During the early hours of Monday morning, EU leaders agreed to another bailout for Cyprus. The island will receive the €10 billion (us$12.9 billion) it needs to avoid collapse without most Cypriots having money removed from their bank accounts. But Cyprus’s economy has been destroyed. The nation is left as a vassal state of the new German empire.
The deal will be painful for the whole economy. Last week, German Chancellor Angela Merkel said that Cyprus “must realize its business model is dead.” The latest bailout has ensured that realization.
The Financial Times reports that the Russian businessmen who have poured so much money into Cyprus’s economy are packing up. With all the talk of Russian mafia money, some may say “good riddance,” but their exit will have a dramatic impact on the economy.
Think tank Open Europe wrote that “the collapse in gdp could be anywhere between 5 percent and 10 percent this year .…” The bailout has destroyed the engine of Cyprus’s economy. Its only option is to be towed along by Germany. The new deal “offers no way out of the economic ruin that the single currency has visited on the island,” wrote Jeremy Warner, assistant editor for the Telegraph.
“Under this deal, Cyprus is, in effect, kissing goodbye to one of the mainstays of its prosperity and growth—finance,” Warner wrote. “It’s a bit like saying that closing down the city of London would put the UK on a sustainable path to recovery. Many might welcome the death of finance, but the impact on output, tax revenues, employment and public services would be devastating. The same is likely to be true in miniature of Cyprus.” As Tacitus said, “They make a desert and call it peace.” Cyprus’s economy hasn’t been fixed. It has been destroyed.
Like Greece, Cyprus seems doomed to depend on Germany for one bailout after another, making painful concessions every time. “There is a strong chance Cyprus could become a zombie economy—reliant on eurozone and central bank funding, with little hope of economic growth” (Open Europe).
But the most poignant analysis comes from Charles Moore, the official biographer of Margaret Thatcher and former editor of the Spectator and the Daily Telegraph. His article “Southern Europe lies prostrate before the German imperium” is worth reading in full. Germany, he argues, is now an imperialist power.
The Germans “are perfectly genuine about wishing to overcome what is euphemistically called ‘the problem of history,’” he writes. “So they are obsessed with the importance of rules, of obeying them and being seen to obey them.” He continues:
But as they have grown stronger, their love of rules has turned into an instrument of their power. We are good European citizens, the Germans argue, and we have done well. So the answer is for everyone in the eurozone to behave just like us and they will do well too. One size must fit all, and that size is made in Germany. What the Germans leave out of account is that the single currency which, for them, is artificially low in international value is, for most of the rest of the eurozone, punitively high. What helps them crushes others. After victory in 1945, Churchill broadcast that Germany “lies prostrate before us”. Today, most of southern Europe lies prostrate before Germany.
As if to deliberately underscore Mr. Moore’s point, Germany’s parliament will soon vote on the new deal. Cyprus won’t. They already voted on these kinds of measures before the weekend— before they knew what the deal would be.
Full article: Cyprus a Vassal State of the German Empire (The Trumpet)