The No-Name European Committee That Made the $13 Billion Guarantee to Cypriot Banks

by Gary North
GaryNorth.com

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The Eurogroup held a teleconference this evening to take stock of the situation in Cyprus.

The eurozone's decision-making institution on the euro is an informal committee of finance ministers. The committee has no official name. It has no official power. It is not voted into office.

In the Lisbon Treaty, which went into effect on January 1, 2009, this no-name informal committee at last got its legal status.

Article 1: The Ministers of the Member States whose currency is the euro shall meet informally. Such meetings shall take place, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency. The Commission shall take part in the meetings. The European Central Bank shall be invited to take part in such meetings, which shall be prepared by the representatives of the Ministers with responsibility for finance of the Member States whose currency is the euro and of the Commission.

Article 2: The Ministers of the Member States whose currency is the euro shall elect a president for two and a half years, by a majority of those Member States.

So, it meets informally. It discusses questions. The Commission takes part. (How? With what authority? With how many votes?) The ECB is invited. It does not have a vote.

The president of the no-name committee has a name no one can pronounce unless he is Dutch, Jeroen Dijsselbloem.

Yet this no-name Committee promised Cyprus banks $13 billion worth of euros over the weekend, on its own authority, and answerable to no one in any European parliament, including the European Union.

This is called democracy in Europe. In Europe, democracy means: "You dumb clucks."

The bailout required the government of Cyprus to impose a capital tax on all bank accounts.

This was announced on Monday by the newly elected President of Cyprus. The voters of Cyprus went ballistic. The President of Cyprus had sworn to the people in his inauguration address on February 28 that he would never, ever do this.

Translation: "You dumb clucks."

The Parliament of Cyprus has thrown a spammer into the works. It has refused to impose the tax. What's this? It's democracy. The real kind.

The president of the no-name informal committee, which is informally called the "Euro Group," has issued a statement. It is unsigned. (No one can pronounce it, so who cares?) He is appalled at this betrayal by the parliament of Cyprus. This was a secret deal, and secret deals are supposed to be agreed to by Parliaments. Parliaments are supposed to be rubber stamps. Who does the bunch of stooges think they are, anyway?

I reproduce this announcement verbatim from the website of the so-called Euro Group. I also provide a translation.

I recall that the political agreement reached on 16 March on the cornerstones of the adjustment programme and the financing envelope for Cyprus reflects the consensus reached by the Cypriot government with the Eurogroup.

Because the meeting was held in secret, there were no official notes. You will have to trust my memory. The group met with the someone or other – I cannot recall who – who said he represented the government of Cyprus.

The implementation of the reform measures included in the draft programme is the best guarantee for a more prosperous future for Cyprus and its citizens, through a viable financial sector, sound public finances and sustainable economic growth.

The parliament of Cyprus should rubber stamp this deal. It is best for Cyprus citizens. Pay no attention to those crowds in front of the Parliament shouting "no!"

I reiterate that the stability levy on deposits is a one-off measure.

No body in the Eurozone outside of the no-name group with no official power has approved any of this. It has never happened before. It will never happen again. Trust me.

This measure will – together with the international financial support – be used to restore the viability of the Cypriot banking system and hence, safeguard financial stability in Cyprus. In the absence of this measure, Cyprus would have faced scenarios that would have left deposit holders significantly worse off.

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March 21, 2013

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 31-volume series, An Economic Commentary on the Bible.

Copyright © 2013 Gary North

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