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European Council’s Portentous ‘Statement on Cyprus’ Contains Typo And Other Mysteries

Russia Less Than Amused – Retaliation In Prospect

by Xavier Basil


One thing that non-Europeans have difficulty with when it comes to Europe is working out just what it is. There’s the European Union of course – the ‘EU’ – and there’s the European Commission, which is the ‘EC’. But there’s also the ‘EP’ – the European Parliament – and there’s the ‘EC’. But not the European Commission, the other one – the European Council. Which does what, exactly? It’s a safe bet that not even your average well-read Euro-citizen could tell you that.

And neither could this correspondent, with any confidence. But one thing the European Council does do is issue statements about resolution of the Cypriot financial crisis. We know this because precisely such a statement emanated in the early hours of this morning from its official website, can be read here [Eurogroup Statement on Cyprus].

‘Consilium’ – an organisation having no fewer than 23 living languages from which to choose spurns all of them and goes with Latin, which is a dead one.And for all the light shed on its subject matter, the Cyprus statement might just as well have been written in Latin, or Greek for that matter. The confusion for any reader not steeped in Euro-lore starts with the heading - ‘Eurogroup Statement on Cyprus’. Eurogroup? Is that, like Consilium, another name for the European Council?

Actually, the answer is no. Whereas the European Council is the body corporate of the heads of state of all 27 EU member countries, only latterly (since 2009) in formal existence and presided over by Belgium’s ‘Haiku Herman’ van Rompuy, the Eurogroup isa sort of unincorporated club, comprising the finance ministers of the 17 EU member states which have adopted the euro currency, a.k.a. ‘the Eurozone’.New club president and playing through domestic finance minister Jeroen Dijsselbloem hails from just over the internal border from President van Rompuy, in The Netherlands. Ex officio membership of the Eurogroup is extended to two additional Euro-functionaries, the president of the European Central Bank and the EC’s – meaning the European Commission’s - economic commissioner, meaning minister.

So why is the European Council issuing statements about Cypriot financial crises purporting to be from the Eurogroup? Presumably because the Eurogroup – or Euro Group if you prefer, both are still in play – doesn’t have its own website.

Whatever the reason, the statement then proceeds in 424 words across 12 paragraphs to tell the world of the prevention at the last possible moment of financial meltdown in Cyprus. It’s written in that ponderous and didactic style which is the hallmark of all Euro-emanations – nine of the 12 paragraphs open with ‘The Eurogroup + verb’. So, ‘The Eurogroup welcomes’ three times, ‘the Eurogroup notes’ twice and ‘the Eurogroup’ urges, expects and requests, in that order. The statement appears to have been authored by someone – there is no attribution – whose Euro-English though highly proficient is not native. (The words, for example, ‘with the view of restoring sustainable growth’ would in native English be rendered ‘with a view to restoring’.)

And there is a typo, at least in the English language as received. The measures to be taken under the bailout will, we are told, ‘safeguard all deposits below EUR 100.000 in accordance with EU principles’. We can safely assume that the full-stop in ‘100.000’ should be read as a comma, and that it is indeed €99,999.999 which will be spared and not one hundred euros to three decimal places.

Though, that is not entirely clear, either in the statement or in today’s media coverage – which in the latter case, given the frenetic pace of relevant events over the past 10 days, is perhaps to be expected. As just noted, there is to be a ‘safeguarding’ of ‘all deposits below’ €100,000. We have to go outside the statement and into the media to learn that this references the intent – apparently permitted under Cypriot law, albeit enacted just last week – to migrate certain deposit accounts in Laiki (Popular) Bank to the Bank of Cyprus before putting the sword to Laiki and all its remaining accounts. But is this safeguarding to be confined to accounts whose balances happen, at the designated moment, to have been under €100,000 or to the first €100,000 of all Laiki Bank accounts?

It may be of no great moment if you’re a Russian businessman with, say, five million freshly-laundered euros on deposit in Laiki, since most of it’s done for anyway, but it’s of profound import if you’re a hard-working Cypriot family with, say, €105,610 in a short-term savings account. Is your entire balance being despatched to the bad bank or just the €5,611 which is not ‘below EUR100.000’? Perhaps the media have it sorted.

Here’s how Reuters puts it – ‘…shifting deposits below 100,000 euros to the Bank of Cyprus to create a "good bank"’. The Financial Times has this –‘…the new programme spares all deposits below €100,000’ - while Bloomberg says this – ‘The revised accord spares bank accounts below the insured limit of 100,000 euros.’ And for good measure, let’s take one British and one American daily – the Daily Telegraph is suspiciously close to Bloomberg with ‘All deposits in Laiki Bank below €100,000 will be shifted to the Bank of Cyprus to create a "good bank"’, while the NY Times, perhaps exhibiting the tyranny of distance, goes its own way with ‘Depositors in the bank with accounts holding more than 100,000 euros would also be heavily penalized.’

Reading all these – and the multitudinous other – media reports uploaded today on the Eurogroup statement, one would be none the wiser on the question earlier posed. Are all accounts, of whatever balance, going to be ‘safeguarded’ up to €100k or does the safeguard apply only to accounts whose balances are ‘below EUR100.000’, in the words of the European Council/Consilium functioning as the Eurogroup/Eurozone? One suspects that there’s quite a lot of money hanging on the distinction.

And doubtless all will be revealed in the fullness of time. Meantime, media focus is moving towards ‘the Russian reaction’. The Telegraph’s current headline to its running commentary on the crisis captures it neatly – ‘Russia slams deal as ‘tantamount to theft’’, it reads, in what may be one of the great expositions of the pot calling the kettle black.

But origins of the Russian billions aside, the point has surely to be conceded. The forcedmarch of Cypriot bank balances from €100k up – whatever that means exactly – to imprisonment in a ‘bad bank’, there to be expended in satisfaction of all the red ink slopping around in the post-Grecian debacle, and with the percentage expropriation of those funds yet to be determined – though 30 percent is in play, is the stuff of erstwhile banana republics rather than state-of-the-art western democracies.

But the European Council/Eurogroup statement is breathtakingly unrepentant – the club ‘looks forward to an agreement between Cyprus and the Russian Federation on a financial contribution’. Meaning, presumably, in addition to the billions – and at a 30 percent expropriation perhaps in the order of €10 billion – which Russian depositors stand to lose from the bailout. As this item goes to press, it’s being rumoured that the Kremlin’s response to that little jibe is to be a freeze on all German assets in Russia.

One can’t help but conclude that today’s ‘Eurogroup Statement On Cyprus’ has gotten a whole new ball rolling in Euro-relations.

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