Cyprus’s trauma

The trauma Cyprus has suffered in recent days is not contained to its own people – it has shaken every EU citizen and the very idea of a united Europe. The Eurogroup’s decision on Saturday, under pressure from the troika and Berlin, revealed the extent of the problem that was evident from the start of the Greek crisis: The bloc has still not acquired a strong crisis management system worthy of its economic power. The latest developments, however, introduce a dangerous new element – the cynical wish of some countries to test the limits of policy and the cohesion of the eurozone.

It is indicative that Cyprus, one of the very smallest EU member states, should be at the heart of today’s problem. From the start, the EU’s leadership refused to act as if they represented an economic giant, with a centralized economic policy that would take into account members’ needs and differences and would prevent any derailment of the collective effort. The result is that every crisis, in whichever country, can be a systemic danger to the common currency. Perhaps that is why it was such a temptation to treat Cyprus as insignificant to the eurozone’s cohesion – because it is so small. Perhaps that is why the Eurogroup took the fatal decision to confiscate (in the form of a tax) part of each bank account in Cyprus, including those under the 100,000-euro threshold. The EU itself broke the taboo that it had established: that all accounts under this limit are guaranteed.

Whether or not it was a Cypriot bluff that the others called, whether or not it was a mistake or part of some unknown plan, the decision to impose a levy on accounts less than 100,000 euros weighs on all members – but especially those countries with the greatest influence. Now all Europeans have lost confidence in a system that guaranteed their savings. The issue, then, concerns not only Cyprus and the Cypriots, but has shown how, alone, just how vulnerable each EU citizen is. This takes the crisis to a new level.

The Eurogroup’s decision showed once again that when there is no ready framework, improvisation allows the powerful to impose decisions solely on the basis of what suits them best. It is natural that Germany, the Netherlands and Finland will not want to keep footing the bill for other nations, but it is absurd that they should keep obstructing the establishment of collective mechanisms that would prevent this “national” dispute between countries that are suffering from the crisis and others which – for many reasons but also because their partners are in crisis – are benefiting from it. Choosing to make domestic political needs their priority, all the EU countries are undermining collective gains, jeopardizing the bloc and shaking the lives of citizens. As in every organization, it is the most powerful members who have the greatest responsibility. If they seek a Union that is permanently divided into rich and poor, they should say so.

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