Kettle, Meet Pot

This about Politics, tagged , , , , was written by for on February 3, 2014

“Corruption across EU ‘breathtaking’ – EU Commission” says a headline in the BBC. The Commissioner responsible for the report said that she believed the cost of corruption was “probably much higher” than the €120 billion (US$162 billion) the report estimates. And indeed that is probably correct because corruption within EU organs themselves was not included. Given that the auditors have persistently found money missing in the EU accounts (or, as it is quaintly put in Eurospeak: “error rates”) for nearly two decades, 4.8% of €138.6 billion (€6.6 billion or US$8.9 billion) in 2012, there may well be more. Almost half the businesses operating in Europe say they find corruption to be a problem, More than half the people surveyed think the problem is getting worse. 8% claim to have personally experienced something in the past 12 months.

Here’s the actual report.

Now, these are precisely the politicians, followed enthusiastically by a barking pack of reporters, opinioneers and editorial writers, who are always ready to lecture Russia and posture as an paradigm to be emulated. Indeed Ukraine is being torn apart precisely by the pretension that the EU is the only route for it to get out of stagnation and corruption. I do not believe that tu quoque is a particularly effective way of arguing but there are times when outright hypocrisy must be acknowledged. Eurosceptics like myself have always expected that huge uncontrolled bureaucracies producing ever more layers of regulations is a strong precondition for corruption – how else can a company or individual navigate through contradictory and incomprehensible regulations than by the lubrication of a shot of cash in the right place? It is to the credit of the EU that it produced such a harsh report.

And it’s not just hypocrisy that Ukrainians should think about. What if the EU structure is in fact the principle cause of stagnation and corruption just as communism was? There are important similarities after all: faceless, well-paid bureaucrats at the centre conducting experiments on a powerless population.

Who are the faceless gnomes of Brussels to lecture Moscow or Kiev or anyone else?

Who can take anything they say seriously any more?

 

Translation: Ukraine and Its Monsters

This about Geopolitics, tagged , , , , was written by for on September 22, 2013

Regnum reports on statements made by Ukraine’s President, Victor Yanukovych, in which he visualizes Ukraine becoming a link between the East and the West as a result of an impending trade deal with the European Union.

Yanukovych: Russia and the EU are giant monsters “and we feel it every day”

Victor Yanukovych, the President of Ukraine, calls the European Union and Russia “monsters”, stating that Kiev will never compare the processes of integration in these areas.  The head of the government stated this during the tenth Yalta Annual Meeting today, September 20th, reports Regnum IA.

“I would say that Ukraine is located between two big monsters, the European Union and Russia. And we feel it every day.  We cannot ignore or take this situation lightly, therefore, I am very thankful to our partners from the EU and Russia for their understanding of this issue.  That is why we did not want, do not want, and never will compare processes of integration of the West to the East.  We want to unify them…and Ukraine is confidently going on this path through modernization, through the creation of conditions for the administration of business and the removal of those barriers that are present in questions of trade. So that this process more closely unites us all and so that we would actually create a common economic space from Vancouver to Vladivostok” said the head of government.

At the same time, in Yanukovych’s words, the effectiveness of Ukraine’s cooperation with the European Union depends on how much success there is in building filial relations.  “I would like to wish all of us together the assured construction of a Big Europe.  Ukraine will play its part.  However, a lot will depend on how well these filial relations will work.  We expect that they will be effective”, he said.

On The Cyprus Deal

This about Economy, tagged , , , was written by for on March 26, 2013

As a Greek with contacts in Cyprus, his opinion is one of the most valuable ones out there. Here it is:

We have now the latest bailout plan and contrary to the spin in parts of the western media it is COMPLETELY DIFFERENT from the plan we saw last week.

