Ireland to fail. They know that once one country goes the whole deck of cards will come tumbling down. And countries like Germany will realize absolutely vast losses – possibly as much as one trillion euro.
So, they are prepared now to do literally anything to try to keep the Euro afloat. And that is why they have now resorted to what can only be described as theft.
Now they’ve done it in one country, they are quite capable of doing it in Italy, Spain, Portugal, or anywhere else.
And the message that sends to people who have got savings in banks in those countries – certainly if I was them is “get your money out while you can.”
RT: In 2010, almost twice as much British money went to Cyprus as transfers from Russia - according to the country's official website. Haven't you got a responsibility to safeguard your constituents’ interests there?
NF: The government has had nothing to say on that subject whatsoever. And what the government ought to do is to help the British people living down there – mostly pensioners.
But what the British government needs to do is to say to the hundreds of thousands Brits that are living Southern Spain, that “For goodness sake, get your money out of that country and have a monthly transfer to pay your bills. And that is what I’d like to see [Britain's Chancellor of the Exchequer] George Osborne do in budget statement in the House of Commons tomorrow.
RT: And what sort of message is this sending to foreign investors? Essentially, are not they being taxed to cure a crisis they had no part in causing?
NF: Don’t invest in the Eurozone! Do not invest anywhere in Eurozone. You’ve got to be mad to do so, because it’s now run by people who don’t respect democracy, who don’t respect the rule of law, who don’t respect the basic principles upon which western civilization is supposed to be based.
I think that this German-dominated and led decision is the worst decision we’ve seen so far in this whole Eurozone crisis.
RT: Various EU leaders have said recently that they are not happy with the way tax havens work. Is something being done about that now?
NF: The EU has been unhappy about so-called tax havens for a very long time. Ironically, whilst continuing to turn a blind-eye to many activities that go on in Luxemburg. I mean Cyprus finds itself right now in a very difficult, desperate position. But I would say that it is better to officially go bankrupt, to default on international bond obligations. And to do that best to keep a banking industry and to keep some confidence in that country.
Taxpayers Are GIVING Big Banks $83 Billion A Year!
source
On television, in interviews and in meetings with investors, executives of the biggest U.S. banks — notably JPMorgan Chase & Co. Chief Executive Jamie Dimon — make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.
So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?
Granted, it’s a hard concept to swallow. It’s also crucial to understanding why the big banks present such a threat to the global economy.
Let’s start with a bit of background. Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.
Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers — Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz — put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.
The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry — with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.
Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.
Once shareholders fully recognized how poorly the biggest banks perform without government support, they would be motivated to demand better. This could entail anything from cutting pay packages to breaking down financial juggernauts into more manageable units. The market discipline might not please executives, but it would certainly be an improvement over paying banks to put us in danger.
On television, in interviews and in meetings with investors, executives of the biggest U.S. banks — notably JPMorgan Chase & Co. Chief Executive Jamie Dimon — make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.
So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?
Granted, it’s a hard concept to swallow. It’s also crucial to understanding why the big banks present such a threat to the global economy.
Let’s start with a bit of background. Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.
Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers — Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz — put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.
Big Difference
Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry — with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.
Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.
Once shareholders fully recognized how poorly the biggest banks perform without government support, they would be motivated to demand better. This could entail anything from cutting pay packages to breaking down financial juggernauts into more manageable units. The market discipline might not please executives, but it would certainly be an improvement over paying banks to put us in danger.
UPDATE: New Bill Requires Gold & Silver Registration
The slippery slope to confiscation has begun.
Gold and silver buyers could soon have to register with the state of Illinois.
Rick Santelli provides an update on legislation that requires every gold and silver transaction to be registered with the State. Here are the basics. The bill, officially called SB-3341, was introduced in 2012, immediately passed the Illinois Senate and is now awaiting action by the House. Click here for the latest status update on SB3341...
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Background and text of the bill:
A Bill to Register Buyers of Gold and Silver Coins
Creates the Precious Metal Purchasing Act. Provides that a person who is in the businessof purchasing precious metal shall obtain a proof of ownership, create a record of the sale, and verify the identity of the seller. Provides that a person who is in the business of purchasing precious metal shall not pay for the precious metal in cash and shall record the method of payment. Requires the purchaser to keep a record of the sale for one year or, if the purchase amount is over $500, for 5 years. Provides that a person who violates the Act is guilty of a petty offense and subject to a fine not exceeding $500. Provides that the Attorney General may inspect records, investigate an alleged violation, and take action to collect civil penalties.
