Way back in the mists of cinema history – 1959 to be precise – there was a spoof movie whose plot might just have provided the answer to cash-strapped Cyprus. Plus, it could also have sent a reassuring message to other Club Med Eurozone members on their uppers, their populations incandescent with rage over force-fed austerity.
Based on a book by Irish-American writer, Leonard Wibberley, and starring Peter Sellers, The Mouse That Roared chronicled the tale of the miniscule European duchy of Grand Fenwick when it was hit by a financial tsunami.
With its tiny economy almost entirely reliant on Pinot Grand Fenwick wine – read that as a metaphor for today’s banking – the country suddenly faced ruin when a US winery made a knockoff version of the highly-quaffable plonk.
The medieval micro-state, its 20-man army equipped with longbows and arrows, had but one recourse…to declare war on America, pray for instant defeat and trouser the largesse Washington usually doles out to those it has vanquished (e.g. the Marshall Plan for Germany following World War II).
So far, so good. Except it all turns turtle when the pauper duchy accidently defeats the mighty superpower and stumbles on control of the ‘Q-bomb’, a doomsday weapon capable of destroying mankind.
Naturally, in the world of wacky movies, all’s well that ends well; Grand Fenwick loses the conflict…and wins the moolah.
Fast-forward 50-plus years and, with nowhere to run to find financial succour, Cyprus played an audacious, Mouse That Roared card and took on the clunking fist of the EU in a poker game over bail-out terms for its banks relatively huge toxic debt.
However, unlike Grand Fenwick, Cyprus (population: 700,000 and dwindling) didn’t stand a snowball in Hades chance of plucking victory from the jaws of defeat. Because German Chancellor Angela Merkel and her finance minister Wolfgang Schaeuble – a man who could start a fight in an empty room – were never going to dip into their tax-payers’ wallets, especially in an election year.
Despite Germany’s financial might only required to back-stop a European Central Bank-EU-IMF (a.k.a. the Troika) loan approaching €10bn to the blighted island, it was time to set a brutal example to all Club Med beggars and crack the whip, even if it confirmed (once again) the Eurozone isn’t fit for purpose.
So, if Cyprus railed over the hardball terms being dictated, the door marked Exit, Ausgang or Salida beckoned to bankruptcy, irrespective of the EU’s Alcatraz rules that once in, there’s no escape.
This was the Euro superpowers’ revenge for feckless bankers having the audacity to set up an off-shore tax-haven paradise on the tiddler island…a money laundrette for washloads of filthy lucre (€18bn by some accounts), dropped off by Russian oligarchs wanting more bangs for their buck – or rather rouble – and no questions asked.
Then, to compound their monumental folly and displaying quite staggering disregard for due diligence, the Cypriot whizkids showered an avalanche of euros on iffy on Athenian junk bonds, which sank when the vacuous nation’s gravy train hit the buffers (Moral: beware of Greeks seeking gifts).
So, like their busted flush neighbour before it, Cyprus took its begging bowl to Brussels, with the implied threat that if you don’t underwrite our debt, we’ll upset the EU applecart.
However, the response was predictably draconian or, to paraphrase a fox-hunting analogy, the ruthless in pursuit of the potless.
Spurred on by a Germany for whom the Eurozone is fast becoming a jigsaw of Teutonic provinces, the Brussels bullyboys (Motto: take a sledgehammer to crack a nut) exposed themselves – once again – as crass, anti-democratic, bean-counting thugs.
And, to stamp their authority with maximum savagery, they demanded not only an end to Cyprus’s dodgy tax laxity, but depositors become victims of blatant bank robbery to help stump up nearly €6bn.
This will be achieved via a 40% haircut (scalping more like it) for those with over €100K in one dubious bank and the total annihilation of another. Plus, there’ll be ‘temporary’ controls to stop capital flight – another pillar of monetary union conveniently disregarded – though most of the dirty money has already flown.
The net result is that no-one comes out of this smelling of attar of roses. The EU is exposed for what it is – a wannabe super-state without a grain of compassion for its hoi-polloi; and Cyprus, an omnishambles of Byzantine idiocy, is to be the template for any other uppity lot misguided enough to believe it’s still a sovereign nation (Club Med+Ireland take note).
My guess, though, whatever arm-twisting deal was cobbled together, we’ve not heard the last of the Eastern Mediterranean mouse and how it cheesed off the EU (sorry, couldn’t resist that pun).
So the fear of contagion lurks and not a day goes by without me hearing folk voicing similar distrust of the Troika’s heavy-handedness, despite Spain’s finance minister assuring investors it can’t possibly happen again.
Why not? Even with depositor guarantees of €100,000, if the ECB – supposedly the milch-cow of last resort – cocks a snook at Cyprus, for all its profligacy, which Eurozone politician can predict with any certainty no more cruelty will be meted out to purge ungodliness from the sainted euro paradigm?
However, Cyprus may have more room for manoeuvre than Brussels imagines.
Having propped up the island with a €5bn inter-government loan, Moscow is livid at being locked out of rescue talks in what it perceives as an EU snub. And now it is muttering darkly about pay-back.
This, then, could be the trigger for woebegone Cypriots to pull, because they have two prizes Vladimir Putin muchly desires: Russian exploration rights to a natural gas field Cyprus is developing with Israel and the potential to be a new base for its Mediterranean fleet if the Syrian port of Tartus is lost, come Bashar al-Assad’s downfall.
And writing off a €5bn loan – mere loose change – is no hardship for an economy swimming in petro-dollars.
Moreover, the geopolitical implications of Cyprus falling further under Moscow’s sway could be dramatic. The EU’s third smallest nation could not only afford to shun the euro and return to its old Cyprus £ – as one of its ministers threatened – it could deliver a strategic uppercut to the West’s sphere of Middle East influence and threaten the British army outpost at Akrotiri, one of NATO’s pivotal monitoring stations.
With Greece already deep in hock to the expansionist Chinese, who own the deeds to the port of Piraeus, and the Moscow-Beijing axis strengthening, Cyprus may provide the key to unlocking greater riches than its emptying bank vaults.
If that happens, the smart alecs who dictate EU tyranny may well rue the day they put the screws on the tiny Eastern Med mouse with the temerity to roar.