When the European Union over the weekend told Cyprus banks to help “fund” a bailout by stealing up to 10 percent of depositors’ money from their savings accounts, they sent a lot of small-time savers on the island and in other EU countries into a panic.
ATMs ran out of cash quickly, and officials ordered Cyprus banks closed until Thursday to try to prevent a run caused by the ham-handed government confiscation of property.
The ramifications as the Cyprus theft ripples through the global economy are not all clear yet, but one thing is clear: The EU finance ministers have managed to anger Vladimir Putin and a lot of other powerful Russians.
It is estimated that there are almost 70 billion euros from foreign depositors held in Cypriot banks, and most of those depositors are Russian.
“While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous,” Kremlin spokesman Dmitry Peskov growled at journalists.
In fact, one of the concerns the finance ministers had while they delayed their initial announcement of the theft of deposits was that the close ties between Russian businesses and Cyprus banks meant the presence of a massive money laundering pipeline.
So in short, the finance ministers have not only violated the very notion of deposit insurance, undermined trust in Cypriot and by extension European banks, but they have angered Putin, president of one of the most powerful countries on Earth, hampered Russian businesses as they struggle through their own economic troubles, and possibly made themselves targets for the Russian mob.
If there is still a global banking system next week, the eurozone finance ministers just might consider taking extended vacations at an undisclosed location.
Of course, if they were to do that, they should take cash.