This is the first out of a series of four pieces written about the Cypriot financial crisis.
On March 19, 2013, the members of the Cypriot Parliament were called to make a decision that could have changed the lives of Europeans forever. The Parliament was asked to accept or reject the bail out plan set by the European Central Bank, the European Commission and the International Monetary Fund (Troika). The plan would dip into the depositors’ bank accounts to help save the Cypriot banks from bankruptcy. Αs many economic analysts said, the proposed imposition of a levy (“haircut”) of 6.75% on bank deposits less than 100.00 euros was an unprecedented event in the world’s economic history. While large groups of protesters gathered outside the Cypriot Parliament waiting for the result of the vote, Spanish protesters gathered in Madrid knowing that they could be next with a possible imposition of a levy of 0.2% on their bank deposits over 100.00 euros.
The unanimous rejection (the “No”) of the haircut by the members of the Parliament had no impact whatsoever on whether the European bail out plan would eventually be implemented or not. To the surprise of the Cypriot citizens the Troika eventually imposed the closing of Cyprus Popular Bank, one of the country’s largest, costing account holders 4.9 billion euros and proceeded with the haircut of 60% on bank deposits over 100.00 euros for deposites in the Bank of Cyprus.
Then, Cypriots, albeit in a state of shock, seeing their life savings, their pensions and their businesses vanishing in front of their eyes, instantly invented various support mechanisms in order to deal with the upcoming shortages: the power supply company reduced its monthly fees; the telecommunication authority provided free telephone service for April; doctor Eleni Theocharous established a temporary nursing unit to provide free health care; bakeries decreased the price of milk and bread. Α Day Long Solidarity Concert with title “People for People” took place on April 1st to collect food supplies for the poor (video). Think tanks, comprised by civilians, are currently being formed to find innovative ways to reclaim democracy and facilitate future everyday economic exchanges.
The Cypriot “No” was a reminder that the European community breathes (perhaps its last breaths) at the Community’s periphery. According to Costas Douzinas it “was the first formal rebuff of austerity, something that the obedient governments of southern Europe had not dared” (The Guardian). The parliament’s “No” cost the Cypriots one of their biggest banks, even though as many have argued the bank would be lost regardless; yet it affirmed their faith in democracy and European solidarity regardless of the financial cost. Little did the common Cypriots know about the existing divisions within the E.U. in which the individual democratic decision-making processes of nations are, since the Lisbon treaty, subject to the authority of the supranational European Commission.