To read the entire bill, click here.
Infowars
Prior to the failure of the Illinois legislature to force citizens to register outlawed firearms, the state moved to place restrictions on the sale of gold. Santelli ties the floundering legislation to FDR’s 1933 Executive Order 6102 confiscating gold and setting the stage for Richard Nixon severing the connection between gold and the dollar in 1971.
“So let me get this straight,” writes Mike Krieger of Liberty Blitzkrieg. “First they want gun registration and now precious metal registration? I’m sure the government would only use such information in our best interests, because as we all know: Your Government Loves You. Sounds reasonable, after all, only ‘terrorists’ buy guns and gold anyway.”
Check out what they are now doing in Houston:
RED ALERT: The Gold Police Have Arrived!
Bernanke Gold Varmint by William Banzai7...
S&P Downgrades Cyprus’ Long-term Rating to ‘CCC’
MOSCOW, March 22 (RIA Novosti) - Standard & Poor's Ratings
Services has lowered its long-term sovereign credit rating on the
Republic of Cyprus to 'CCC' from 'CCC+' with a negative outlook, the
ratings agency reported.
S&P has also affirmed its short-term sovereign credit rating on Cyprus at 'C'.
“The downgrade mainly reflects our view of the acute problems in Cyprus' banking sector. Since early 2012, Cyprus' domestic banks have repeatedly suffered losses because of write-downs on their holdings of Greek government bonds and credit losses on their Greek and domestic private-sector loans,” the agency said in a report on Thursday.
Anxiety spread across Europe on Tuesday after the Cypriot parliament overwhelmingly rejected a windfall levy on bank accounts that international creditors, including the EU and the International Monetary Fund, had set as a condition for providing a 10 billion euro ($13 billion) bailout.
The bill rejected this week envisioned a 6.75 percent levy on deposits of less than 100,000 euros ($128,950) and 9.9 percent on larger deposits.
S&P has also affirmed its short-term sovereign credit rating on Cyprus at 'C'.
“The downgrade mainly reflects our view of the acute problems in Cyprus' banking sector. Since early 2012, Cyprus' domestic banks have repeatedly suffered losses because of write-downs on their holdings of Greek government bonds and credit losses on their Greek and domestic private-sector loans,” the agency said in a report on Thursday.
Anxiety spread across Europe on Tuesday after the Cypriot parliament overwhelmingly rejected a windfall levy on bank accounts that international creditors, including the EU and the International Monetary Fund, had set as a condition for providing a 10 billion euro ($13 billion) bailout.
The bill rejected this week envisioned a 6.75 percent levy on deposits of less than 100,000 euros ($128,950) and 9.9 percent on larger deposits.
The truth is that austerity in Britain has barely begun
Why can’t politicians learn to tell it as it is?
George Osborne is often accused of
cowardice and a lack of radicalism. He needs to be much bolder if he is
ever to get to grips with the public finances, critics say Photo: Julian Simmonds
With each passing Budget, the full horror of Britain’s economic predicament
becomes steadily more apparent, yet like a stuck record, the message is
still the same. Be patient, the Chancellor says. Recovery is coming; wait a
few more years and things will be fine again. Well here’s the truth — they
will not.
The raft of delayed-action goodies announced in the Budget on Wednesday
disguise a programme of continued austerity which now stretches far out into
the middle of the next parliament and beyond. With each passing year, the
point at which the pain is supposed to end and things return to normal gets
pushed ever further into the future. To travel in hope, it is sometimes
said, is better than to arrive. Not in this case it’s not. A nightmare
journey confined to cattle class lies ahead.
What’s more, to get to the supposed end in five years’ time requires growth to
pick up quite sharply from next year onwards. Unfortunately, the Office for
Budget Responsibility’s forecasting record to date gives little reason to
believe in the latest set of predictions. Any shortfall, which given the
developing multiple pile-up in the eurozone looks all too possible, and
paying for all those years of Labour profligacy will take even longer, with
public debt mounting all the while.
The situation looks little short of hopeless. Trawling through the Institute
for Fiscal Studies’ always-illuminating post-Budget analysis reveals a truly
devastating story of cuts in departmental spending still to be decided,
likely tax rises and rising indebtedness.
It was all meant to be so different. Rewind to the emergency Budget of 2010,
and the deficit should by now have been reduced to £89bn, with £60bn and
£37bn pencilled in for the two years running up to the election.
