Bankers provoked Cyprus crisis

The European economic crisis has crashed down upon the small nation of Cyprus. A second “bailout” was announced on March 25 after mass protests shook Cyprus over the terms of a first proposal only eight days earlier. The revised austerity terms, however, are bound to result in further protests as unemployment, service cuts and recession worsen, along with seizure of a large part of bank deposits to pay off the foreign bankers.

As usual, the corporate media try to blame the people and government of Cyprus for the economic crisis. But a March 27 New York Times headline reveals that “Europeans planted seeds of crisis in Cyprus.”

At a secret meeting in Brussels in October 2011 the financial representatives of the European Union and the International Monetary Fund met to “solve” the Greek debt crisis. They agreed that Greek government bonds would lose at least 50 percent of their value. Cyprus, which held a large amount of Greek debt, ended up losing around 75 percent of it, or about 4 billion euros.

The EU bankers contributed further to the Cyprus crisis by ordering all banks to have a larger reserve of capital on hand. According to the Times, the government of Germany, which has the largest economy in the EU, demanded “a complete overhaul of Cyprus’ economic model.” Former Cyprus central bank board member Pambos Papageorgiou stated, “They wanted Cyprus to stop being a financial center. … It was very brutal, like warfare.” (NY Times, March 26)

Cyprus banks finally opened on March 28 after being shuttered for almost two weeks. Withdrawals were limited to only 300 euros, much less than many workers and small businesses needed to pay bills. Check cashing has also been halted. These controls have been extended to one month, according to Cyprus’ foreign minister.

Bank deposits of more than 100,000 euros are to lose 30 percent to pay for the crisis, according to some estimates. But (March 30) stated, “Bank of Cyprus depositors with more than 100,000 euros could lose up to 60 percent of their savings as part of the … restructuring move.” The Bank of Cyprus holds around one third of all of Cyprus’ deposits. Depositors at Cyprus’ second largest Laiki Bank, which is scheduled to be dismantled, may take an even bigger hit.

There is no guarantee that these drastic measures will resolve the financial crisis that is deepening across the EU. Seizure of bank deposits “could spread fear in other indebted eurozone countries” anticipating similar action (, March 30). The overall productive economy has already slipped into a second recession, following the 2008 collapse.

While much attention is being given to the actions of the bankers and politicians, the role of the working class may be decisive and needs more scrutiny. Cyprus joined the EU only in 2004. In 2008, Cyprus elected President Demetris Christofias from the Progressive Party of Working People—AKEL (a communist party). Cyprus has powerful leftist unions and broad, mass support for socialism.

Under the deepening economic crisis, however, President Christofias imposed cuts in wages, pensions and public sector jobs. In the presidential elections held this February, Christofias didn’t run and AKEL lost the election to a rightist candidate. AKEL failed to rally the masses by calling for an anti-capitalist solution to the crisis. Whether or not this contributed to its electoral setback, it means that AKEL has offered no clear way forward.

Now in opposition, AKEL attacked the “bailout” measures in a “Statement of the Secretariat of the C.C. [Central Committee] of AKEL on the Eurogroup Agreement,” posted March 25 at The statement repeatedly, but vaguely, calls “to free ourselves from this framework of reasoning, resist the Troika’s threats and seek a solution outside this framework.” The only concrete demand is the call to the governor of the Central Bank to make public “the names of all those who during the recent period had taken money en masse out of the country … who hold political or state posts,” including family relatives.

Mass protests and strikes have spread across the country, but a clear program does not seem to be offered by the left leadership. The Greek Communist Party (, March 30) advises that “the only path for the Cypriot people is its struggle for disengagement from the EU and the socialization of the monopolies, with their own power.”

The deepening world capitalist economic crisis and the various capitalist-inspired “bailouts,” whether in Europe, Africa or the United States, promise only more misery and suffering for the workers and the poor. A serious and sustained working-class struggle is needed that raises the question — will we pay the banks or will we pay for wages, pensions and social services? For the working class the answer is obvious: Don’t pay the banks.

Simple Share Buttons

Share this
Simple Share Buttons