Cyprus Mail

Stigma of deposit haircut undermines Anastasiades

Dear President Anastasiades,


Around March 2013 the people of Cyprus were shocked that the mad politics of chasing after so-called “dirty money” and Russian spies all over the world led to the complete collapse of Cyprus’ banking system. You appeared on television declaring loud and clear that a haircut on deposits would be catastrophic for Cyprus and that you would not sign a memorandum that would include any provision for a deposit haircut.

After your meeting in Brussels, you came back declaring that the Eurocrats put a gun to your head and you persuaded the Cyprus parliament that there was no other way but to expropriate people’s money.

That was not correct. According to the Article 66 of The Treaty on European Union and the Treaty on the Functioning of the European Union (“The Treaties”):

“Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council, on a proposal from the Commission and after consulting the European Central Bank, may take safeguard measures with regard to third countries for a period not exceeding six months if such measures are strictly necessary.”

It is no secret that Russia is our main investor and it is precisely Russian investors that have suffered the most as a result of deposit cuts. This became possible despite all guarantees from the EU of inviolability of private property.

“The Treaties” directly prohibits governmental members of the EU to regulate private property ownership.

Article 345: “The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.”

This is why Mr President the blame of expropriation lies on you.

Today all of the judicial system of Cyprus is practically paralysed with claims of investors demanding the return of their money. Cyprus has acquired a reputation of a country that went along the path of forced expropriation of private property while at the same time it remains unclear whom it benefited.

Our banks are in trouble for the simple reason that big investors and business people around the world do not trust you or your government any longer. A few weeks ago when you were in Moscow, you gathered together many big investors trying to persuade them to invest in Cyprus. It really sounded ridiculous for those are the same people who lost their money in the haircut.

On April 7, 2013 I sent a letter to the Sunday Mail and ended my letter advising you to reverse the situation immediately.

For the last four and a half years as president you have in some respects achieved some wonderful things for our country, but unfortunately nothing about the expropriation of money from people’s accounts. Therefore, the stigma you created for yourself will not go away until you realise your mistake: allowing the biggest theft that happened in the EU.

You absolutely need to borrow this money immediately and pay the people, including their interest up to the last cent, to gain the respect that is absolutely necessary to carry on your duties as the next president of Cyprus.

Quote from the book of First Democracy written by Paul Woodruff:

“The ancient inventors of democracy knew that even the best of us can be distracted by ambition or fear from doing what is right. They knew how easily success leads to pride, and pride to arrogance. They knew how arrogance leads to blindness and blindness to catastrophic mistakes. Democracy was designed to prevent its leaders from having the unchecked power that could lead even the wisest of them from arrogance to foolishness.”

Eric Paschalis

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