A country awash with conspiracy theories to explain hard line on bailout

Cypriots suspect EU hidden agenda

People eat at a restaurant under a banner placed by the owner in central Nicosia. The banner reads: “My proud Cyprus with the big No.”

People eat at a restaurant under a banner placed by the owner in central Nicosia. The banner reads: “My proud Cyprus with the big No.”


Cyprus is buzzing with conspiracy theories over why its Eu ropean partners and the International Monetary Fund are adopting a hard line over the bailout.

The most widely believed theory is that leaders of the Europe an People’s Party, including Taoiseach Enda Kenny and German chancellor Angela Merkel, supported the presidential bid of fellow EU parliamentary bloc member, Nikos Anastasiades, in the expectation that once in office he would capitulate to the troika’s price for a partial bailout.

However, President Anastasiades, who did not like the terms laid down, could not muster even the votes of members of his own Democratic Rally in parliament who, to avoid embarrassment, abstained on the ballot on the EU-IMF deal involving levies on bank deposits.

The second theory is that the EU is determined to shake the Cypriot economy and make it dependent on the bloc. This would allow Germany, the main bailout funder, to restructure the troubled Mediterranean economies to suit its purposes, essentially transforming them into captive markets for German goods.

Advocates of this theory argue that since last summer the Troika kept moving the goal posts during negotiations with Cyprus so that every time the government began implementing reforms new demands were raised with the aim of realising Germany’s objective.

The third theory holds that Germany, which has major political differences with Russia, is using the EU to play hard ball with Cyprus as its banks hold billions of euro in Russian deposits that will suffer serious losses from the scheme to cut deposits over €100,000 by between 9.9 per cent and 15 per cent.

The demand for heavy levies forces Cyprus to choose between Russia and the EU and puts pressure on Moscow to provide funds for Cyprus in order to preserve Russian deposits in Cypriot banks and to encourage Russians to keep their funds in these banks in order to maintain Cyprus as a useful financial hub.

Those advocating the fourth theory argue that the western powers and the US seek leverage to pressure the Cyprus republic to accept a disadvantageous reunification deal with Turkey, a modified version of the 2004 UN plan rejected by Greek Cypriots on the ground it preserved and legitimised the de facto partition of the island, divided since Turkey invaded and occupied the north in 1974.

This scheme would be to pave the way for Cypriot and, perhaps, Israeli, natural gas extracted from adjacent offshore fields, to be exported to Europe via a pipeline through Turkey rather than shipped to European ports at greater cost. Cypriot and Israeli natural gas supplies would make Europe less dependent on Russian gas.