Interview on Cyprus Crisis: European Cosmopolitanism in the Age of Financial ...
Michael Peters: If you might permit me as a non-European, oriented and socialized through European ideals, it seems that Cyprus' current crisis is strongly related to a kind of neoliberal financial capitalism that is cosmopolitan, although not
Bankers see M&A recovery after deals drop 7% in 2013
Bankers who broker deals were confident things would improve in Europe, as the availability of capital - boosted by government quantitative easing (QE) or bond-buying measures designed to boost economic growth - encourages cash-rich companies to pursue
Master of Quantitative Finance and Numerix
Interview on Cyprus Crisis: European Cosmopolitanism in the Age of Financial ... - Truth-OutThis extended correspondence between two scholars is featured as part of Truthout's Public Intellectual Project.
Michael Peters: If you might permit me as a non-European, oriented and socialized through European ideals, it seems that Cyprus' current crisis is strongly related to a kind of neoliberal financial capitalism that is cosmopolitan, although not democratic. The orientation of Brussels has always been toward the pact for the euro that points the way to institutionalized fiscal austerity and the priority of debt repayment. These monetized aims also help promote the disestablishment of collective wage bargaining and cuts to public spending and pensions.
In other cases, such as the Spanish crisis, the EU austerity strategy seemed to be more bailouts for private banks with state guarantees to pay off debt to foreign creditors at the expense of its own resources. This is an ethico-political vision (but one that you and I abhor) in which financial interests have effected a kind of institutional capture to socialize private banking losses.
The interesting aspect to me is that the financial policy and interests driving the process are often implemented by bodies not directly elected by EU citizens or accountable to them. The growth pact, the pact for the euro, and the different memoranda of understanding seem to sacrifice fiscal sovereignty, and, therefore, also necessarily compromise the possibility of any democratic cosmopolitanism. It is unclear to me why an overextended Cypriot banking system, the partial result of deregulation, closely tied to Greek interests and seen to actively attract and harbor Russian capital at low tax levels, should prompt Eurocrats, International Monetary Fund (IMF) officials and local conservative government ministers to employ a crude burden-sharing levy that cuts across all deposit holders and against the historical and now-standard agreement to protect bank deposit funds up to a threshold of 100,000 euros. This is a recipe for social unrest with strong anti-EU sentiment entering into mainstream political discourse, accompanied by the desire for local economic autonomy. This is surely also able to be parsed in terms of cosmopolitan sentiments that have an ethico-political component - especially if these popular feelings end up punishing the relationship to the rest of Europe and cuddling up closer to Russia.
To read more articles in the Project, click here .
The imposition on capital controls is against basic EU rules that allow for freedom of movement of capital. The wider consequences are hard to ignore: there are many countries that have banking systems where bank assets are higher than eight times the size of GDP (as for Cyprus) - Luxemburg, Ireland, Slovenia and Malta, for example. Is Cyprus a one-off case for the EU or the template for a consistent policy? Who should pay for bailouts? Taxpayers, investors, bondholders, depositors? President Nicos Anastasiades outlined a 12-point plan to rescue the troubled economy, including a Euro-Vegas gambling initiative allowing casinos to operate.
Perhaps the problem is that the cosmopolitan ideal has not been properly instituted, leaving the EU as a decentralized set of states with a range of conflicting national objectives? Is Merkel simply trying to satisfy German voters? The geopolitics surrounding the Cyprus banking crisis cannot be separated from financialization or the growth of finance capitalism worldwide - for the same banking practices of which the Cypriots are accused are much more well developed in Wall Street, the City of London and other European banking capitals; indeed, they are now standard practice, and as Vassilis K. Fouskas and Constantine Dimoulas suggest , the West "encouraged Cyprus to embrace its model of financialization, opening up to foreign capital and services." They go on to point out:
As usual, the weakest party is the first to be blamed: Cyprus has become a tax haven and an offshore paradise, washing Russian, Serbian and Arab money; its financial and banking sector is almost eight times its economic output; it created a real estate bubble and now suffers from non-serviceable mortgages and bad loans; it bought Greek debt, suffering massive losses when Greece's creditors imposed a "haircut" in 2011; and, last but not least, the Greek Cypriots failed to unite the island in 2004 in a referendum in which the Turkish Cypriots voted in favor and the Greek Cypriots against unity (those arguing this forget what the Annan plan was about: a neocolonial design guaranteeing NATO's interests against those of ordinary Cypriots and the refugees).
The Cyprus crisis is essentially a Eurozone crisis which threatens the very foundations of the European Union. This small island economy, only 0.2.% of the Eurozone, is proving to be 'systemic' at the political, social and economic level. The Cyprus crisis is a manifestation...>