International

The rejection by the Cypriot Parliament of the Eurogroup’s proposals demonstrates the extent of the chaos which the body’s decision has caused during the last few days. Referring to the group’s recently appointed Chair, who is also the Netherlands’ Finance Minister, SP Euro-MP Dennis de Jong said, ‘Jeroen Dijsselbloem has failed on a number of points. To start with he should have proposed a settlement which would have spared Cypriot savers with less than €100,000. In this sort of matter you have to ensure that the strongest shoulders carry the heaviest burden. Small savers should have been given reassurance, and no doubt should have been cast over the rule that whatever difficulties a bank may find itself in, you can always get a sum of up to €100,000 back. This is leading to huge instability in the Eurozone with in the worst case scenario a run on the banks in the Mediterranean countries. Dijsselbloem also misjudged the likelihood of the Cypriot Parliament kicking this into touch. It’s completely understandable and absolutely correct that people in Cyprus wouldn’t accept this reverse bank robbery.'

In the SP’s view Dijsselbloem must at the earliest opportunity call a meeting of the Eurogroup and talk also to the European Central Bank about putting the Eurogroup’s mistakes to rights. 'Now we could move to a healthier approach which protects ordinary savers and instead of targeting them to solve the problems caused by the banks, hits the banks’ shareholders who for years have profited,’ says De Jong. ‘Also, the major bondholders with a sum of more than €100,000 must make a contribution.’

The Eurogroup’s misguided approach will probably offer Russia its chance to score a hit, as De Jong warns. ‘It’s not only the danger of a run on the banks which lies on the horizon, but it’s also the case that the European energy policy has taken a blow,’ he says. ‘It’s not in Europe’s interests for Gazprom to buy up Cyprus’s gas fields in exchange for Russia’s financial support. Moreover, money laundering in Cyprus, which causes problems throughout Europe, will only increase if Russia gains more influence in the country. Cyprus is playing the EU and Russia off against each other, and that could have been prevented.'