Russia, Cyprus, the EU and the comedy of nation states
by David Atkins
Once upon a time there was a little country called Cyprus, an island located in the middle of a big sea. It had its problems and its wars, but it managed.
But there was also this very large called Russia. Russia had been controlled by an iron dictatorship that gave way very quickly to kleptocracy due to rapid privatization. Soon mobsters and anarcho-capitalists ruled this large country with little accountability.
The little country of Cyprus needed money, and the best way to get it was to open up its banks to all comers, like so many little countries and islands before it. So in came the Russian “capitalists” to fund the Cypriot banks.
Ah, but there was a little wrinkle. You see, the world’s banks had bitten off more risk than they could chew. The more a little country like Cyprus depended on is banks, the worse shape it was in once the Jenga tower of banking risk came crashing down.
Worse still, Cyprus had joined a confederation of nation states pegged to a single currency. So instead of being able to tell its bankers and Russian mobsters to eat their losses while the Cypriot people revalued their currency and took care of their people, the Cypriots were instead forced to ask their large neighbors to the north for help. And help did come–but with strings attached. The Cypriots had to make a few concessions the first time.
But it turns out that running an entire country on the back of a wholly corrupted financial system isn’t good for long-term prospects. So they needed help again.
At this point the big bad federation had a choice: they could attempt to leverage some of that multinational power to seize, freeze and redistribute the assets of the capitalist mobsters to the Cypriot or Russian people in a cooperative international venture. Or they could simply take a cut of every Cypriot bank account as a punitive tactic. They chose the last options. Which is interesting.
You see, the three oh-so-sovereign powers had some choices. Russia could have cracked down on the mobsters looting that great nation and sending the money offshore to Cyprus. But no. Cyprus could have told the EU it was leaving the Euro unless mob assets were frozen and a relatively small bailout for the real Cypriot people was given. And the EU could have chosen to take on the rich and powerful instead of the lashing out at average Cypriots.
But any of those options would have required taking on the power of multinational raiders on behalf of real people in the real economies of both their own and other nations. And as it turns out, nation-states are much more interested in protecting the riches of their wealthiest “citizens” than in doing the right thing by worldwide economies.
The world runs on an antiquated system destined for the dustbin. The situation in Cyprus is just the latest farce in this comedic cycle.
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