Cyprus Mail
CM Regular ColumnistOpinion

Mea culpa or mea stultitia

By Loucas Charalambous


“YOU SAY, and it is a fact, which I have nevertheless explained many times, that my pledge about the haircut was probably my biggest mistake.” This was the answer given by President Anastasiades during his news conference at the presidential palace last month when a journalist had asked him to offer his own mea culpa. His response sparked a wave of smug and ironic comments by journalists and gloating by our political demagogues who considered it their vindication.

Anastasiades is by nature a self-destructive man. This was illustrated yet again by his idiotic remark, as the truth is that he bore no responsibility for the haircut. As I have explained in the past, the proposal brought back by Anastasiades after the first  Eurogroup meeting in March 2013 was not a haircut. All those that described it as such (including deputies, naive journalists, but also the president himself) were ignorant about the meaning of the term ‘haircut’ in economics.

The decision of the first Eurogroup meeting adopted our proposal and was a real achievement by Anastasiades and our delegation. It involved a one-off levy on all bank deposits – 6.75 per cent on those up to €100,000 and 9.9 per cent on those above this figure. The state had every right to impose a special tax on citizens in order to save itself from bankruptcy and depositors.

The wording of the relevant bill was very clear. It was titled ‘The levy on deposits at credit institutions law of 2013’ and clearly stated that this would be a one-off contribution that would be deposited in an account of the state (not at banks) and would have been used by it to rescue the banks that were collapsing.

The state had the right to impose such a tax in order to tackle an extraordinary situation. As has been correctly pointed out, this contribution under conditions of the time represented on average the revenue from interest over 18 months. This was a caress compared to the massacre of the real haircut that followed a week later with the plundering of all deposits above €100,000 at Laiki Bank and 47.5 per cent of those at the Bank of Cyprus.

This plunder resulted in the closing down of one bank, the collapse of thousands of businesses, the driving away of foreign investors, the destruction of the bondholders and the fire sale of the branches of the Cyprus banks in Greece at a loss of about €4.5 billion, as Nicolas Papadopoulos, one of the guilty parties, never tires of telling us.

EDEK chief, Marinos Sizopoulos, to cover up this blunder repeated during a recent television appearance the fairy tale that the European Commission had admitted the proposal of the first Eurogroup meeting was illegal, as deposits of €100,000 were guaranteed. He cited the answer by the spokesman of the commission to a journalist’s question, who had said that if the Cyprus government wanted it could submit another proposal. The reality is that the commission was not even aware of the bill which, I repeat, did not envisage a haircut of deposits at bankrupt banks, but a special tax on all deposits in Cyprus banks. The real haircut was approved by the House of demagogues, including EDEK, via the Resolution Bill three days later.

Anastasiades was therefore not responsible for the haircut and his bizarre mea culpa simply showed his ignorance and his lack of courage in defending himself. This lack of courage I suspect stems from his real sins. The real culprits were the 56 demagogue deputies who rejected the first proposal (DISY’s abstention from the voting was tantamount to rejection) and thus paved the way for the haircut-massacre mentioned above. This is why the column suggests that in next Sunday’s parliamentary elections we do not vote for any of the current 56 deputies who were guilty for the plundering of bank deposits. I am very pleased to see this is a suggestion which is also being promoted by fellow citizens.

*stultitia – stupidity

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