In fact, the deficit is still stuck at £121bn, with £120bn and £108bn
extrapolated for the next two years. Lack of growth has completely poleaxed
the centre piece of the Government’s economic strategy — getting the deficit
under control. The flatlining economy is making the task of getting back to
sustainability in the public finances both much longer and steeper than it
was supposed to be. The IFS analysis points to a further £23bn of
departmental spending cuts still to come after the next election in 2015, or
an extra real terms reduction in spending of 7.6pc. Continued protection for
health, education and overseas aid would concentrate all these cuts on other
public services — transport, the police, defence and so on — though the
Budget Red Book notes ominously that “it would, of course, be possible to do
more of this further consolidation through tax instead”.
In view of the way protected spending is magnifying the cuts elsewhere, the IFS’s Paul Johnson reckons that such tax rises are more likely than not. I’d go further; if Labour wins the next election, they are a dead certainty.
Yet it’s even worse than it seems. To pay for his own tax giveaways, the Chancellor has engaged in accounting trickery worthy of the master illusionist himself, our unlamented former prime minister Gordon Brown.
I’m not referring here to what the Treasury has labelled “exceptional inter-period flexibility”, a deliberately mysterious term for an extraordinarily simple wheeze. Exceptional inter-period flexibility is in fact just the practice of deferring expenditure that might have been made this year into the following one so as to ensure that the political objective of some kind of a fall in the headline borrowing figure, marginal though it has turned out to be, can be met.
This is not obviously a good use of civil servants’ time, the IFS notes sarcastically. Actually, on this narrow matter, I beg to differ. No household living far beyond its means would rush to pay its bills early.
That civil servants are beginning to show the same due care and attention when dealing with taxpayers’ money is an entirely welcome development. More of that, and we wouldn’t be in this mess. Now if civil servants have got bonuses riding on their diligence, then there really would be a scandal, but we have had no evidence of them so far. Watch this space.
The more serious use of smoke and mirrors lies in the Government’s treatment of national insurance revenues from public sector employees. This is the big “gain” which has given the Chancellor the fiscal flexibility he needs to announce a series of tax and spend “giveaways” for the year after next. It’s also complicated, so do keep up there at the back.
As part of the government’s reform of the state pension, the government is in effect going to have to pay more national insurance on behalf of public sector workers than it has done. In its desperation, the Treasury has decided to bank this extra money as if it was extra tax revenue, even though this is actually just one part of the government paying more to another part. The government is actually just paying the extra revenue to itself. It’s a big sum of money — a hefty £3.3bn a year. What a find.
The wonders of public sector accounting never cease to amaze. It seems to allow things that would be considered basically fraudulent out in the real world of private enterprise. Yet even the Treasury would struggle to book such a gain without something appearing on the other side of the ledger, so where is this money going to come from?
Basically, it will have to come from extra spending cuts not yet specified. Government departments are going to have to fund the extra £3.3bn a year in national insurance from existing budgets. So that’s another £3.3bn of cuts they will have to push through after the next election. Whitehall agony is piled on Whitehall agony.
Osborne is often accused of cowardice and a lack of radicalism. He needs to be much bolder if he is ever to get to grips with the public finances, critics say. This may or may not be true, but the perhaps surprising reality is that if he is given the five years now needed to complete his plans, he will have brought about a remarkable transformation — some £24bn in selected tax cuts at the same time as a fiscal squeeze which reduces the size of the state as a proportion of GDP back to where it was before the last government began its madness. Brown’s public sector expansion will have been entirely reversed.
Promises, promises. We’ve heard them before. We should already have been well on the way, but we are not. And as things stand, it seems most unlikely Osborne will get the extra time he needs. To deliver, he also requires growth to pick up sharpish from next year onwards. Who would bet on that? And because key parts of government spending have been ring-fenced from the cuts, he’s going to have to impose destructive levels of contraction on almost everything else to succeed. It’s hard to be optimistic about his chances.
In view of the way protected spending is magnifying the cuts elsewhere, the IFS’s Paul Johnson reckons that such tax rises are more likely than not. I’d go further; if Labour wins the next election, they are a dead certainty.
Yet it’s even worse than it seems. To pay for his own tax giveaways, the Chancellor has engaged in accounting trickery worthy of the master illusionist himself, our unlamented former prime minister Gordon Brown.
I’m not referring here to what the Treasury has labelled “exceptional inter-period flexibility”, a deliberately mysterious term for an extraordinarily simple wheeze. Exceptional inter-period flexibility is in fact just the practice of deferring expenditure that might have been made this year into the following one so as to ensure that the political objective of some kind of a fall in the headline borrowing figure, marginal though it has turned out to be, can be met.
