Russians are preparing to withdraw billions of euros from Cyprus and the island will plunge into a recession lasting for decades due to the onerous terms of a EU bailout, economists warned on Monday.
“The Russians are already indicating they want to withdraw their money. Why should they stay? They will go somewhere where they can be protected; we can’t protect them,” economist Simeon Matsi told AFP.
“We have indications that billions (of euros) will be withdrawn, we already know of about three billion that is ready to move. They are already asking lawyers to draw up documents to withdraw money.”
As a condition for a desperately-needed 10-billion-euro ($13 billion) bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island’s banks.
Deposits of more than 100,000 euros will be hit with a 9.9 percent charge, while under that threshold the levy drops to 6.75 percent.
The controversial tax is seen hitting Russian pockets hard, with experts estimating that Russian deposits in Cypriot banks amount to at least 15.4 billion euros ($20 billion) of the estimated 67 billion euros of deposits held by Cyprus banks.
Russian President Vladimir Putin on Monday criticised the proposed tax, describing it, according to a Kremlin spokesman, as “unfair, unprofessional and dangerous”.
Russian Prime Minister Dmitry Medvedev was equally forthright.
“We should say this directly: this simply looks like the confiscation of other people’s money,” Russian news agencies quoted him as saying. “I do not know who the author of this idea is, but this is what it looks like.”
Economist Matsi predicted that Cyprus banks which were scheduled to reopen on Tuesday after a three-day weekend, would remain closed for a time to prevent a rush on accounts.
“The deal by the eurogroup dealt a very heavy blow to Cyprus — it was the death knell for the financial sector,” he said.
Economist Castas Apostolides said the Cypriot government went unprepared into negotiations with the eurogroup.
“We should have called Europe’s bluff,” he said.
“A bank haircut on deposits is unacceptable; they should have walked out because without a business sector there is no Cyprus economy,” Apostolides said.
“Cyprus will be unable to exit recession for the next 20 years. Our children will pay for this mistake.”
An analysis by IHS Global Insight said there was a “potential for contagion from the move to impact bank sectors in other troubled economies on the periphery of the eurozone.”
“A mass of withdrawals from eurozone periphery banks could heat up the debt crisis once again after the international financial community had decided that lending to countries such as Spain and Italy would not require the extremely high risk premia it had earlier demanded,” it said.
“The financial markets’ immediate bad reaction to the part funding of the Cypriot rescue by taxing bank depositors has highlighted the concerns that it could be opening a nasty can of worms.”
UBS Investment Bank managing director Reinhard Cluse said the deal “raises the obvious question whether the depositor bail-in in Cyprus is a ‘one-off’ or whether it will eventually be repeated elsewhere in the future”.
In our view, the immediate implication for other periphery countries might be limited, but we see a substantial risk that depositors will behave a lot more nervously elsewhere in the future,” he said.
Jennifer McKeown, a senior economist with Capital Economics, said that eurozone depositors may not be convinced that the Cyprus action will be a one-off measure.
“And even if Cyprus is a special case, the key point is that depositors elsewhere might not be willing to take the chance. … and if the authorities are unwilling to save an economy as small as Cyprus … will they really save the others?” she asked.
MSNBC analyst shreds GOP claim impeachment is an effort to change the 2016 election
Republicans have claimed that the reason Democrats have sought impeachment, either from the Russia scandal to the Ukraine scandal, is that they want to unmake the 2016 election. Speaking to MSNBC Sunday, NYU Law Prof. Melissa Murray ripped the claim to shreds.
First, impeachment would only remove President Donald Trump is the Republican Senate voted to do so. If the president were removed, the new president wouldn't be Hillary Clinton; it would be Mike Pence, getting Democrats no victories other than upholding the rule of law.
"As these proceedings go away, there is building support for impeachment; it will require a supermajority of the Senate in order to convict and remove the president, which will require some Republican Senators to peel off and depart from the path," Murray said. "But I think the really important thing that Bob has mentioned here is this idea ta the Republicans are taunting that impeachment is a backend effort to basically subvert the will of the people. I think the testimony that was presented yesterday makes clear that that claim is specious."
Rudy Giuliani’s devotion has escorted Trump straight to impeachment
"Step by step, [Rudy Giuliani] has escorted President Trump to the brink of impeachment," The New York Times said in a piece following the president's top lawyer and his impact on the scandals facing the 45th president.
Two associates of Giuliani's have already been indicted, Giuliani is under criminal investigation from federal prosecutors, and he was never graced with a top position in the Trump government.
"The separate troubles he has gotten his client and himself into are products of the uniquely powerful position he has fashioned, a hybrid of unpaid personal counsel to the president and for-profit peddler of access and advice," The Times said Sunday.
Trump team ‘is as incompetent, shambolic, paranoid, and given to conspiracy theories as it appears’: MSNBC panel
In a Sunday evening panel discussion, MSNBC commentators explained that the White House appears to be just as chaotic and marred by chaos as the rumors say.
Many in the White House learned that the president's lawyer, Rudy Giuliani, was working overseas in Ukraine. Giuliani claimed that he's been producing a film that he couldn't get Fox News to run, as it will appear on the fringe network OAN.
"What Rudy Giuliani is doing is using Kremlin-manufactured propaganda as a defensive shield for the president," said CNBC's John Harwood. "Fiona Hill was unambiguous in her testimony to the intelligence committee. What Rudy Giuliani has been doing with these two indicted men who are linked to a Russian oligarch who is tied to Russian organized crime, is trying to manufacture a story that Ukraine, rather than Russia or in addition to Russia or differently from Russia, meddle in the campaign. That is false."