March 20, 2013
Cyprus comes to take the lion’s share in the process of fiercely undermining austerity politics in Eurozone. After Greece, Italy, Spain, and Portugal, Cyprus seems to shake and unveil the deep heterogeneity inside the single monetary union. There are many questions with pending answers that our interest should be focused on.
Cyprus denied to accept the decision of the last EU Summit to impose a haircut in the national debt of the country and intervene in the savings of Cypriots in order to cover a significant amount of the bailout plan. EU will cover almost 70% of the bailout plan, Cyprus was supposed to cover another 10% and finally Russia would conclude the pazzle with another 20%. But finally, this is no longer the case as the Cypriot Parliament decided not to ratify this decision. In other words, it denied to implement the austerity politics program imposed by the Eurogroup after an unfair bras de fer during the Summit in Brussels.
The interesting part of this chess game, which gives a major geopolitical aspect on this issue, is the role Russia will play in this discussion, and finally, in the solution of this deadlock. I believe that it is a great diplomatic mistake for Eurozone to entangle Russia in this geopolitical game and press it indirectly to contribute to the bailout of Cyprus. I firmly believe that actually Kremlin has now the upper hand in the discussions over the economic future in Cyprus, and therefore, over the future of the single currency. Eurozone decided to punish Cyrpus, Cyprus turned to Russia, and now Russia has both the knife and the cake.
My major concern is whether Eurozone will go ahead in this deadlock and find a solution which will be definitely way far from the austerity politics track or it is going to dilute into a transitional model with few member states, after the track of Cyprus being followed by other overdebted states of Eurozone, like Greece. Therefore, we have the following political chessboard:
1. Either the Eurogroup will step back for the conditions of the bailout plan of Cyprus and accept a smoother decision.
2. Either Russia will decide to buy out a part of the national debt of Cyprus and therefore be further involved in political and economic developments in the island
3. Or a Eurogroup-Russia bilateral Summit will be convened for a first time in history with the issue of protecting and safeguarding the political and economic stability in the entire area of the Mediterranean basin.
Whichever option is going to be finally implemented, one is the conclusion: that an economic war, silent in its implementation and development, is underway. But as we know from history, a complete economic collapse is only preceeded by a political, social, and finally a military war. And this is my major fear.Dimitris Rapidis