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Cyprus crisis echoes

March 23rd, 2013

A pro-government columnist writes that Cyprus is yet another example of how the EU-IMF pair wrecks vulnerable countries, while centrist commentators claim Cyprus is a special geopolitical case and is unlikely to serve as a precedent.

In Magyar Hírlap, Imre Boros, a former central banker, Smallholders’ Party MP (1998-2002) ad Cabinet Minister (2001-2002) describes countries “under IMF-EU tutelage” as showcases of the failure of austerity strategies. Hungary alone, he says, has been able to keep her fiscal balance, by refusing to give in and by “creating a broad system of burden sharing,” involving foreign owned companies. It is this “democratic solution”, the author claims, that appears to prevail in Cyprus as well, just as it did in Iceland when Icelanders “chased away their government” and chose not to bail out the private banks that destroyed their economy.

Péter József Martin, an economist and foreign affairs analyst admits the EU would . In Tagok vagyunk (We are members), a blog dedicated to Hungary”s EU membership, he writes that the idea itself reflects how shattered the foundations of the Union are, and how high the mistrust between the rich North and the needy South has become. He fears that euro-pessimism and anti-establishment sentiments will inevitably gain strength as a result. Yet there are arguments in favour of the tax on deposits and he predicts some compromise is likely to emerge in the end. In any case, the author strongly disagrees with those who forecast an escalation of the Cyprus crisis and a proliferation of deposit taxes. Hungarian banks have no foreign deposits and such a tax would lead to an immediate collapse of the relatively sound financial sector – an outcome the government has no intention of risking.

In his piece for HVG, Gusztáv Molnár also underlines the deep structural divide between German or “Northern” interests and Southern Europe. He attributes the attempts to pass the buck to depositors in Cyprus to her geopolitical status. Europe cannot afford to lose Cyprus to Russia while Russia is not that eager to lend a helping hand to Cyprus unless Cyprus is ready to pay the price. Quoting Nouriel Roubini, Molnár says Britain and the United States would hate to see a Russian marine base on the island but Germany may not care too much. This might be the opportunity, he suggests, for the EU to get its act together and take geopolitical interests into serious consideration.

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