Tuesday, March 26, 2013

Eurocrash: Cyprus details yet to emerge

Cyprus off.jpg

As you might imagine, I have been following the Cyprus situation closely, reading hundreds of English language reports, and well as many foreign language reports, and especially those in the German press.

The one thing that I come away with, though, is that there are huge gaps in the accounts. We are thus very far from knowing the truth of what has been going on, and the full text of whatever deal has actually been made. The publicly accessible information is to the rest what the tip is to an iceberg. 

Of very great interest though is the account of the Sunday night negotiations offered by Frankfurter Allgemeine Zeitung, which has it that Herman van Rompuy was the lead negotiator on the night. 

In fact – or so we are told – the entire negotiation session was at the instigation of van Rompuy, who decided to intervene after consultations with Merkel and Hollande. And how interesting it is to see the Franco-German motor in action again. 

Apparently, the eurogroup meeting earlier in the week had been so brutal that, after ten hours of battering, finance minister Michalis Sarris had been so exhausted that he could not continue. Thus it was left for the Council president to work directly with Cypriot president Anastasiadis and cut a deal. 

The fascination of this development is that the negotiations have largely been seen through the filter of national players, with the Germans cast in a prominent role. It is often forgotten that the EU also fields its own players, and has its own agenda, subtly different from the member states. 

In the event, it was van Rompuy who carried the day, with agreement being reached by two am Monday morning, actually very early for a crisis in Brussels. 

None of that, though, helps us understand what is really going on. On the face of it, the deal reached should have the Russians up in arms – those who hadn't already moved their money – and the people of Cyprus rioting in the streets. Furthermore, because of the risk of contagion, we should be seeing some action in Spain and Italy to guard against bank runs. 

Perhaps it is too early to expect a response, with people either in shock or looking to find the missing detail that would make sense of the deal. No that the banks are to stay closed until Thursday, it may take until then before the reaction sets in. 

And at that point, we may well find out how well trained and organised the Cypriot riot police are. But one should also remember that this is an island which is extremely adept at guerrilla warfare. No one in their right mind messes with the natives – as the EU may yet learn.