Thursday, 21 March 2013

No-one Blinking in Berlin, Moscow or Nicosia

The established Russian financial base in Cyprus is under very serious threat from Berlin masked as the EU and from the US masked as the IMF.   It is not credible that the Russian government regards the Russian resources in Cyprus as illegal or borderline legal - their size and the entities involved are part of Russian policy even if there are some Russian and non-Russian money laundering advantage-takers in the mix.

The European Central Bank continues to provide liquidity to Cyprus banks.   EU rules require it to provide such liquidity only to solvent banks;  Cyprus banks are being kept solvent only by the funding that requires their solvency for such funding to be extended.  Obviously the ECB is holding the banks in suspension while the political stand-off is resolved (in itself a highly politicised act from an ostensibly 'technical' institution, but then it has its own axe to grind about eurozone member states departing the zone).

Cyprus government (which includes the whole political and cultural spectrum, as do other  Mediterranean states, it's the constitutional model used in this part of the world) is entertaining the Troika  while its minister of  Finance  is in Moscow and, he says, intends to stay there  until discussions are satisfactorily completed, though what form finalisation will take is under consideration.  Meanwhile in Cyprus the parliamentary draftsmen are blamed for no legislation being available for bank resolution and a parliamentary session to debate this is cancelled.  The chances of this being true are challenged by Cyprus having perfectly well drafted (by the English) bank resolution legislation, have had since long ago.

The RAF has had to fly out a plane load of euro bank notes because the eurozone seems unable to perform even that most basic of monetary operations, run a retail cash banking system.

Every, perfectly reasonable, alternative to mulcting the Russians out of their deposits and out of such a geo-politically important piece of real estate is met with vetos from the Troikerenes in Nicosia.  Pips are going to be made to squeak, right down to the last euro to teach all of us Southern wastrels to mind ourselves as well.

The Archbishop of Cyprus, who owns the third largest bank there, and large pieces of the island,  has been seen kissing the new Jesuit Pope in Rome, (Dearest brother) which is giving a decided Umberto Eco-ish twist to these events.  The Italian President, occupying Rome's magnificent former papal palace, is failing meanwhile  to put together a democratic pro-European administration while the largest single party in the Italian Parliament calls for  re-negotiating the euro and, indeed the entire European Project.

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