This is not obviously a good use of civil servants’ time, the IFS notes sarcastically. Actually, on this narrow matter, I beg to differ. No household living far beyond its means would rush to pay its bills early.
That civil servants are beginning to show the same due care and attention when dealing with taxpayers’ money is an entirely welcome development. More of that, and we wouldn’t be in this mess. Now if civil servants have got bonuses riding on their diligence, then there really would be a scandal, but we have had no evidence of them so far. Watch this space.
The more serious use of smoke and mirrors lies in the Government’s treatment of national insurance revenues from public sector employees. This is the big “gain” which has given the Chancellor the fiscal flexibility he needs to announce a series of tax and spend “giveaways” for the year after next. It’s also complicated, so do keep up there at the back.
As part of the government’s reform of the state pension, the government is in effect going to have to pay more national insurance on behalf of public sector workers than it has done. In its desperation, the Treasury has decided to bank this extra money as if it was extra tax revenue, even though this is actually just one part of the government paying more to another part. The government is actually just paying the extra revenue to itself. It’s a big sum of money — a hefty £3.3bn a year. What a find.
The wonders of public sector accounting never cease to amaze. It seems to allow things that would be considered basically fraudulent out in the real world of private enterprise. Yet even the Treasury would struggle to book such a gain without something appearing on the other side of the ledger, so where is this money going to come from?
Basically, it will have to come from extra spending cuts not yet specified. Government departments are going to have to fund the extra £3.3bn a year in national insurance from existing budgets. So that’s another £3.3bn of cuts they will have to push through after the next election. Whitehall agony is piled on Whitehall agony.
Osborne is often accused of cowardice and a lack of radicalism. He needs to be much bolder if he is ever to get to grips with the public finances, critics say. This may or may not be true, but the perhaps surprising reality is that if he is given the five years now needed to complete his plans, he will have brought about a remarkable transformation — some £24bn in selected tax cuts at the same time as a fiscal squeeze which reduces the size of the state as a proportion of GDP back to where it was before the last government began its madness. Brown’s public sector expansion will have been entirely reversed.
Promises, promises. We’ve heard them before. We should already have been well on the way, but we are not. And as things stand, it seems most unlikely Osborne will get the extra time he needs. To deliver, he also requires growth to pick up sharpish from next year onwards. Who would bet on that? And because key parts of government spending have been ring-fenced from the cuts, he’s going to have to impose destructive levels of contraction on almost everything else to succeed. It’s hard to be optimistic about his chances.
Shall Russia pay for Germany's great plans?
Germany is looking for ways to fund its
major geopolitical projects. Taking money from the German citizens is
dangerous as it may not be appreciated. German authorities set their
sights on Russia. The Germans will take money from Russia without even
asking for permission.
Recently the Russian-German relations
have not been the greatest. Of course, they are not at the level of the
Russian-American or Russian-Polish relations. Germany did not declare
Russia its enemy and the Germans do not intend to stop interaction with
Russia. However partnership is one thing, and money and interests is
another. When money is needed for great goals, there is nothing wrong
with emptying partner's pockets.
There is no other explanation for the
actions of the Germans. They are very persistent in their wants. In the
fall of 2011 in Berlin the offices of "Gazprom" subsidiary, Gazprom
Germany, were searched. A year later, the European Commission where the
Germans have an important role began an antitrust investigation against
the Russian giant. The most zealous European bureaucrats issued it a
bill for 15 billion euros.
The Germans (though not completely)
achieved their goals. Since 2011, the Russian company has been forced to
cut prices for European consumers, primarily German. Russia's
dependence on German buyers is significant enough and the latter can
dictate their conditions. Germany also made it clear that it would not
mind starting development of shale gas on the German territory. Well,
pressure is pressure.
Now number one issue in Europe is the
decision of the authorities of Cyprus to partially withdraw the funds of
local offshore investors. The decision was not made by the Cypriots.
This was the requirement of the creditors from the EU and the IMF who
otherwise threatened to refuse Cyprus a loan. Who pressured the Cypriots
the most? That's right, the Germans.
This year, parliamentary elections will be held in Germany. The results of voting in certain lands indicated that the current coalition of Christian Democrats and Free Democrats have slim chances of winning. The need to help the Cyprus economy with German money will lower the bar of electoral support to a minimum. The Germans gracefully shifted the burden of salvation of Cyprus to others. This is understandable since they do not have spare money and are not willing to pay "freeloaders Greeks."
