To investors in Cyprus: ‘Sit tight and don’t move’

An introduction of a bank deposit tax in Cyprus is the only solution that would save the country – hit by a severe financial crisis – from bankruptcy, Belgian MEP Derk Jan Eppink told RT.

On Tuesday, the parliament of the small Mediterranean island nation was expected to vote on the controversial plan to seize of up to 10 per cent of people’s savings. In exchange Nicosia expects to get 10-billion-euro bailout from its eurozone partners and the International Monetary Fund. However, the vote was postponed till Wednesday.

“I think it’s the best possible option. I wouldn’t know anything better except, perhaps, for a bankruptcy – which would be the worst thing to happen,” states Eppink.

A Cypriot bailout would become the fifth one since the beginning of the world economic crisis: Greece, Portugal and Ireland each have already secured international rescue packages.

“There’s also limit to patience of taxpayers in Germany, the Netherlands and Finland, because finally these are the people who have to guarantee the loans to Cyprus,” Eppink observed. “So I think it was good to have a contribution of savers in Cyprus itself,” he added. 

It is feared now that a Cyprus bank levy may set a dangerous eurozone precedent. However, in Eppink’s view, it is unlikely that a similar measure would be implemented in other EU states.

“It was the only way to save Cyprus. In other countries we have different sort of problems,” he noted.

Eppink empathized that Cypriots would not become the first EU nation to lose money.

“Generally, European savers are losing money because we are having a policy of cheap money, low interest rates. That means that saving money – if you put money in a bank – costs you money [because of inflation]. And this is happening to a lot of EU citizens already. It would be wrong to suggest that this the first time it happens. Actually, it already happened before because savers in Europe are not well off at all,” Eppink said.

Meanwhile, the best option for Cypriot investors would be to actually stay there instead of feeling the country as there are “not many places” where they could go, the politician believes. According to a Dutch saying, “If you are being shaved, sit tight and don’t move,” he told RT. 

“I think when you restore the rule of law in Cyprus and save the island, it will still be a good place to be,” Eppink concluded.