What was utterly outrageous about last week’s plan was its seizure of money from deposits held in every account in every bank across the entire island of Cyprus. This offends against every principle of banking, the rule of law and of private property I know of. By what logic, if solvent debtor A owes me money, am I required to lose money to bail out insolvent debtor B with whom I have no connection at all? The Cypriot government and the Troika compounded the outrage by extending it even to deposits that held less than 100,000 euros. This was blatantly illegal since it violated the EU’s own deposit insurance scheme. As I said, what all this managed to do was transform a problem of two Cypriot banks into a systemic problem of the entire Cypriot banking system.

Though you would not know it from the way it is being reported by the western media this morning, the entire calamitous idea of a deposit raid has been entirely dropped. There will be no raid on deposits whether above or below 100,000 euros. What is happening instead is what should have happened last week. The two insolvent banks, Laiki and Bank of Cyprus, are being merged and restructured. Since they will not be bailed out and since Laiki is being effectively liquidated, the bondholders of Laiki (one of whom is a Russian businessman) will be completely wiped out. The big deposit holders in both Laiki and Bank of Cyprus will also take a big loss. This is not because their deposits in Laiki and Bank of Cyprus are being raided as was proposed last week. It is because they will suffer a commercial loss (or “haircut” if you prefer) as creditors of debtors who have become insolvent.

What proves that the Cypriot authorities and the Troika were at all times aware of the blatant illegality of last week’s proposals, is that the statement setting out this week’s agreement that has been issued by the the eurogroup specifically says that deposits below 100,000 euros (including those in Laiki and Bank of Cyprus) will be fully protected in accordance with the EU’s deposit insurance scheme. What is that if not an admission that last week’s proposed raid on those deposits was illegal?

We now therefore have a bailout agreement that at least conforms with the law. What are its further implications?

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The Western Media’s War Against Cyprus And Russia

This about Economy, tagged , , , , , , was written by for on March 21, 2013

If you ever manage to get a troupe as diverse as Latynina, Mark Adomanis, the Cypriot Communist Party, virtually every financial analyst, Prokhorov, and Putin united in condemning your crass stupidity and cack-handedness, it’s probably time to stop and ponder. But it’s safe to say that’s not what the Troika – the European Commission, European Central Bank, and IMF – tasked with managing the European sovereign debt crisis is going to be doing any time soon. They seem to be living in la la land.

Here is the low-down. Contrary to German/ECB propaganda, Cypriot public finances, while nothing to write home about, are not in a catastrophic state. The debt to GDP ratio, far from ballooning out of control like Greece’s, was actually lower than Germany’s as late as 2011! This was despite Cyprus being steadily hammered by the global financial crisis and the massive explosion at a naval base in 2011 that cost it about 10% of its GDP.

cyprus-debt-dynamics The main problem was in its financial sector. Although it should have been safe on paper, Cypriot banks had the bad fortune to have had many operations in Greece – which hemorrhaged money as Greek debts were restructured under EU guidance. These involved painful austerity, but the principle that bank deposits would be inviolable held across the PIIGS. But for Cyprus, the Eurocrats – egged on by Schäuble in particular – decided to make an exception, demanding a “bail-in” as part of any financial rescue package. For the ultimately trifling sum of $6 billion, they were prepared to erode basic principles such as sanctity of property that the EU is founded on.

According to Edward Scicluna, the Maltese Finance Minister, his Cypriot counterpart Michalis Sarris was for all intents and purposes brow-beaten into accepting the deal – a 6.75% levy on deposits of less than 100,000 Euros, and 9.9% on everything above that – that the country’s parliament would later decisively reject. The Europeans, according to him, were dead-set on “downsizing” Cyprus’ supposedly overgrown financial sector and in particular its status as a tax haven and alleged center of Russian money laundering. After 10 grueling hours of discussions, Sarris finally conceded, and as soon as that happened, “Schäuble demanded that all wire transfers to and from the Cypriot banks would cease forthwith.”

In other words, they wished to destroy Cyprus’ financial system, and it seems certain that they have succeeded in this. As soon as the banks reopen (now delayed until at least May 26th), who exactly will continue to keep their deposits in a Cypriot bank?

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