Blame game: France, Germany insist savings levy was Cyprus's decision
As outrage mounts over an unprecedented bank tax in Cyprus, Europe's biggest economies, France and Germany, have put the blame for the bank levy on Cyprus. Banks all over the country, meanwhile, will remain shut pending parliament’s decision.
Both France and Germany, along with the European Central Bank
(ECB), have hastened to emphasize that they were not behind the
decision to impose a tax on savings in Cyprus. A move which has
impacted the markets worldwide.
A debate in the Cypriot parliament Monday yielded no result on
whether the country should approve the controversial levy.
Opposition parties are against the move, leaving the government
without a majority in the upcoming vote, which has been delayed until Tuesday.
The new tax, which is now being considered by the Cypriot
government, would make its citizens shoulder a 12.5-percent crisis
tax on savings larger than €100,000, with a tax of 3 percent on
The original agreement suggested 9.9 and 6.7 per cent levies on
deposits above and below the €100,000 threshold
The move comes after European finance ministers demanded Cyprus
seize a significant portion of all deposits in the country’s banks
in order to secure a €10 billion bailout.
And while Cyprus says Brussels gave it no choice but to accept a
painful tax on the country’s bank deposits in return for
international aid, Germany and France say it’s not their
"How the country makes its contribution, how it makes the payments, is up to the Cyprus government," Germany’s government spokesman Steffen Seibert said. "Germany could have imagined a different plan but it is not our decision," he added.
Protesters in Cyprus, who gathered outside the Parliament
building in the capital Nicosia, to express their outrage over the
bailout, have held up banners blaming Germany for the controversial
bailout deal. “Merkel, you stole our life savings,” read one
of the banners. The other – “Europe is for its people, not for
The ECB from its side argued that the initiative was “the Cyprus
government's adjustment programme, not the Troika's or any other
"If Cyprus's president wants to change something in the
structure of the levy on bank deposits, that's in his hands. He
must simply make sure that the financing is intact," ECB
executive board member Joerg Asmussen said.
France backed Cyprus' “different distribution to better
protect small deposits,” saying that its choice “respects
the total amount of its contribution to the program, we have to
listen to it and, for me, to hear it," France’s Finance
Minister Pierre Moscovici told AFP.
The ECB opened the door to possible amendments to the EU bailout
deal, arguing that as long as the financing was secure, it was up
to the Cypriot government to decide how to raise it.
In Russia, whose citizens constitute a number of clients of
Cyprus’ banks, President Vladimir Putin slammed the proposed tax on
bank deposits as "unfair, unprofessional and
The Russian Prime Minister Dmitry Medvedev was even harsher in
his comments. “This looks like a forfeiture of other people’s
money,” he told the RIA news agency, calling the decision strange
Russian banks had around $12 billion deposited in Cypriot banks at the end of 2012, according to ratings agency Moody's.
Meanwhile, banks in Cyprus will remain closed on Tuesday and
Wednesday until a decision by parliament is made.
“A decree will be released shortly from the Finance Ministry to this effect,” Reuters reports, citing a government source.