‘Germany used tiny Cyprus to prove its point’
In the midst of Tuesday’s student demonstrations against Cyprus’
bailout plan, co-founder of ACM partners Margaret Bogenrief told RT
that Germany has been a strategic player in the way the protests
More than 1,000 Cypriot students gathered in Nicosia earlier
Tuesday, to protest a last-ditch bailout deal the government struck
with its creditors on Sunday.
The bailout plan, which was agreed on Sunday, comes at a price.
Customers who have more than 100,000 euros in the country’s two
largest banks could face a 40 per cent tax on their assets.
Meanwhile, banks across the island are closed until Thursday, to
prevent a massive run on accounts.
RT:The Cypriot president has defended the deal,
calling it the “best option under these circumstances” – would you
agree with that?
Margaret Bogenrief: I do agree, I mean, here’s kind of
the broader macro issue about the Eurozone – the problem with the
Eurozone is that it is in its current formation, an unstable
entity. The thing that I think is so interesting about this final
agreement that the Troika and Cyprus came to is that they’re trying
to punish as many money launderers as they can, as well as send a
message generally to the Eurozone that Germany’s not afraid to
enforce its position, while trying to protect Cyprus’ citizens. Is
it perfect? No. But the situation isn’t perfect either.
RT:Cyprus may have been saved from imminent default,
but as a result of the deal, many people will be left jobless or
have their savings raided, what could this tension lead
MB: I mean first of all, in terms of joblessness, Cyprus
is a nation of fewer than a couple of million people. So any number
that you’re going to see is going to appear overly-inflated simply
because of the small real number involved. Secondly, do I think
there will be instability in Cyprus? Yes, there will be. And what I
think is so interesting about this is Germany used one of the
smallest nations –not just in the Eurozone, but really in the
western economies, to prove its point. I mean, this sounds a little
cold-hearted and a little analytical But if there’s unrest in
Cyprus – it’s not Portugal. It’s not Spain, it’s not Greece – it’s
not a massive country. So what Germany was actually able to do was
to enforce its might on a small country in which any kind of
unrest, violence or protest will be relatively contained.
RT:The crisis has undoubtedly frightened investors
with huge amounts of money, having fled the ailing island. Do you
think the banking sector will recover?
MB: Frankly, I don’t think it should. I mean, the banking
sector as it stood prior to this crisis was 8 times the nation’s
GDP. I mean, that is simply untenable. You’re talking about just
pure balance sheet math at that point. I mean, I think what you’re
seeing here is a recalibration of expectations, of GDP, of the
actual euro-size of the country’s economy. Do I think it will
recover? Yes, of course – things always ultimately recover. But I
think it will have to go through a severe amount of pain in order
to heal itself.
RT:Do you think we could see other EU debt-stricken
countries apply the same methods in the future?
MB: I think that’s what Germany and Angela Merkel –
that’s what they were signaling to the Eurozone. I mean, Merkel and
Germany –they’re facing elections in six months. German citizens –
I mean, if you’ve been reading the press - they’ve been extremely
upset about footing the bills for these other countries, and I
think what they were saying was “look, jut to let you guys know –
we can do this. We set a precedent in a very small way, but a
precedent was still set, and it does beg our attention.”
RT:And the Russian PM has labeled the bailout deal a
‘theft’ – what do you make of his words?
MB: Well, look at the banking sector in Cyprus. So it has
68bn euros approximately, with 38bn euro in accounts, totaling
100,000 euros or more. Which is a massive amount for residents of
this small island. You don’t have to do the math to realize that
it’s going to really be a lot of Russian citizens and businesses
that are going to be hurt more than the average Cyprus citizen. So
I would say it’s a theft as well. I mean, it’s a great opportunity
to politically grandstand for someone like Putin, who’s trying to
secure his reign in Russia.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.