Only here Russia will be the one under attack. Approximately one-third of foreign funds in Cypriot banks are owned by Russian citizens and Russian companies. If the withdrawal takes place, they will lose more than others. Given that this way the Cypriots, urged by the Germans, want to collect nearly six billion euros, the Russians will lose nearly two billion. But the Germans will have a different use for this money. This is an elegant combination - the money is saved, and Russia was forced to pay.
This year, parliamentary elections will be held in Germany. The results of voting in certain lands indicated that the current coalition of Christian Democrats and Free Democrats have slim chances of winning. The need to help the Cyprus economy with German money will lower the bar of electoral support to a minimum. The Germans gracefully shifted the burden of salvation of Cyprus to others. This is understandable since they do not have spare money and are not willing to pay "freeloaders Greeks."
Only here Russia will be the one under attack. Approximately one-third of foreign funds in Cypriot banks are owned by Russian citizens and Russian companies. If the withdrawal takes place, they will lose more than others. Given that this way the Cypriots, urged by the Germans, want to collect nearly six billion euros, the Russians will lose nearly two billion. But the Germans will have a different use for this money. This is an elegant combination - the money is saved, and Russia was forced to pay.
Should the Germans pay Cypriots? At
first glance, they do not have to, but this is only one side of the
coin. The other is that Germany is considering the EU as a tool for
expanding its influence. Influence costs money. Today the Germans are
unconditionally number one in the EU, they want to dictate to others the
rules of the game, and they want to make Germany a great power in every
sense. However, they do not want to pay. Shifting the costs associated
with political objectives to the Russian partner is a great solution.
Chancellor Angela Merkel represents the
Christian Democratic Union (CDU). Her goal is active foreign policy and
turning Germany into number one country in Europe. German conservatives
do not share Adolf Hitler's racial theories, but a soft "push to the
east" is being implemented. They launched a series of projects that
claim their country as a European leader. They are prepared to do a lot
for the sake of their goal.
One of these projects is the entry of
Croatia into the European Union. The decision was made in 2009-2011,
when the global economic crisis was in full swing. Maybe Croatia is a
very wealthy country? Not at all. The standard of living there is about
the same as in Poland or the Baltic countries. Hundreds of thousands of
Croats are earning money abroad, mainly in Germany. Unemployment is
extremely high. There are no Economic benefits for the EU.
However, not everything is ruled by
money. Croatia is a longtime ally of Germany and Austria. When
Yugoslavia broke up, it was Germany who first recognized Croatian
independence. Despite the resistance from France and other countries,
the Germans push for Croatia's membership in the EU. The expansion of
German influence in Europe and another loyal voice in the EU could come
in handy for the Germans. For the sake of such expansion Germany is
ready to get to the Russian offshore accounts in Cyprus.
The second project is independent
Kosovo. It is not purely German, but the Germans have an interest in the
matter. For German conservatives Serbia is the enemy, and should be
weakened. Berlin is obviously aware that the modern Albanian Kosovo is
drug dealers' territory subsidized by the European Union by 70 percent,
in which the share of Germany is the largest. Funds are needed again,
and the Russians have to fork out.
The third task is of internal nature. The German budget burden of payments to multiple immigrants is increasing as the time progresses. If payments stop, the Turks and other "new Germans" would revolt. If the burden is passed onto Germans they will not like it. This is a great way to postpone a solution of a long overdue problem.
Finally, let's consider the fourth reason. Many representatives of the German elite are not hiding their negative attitude towards Russia. Going after "Gazprom" and urging Cypriots to withdraw Russian money, Germany tends to weaken a competitor in the face of Russia, making it more agreeable. The Germans have leverage with Russia, but it is not always enough. The more leverage, the better. What could be better than a transformation of a dangerous rival into a willing partner?
The third task is of internal nature. The German budget burden of payments to multiple immigrants is increasing as the time progresses. If payments stop, the Turks and other "new Germans" would revolt. If the burden is passed onto Germans they will not like it. This is a great way to postpone a solution of a long overdue problem.
Finally, let's consider the fourth reason. Many representatives of the German elite are not hiding their negative attitude towards Russia. Going after "Gazprom" and urging Cypriots to withdraw Russian money, Germany tends to weaken a competitor in the face of Russia, making it more agreeable. The Germans have leverage with Russia, but it is not always enough. The more leverage, the better. What could be better than a transformation of a dangerous rival into a willing partner?
Pavel Chernyshev
Pravda.Ru
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