THE CYPRUS PARLIAMENT REJECTED THE DEAL OF DEPOSIT TAX

The decision of the Cyprus Parliament to reject the bailout deal on Tuesday night has proven the trustworthiness of Cyprus as a major financial center sending out the signal that the deposit funds of all depositors are totally safe.

Despite threats, unethical attacks and psychological violence that was exercised by the Eurogroup on Cyprus’s political system, yet the Parliament – in essence by a unanimous vote – declined to open the door to “madness” and uncertainty that Eurogroup’s proposal would lead Cyprus.

The proposal of the government was  for a one-time tax of 6.75 percent on deposits of less than 100,000 euros, or about $129,000 — even though deposits are guaranteed up to that amount in Cyprus and in most other European countries.

Further a 9.9 percent tax would be levied on Cyprus bank accounts with more than 100,000 euros. The taxes were meant to raise 5.8 billion euros of the total bailout cost of 10 billion euros, or $13 billion.

The leaders of all political parties condemned the proposal and practices of the Eurogroup sending a strong signal that Cyprus will not be victimized.

Marios Karoyian, the head of the Democratic Party in Mr. Anastasiades’s coalition government, called the bailout terms an “attack” against Cyprus.

The decision for a haircut is unethical and erodes the foundation of the E.U.,” he said, referring to the European Union. “We’re dealing with raw blackmail that could lead to the collapse of the euro zone.”

Averoff Neofytou, head of the governing Democratic Rally party, added: “We must admit that this will create an economic suicide. We are sending a message to Brussels, Berlin, Frankfurt and Washington: Don’t force us out of the euro.”

The decision of the Parliament gives the government the necessary time to negotiate a better agreement and obtain alternative financing.

Cyprus will seek Russian assistance. Russian officials had reacted furiously to the proposed bank deposit tax, which they said had caught them by surprise.

The Finance Minister Michalis Sarris is already in Moscow to meet his Russian counterpart while President Anastasiades had a constructive telephone call with President Putin last night. Mr. Putin’s spokesman, Dmitri S. Peskov, said that the Russian president had expressed concern about the possibility of any measures being adopted that could harm the interests of Russian citizens or businesses, according to the Interfax news agency. The two leaders agreed to stay in contact, and Mr. Putin invited Mr. Anastasiades to visit Moscow at any time.

It should also be noted that after the parliamentary vote, the European Central Bank indicated that it would not immediately cut off emergency cash — without which Cypriot banks probably could not survive.

The Cypriot government is working for alternative plans which will secure the Cyprus economy. What is certain is that Cyprus is not and will not be a enclaved in senseless Eurogroup’s policies that have been characterized by the international community as hopeless, non-professional and illegal.

THE CYPRUS PARLIAMENT REJECTED THE DEAL OF DEPOSIT TAX by
Christophoros Christophi
About the Author
Christophoros Christophi

Lawyer and Managing Partner of Christophi & Associates LLC, Lecturer (Company Law) at the European University of Nicosia.
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