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Govt fears Cyprus example may trigger confiscatory measures – source

March 20, 2013, 17:04 UTC+3
This issue may be discussed during a meeting of Prime Minister Dmitry Medvedev and European Commission President Jose Manuel Barroso, scheduled for Thursday
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MOSCOW, March 20 (Itar-Tass) – The Russian government expresses concern that the Eurogroup-imposed measures to impose a ten-percent levy on deposits in Cypriot banks could be tested by the example of that country and then extended to other countries of the eurozone facing problems, a source in the Russian government told Tass on Wednesday.

The source did not rule out that this issue may be discussed during a meeting of Prime Minister Dmitry Medvedev and European Commission President Jose Manuel Barroso, scheduled for Thursday.

He expressed concern that the example of Cyprus, a small country, could trigger the approval of these “confiscatory, in essence, measures” in other countries, adding that a similar situation could develop in the future in Italy, Spain and Portugal. According to the source, during the talks, Medvedev “will say that we believe this is not the best option”.

He stressed that not all approve of the measures offered by Eurogroup. “We favor a collective decision, a transparent and clear for all decision that must be coordinated not individually, as it concerns all,” the source added.

On March 16, Eurogroup made a decision on the bailout totaling ten billion euros for Cyprus, but an unprecedented decision was made to involve depositors of local banks in financing the efforts of the Cypriot authorities to pull the country out of the crisis. Bank depositors were offered to pay different sums as a one-time anti-crisis levy, depending on the amount of their deposit, in order to raise about 5.8 billion euros. However, the parliament voted against that levy on deposits.

The very possibility of imposing such an anti-crisis measure came as a shock – under different forecasts it would trigger a flight of capitals from Cyprus, would shatter investor’s trust in the whole eurozone and could cause a new wave of crisis in Europe.

President Vladimir Putin has called the imposition of a bank deposit levy unfair, unprofessional and dangerous.

 

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