By Dave Sewell
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Fury in Cyprus as banks try to snatch savings

This article is over 8 years, 10 months old
Issue 2345
Protestors outside the parliament in Nicosia
Protestors outside the parliament in Nicosia (Pic: Mirianthi Loizou)

People in southern Cyprus woke last Saturday to news that money would be lifted from their bank accounts to pay for a bailout of the country’s two biggest banks.

They were furious.

The “solidarity levy” was to take around 10 percent out of accounts containing over £85,000 and almost 7 percent for those with less. 

It followed weeks of political grandstanding against Russian oligarchs. But the worst damage will be done to the finances of ordinary people.

“Most people have some savings, for their children’s studies or their own retirement,” Phaedon Vassiliades, a member of the Workers Democracy group, told Socialist Worker. 

“Ordinary people who were fooled by banks lost money,” he added. “The victims of this economic crisis are asked to contribute to this bailout.”

Much like Iceland in 2008, Cyprus’ crisis spreads well beyond its shores because of the international activities of its banks.


“For years the Greek Cypriot ruling class wanted to make Cyprus a financial hub,” said Phaedon. 

“The two biggest banks have become giant institutions. And now they are in big trouble.”

Those banks invested heavily throughout south eastern Europe and took heavy losses as recession spread through the region. 

They lent heavily in Greece and lost over £3 billion from the “haircut” on Greek debt last year.

Cyprus was—until last week—the perfect tax haven with the lowest corporation tax in Europe.  

Investments in Cyprus from its old ally Russia add up to around three times Cyprus’ GDP.

Newly elected right wing president Nicos Anastasiades promised last week that the levy on accounts wouldn’t happen.

But after a meeting with the European Union, European Central Bank and International Monetary Fund—the Troika, he said there was no alternative.

Some 1,000 angry protestors gathered outside parliament in Nicosia. They threw sheep’s dung and wool at the entrance symbolising the “haircut” imposed on savers.

Banks were closed to stop people taking their money out. 

An emergency session of parliament was set to take a decision on the bailout as Socialist Worker went to press.

Cyprus stood to get a bank bailout of £9 billion. This is much smaller than the bailouts in Greece, Ireland and Portugal. 

But its rejection would raise doubts about the future of the Euro in southern Europe.

The cost of borrowing shot up for the Spanish and Italian governments on Monday.

Phaedon said, “It gave people in Cyprus a lot of confidence to see there were solidarity demonstrations in Spain.

“The ruling class is scared to death. They see what is happening here as a sign of what will happen in Spain and Italy next.”

British troops will get a bailout

David Cameron said that the government would reimburse British troops in Cyprus for money they might lose in the bailout.

But why are so many British troops there in the first place?

The British Empire took over Cyprus in the 19th century as a strategic outpost on the way to India. 

It left a legacy of bitter division between the Greek and Turkish population when it officially pulled out in 1960.

It still keeps troops’ bases in Cyprus—officially to keep the peace. 

In reality this is a launchpad for wars in the Middle East.



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