Cyprus isn't something happening "over there"

Europe – and that includes Britain – is unavoidably connected.

In case anyone thought that the bank and sovereign debt crisis that has engulfed certain parts of the eurozone has produced all its dramatic twists, events this weekend came as a rude awakener.

Eurozone leaders agreed early on Saturday morning a deal to bailout and restructure the Cypriot banking sector.

The most controversial part of the deal sees a tax levied on depositors to raise about 5.8 billion euros, to add to the €10 billion committed by the Eurozone and (probably) IMF. A 9.9 per cent levy will be imposed to deposits over 100.000, while deposits below 100.000 will face a levy of 6.75 per cent.

So for the first time depositors, who were considered sacrosanct until now, are forced to share the cost of a bail-out.

A lot has been said about how this decision was reached. The blame shifts depending who one talks to, but the Financial Times give a good account. It seems that considerations about the future of Cyprus as an off-shore financial centre played a role when deciding how widely to spread the pain among depositors in Cypriot banks. It was feared that taxing only non-resident depositors would scare investors away.

So the main bone of contention (in an overall contentious decision) is that smaller depositors are put on the firing line, in a move that is seen as unfair and dangerous. Asking working people and pensioners to sacrifice their savings in the service of a failed banking sector is indeed cruel. But WSJ’s Simon Dixon makes a fair point, there is an element of fairness when asking locals to contribute to the bail out of their country’s banking sector, especially when that sector represents such a huge part of the country’s economy.

Many argue that it should not have come to this at all, that depositors should have been spared all together. But as Hugo Dixon of Reuters argues the Eurozone and the Cypriot government had very little choice. Imposing a haircut on government debt, like it was done in Greece’s case, was not possible because most of the country’s sovereign debt is held under English law (making a Greek-style restructuring hard) and the remaining is held by Cypriot banks, making a hair-cut self-defeating.

Hence the decision to impose a tax on depositors, many of whom are non-resident, predominately Russian and in many cases suspect of money-laundering. It would have been a hard task politically to explain to taxpayers across the Eurozone why they should contribute more to a bail-out that would have, to some extent, helped Russian oligarchs.

The most important thing that one should consider is what would be the cost of an alternative. In the absence of a bail-out deal (one that the Cypriot government had delayed long enough) Cypriot banks (which are already under ECB life-support) would collapse, taking the Cypriot economy with them. Lest we forget that the banking sector in Cyprus is more than 5 times the Cypriot economy.

The one good thing that can come out of this is the de facto reduction of Cyprus’ banking sector to a size closer to the EU average, as the Eurogroup statement, that followed the bailout agreement, calls for. As we have seen in other European countries like Ireland and the UK, an oversized financial sector holds huge risks for the host country, especially for one whose economy is as small as that of Cyprus. To a large extent this is a banking crisis, rather than a “euro-crisis” and no matter what the structural inefficiencies of Eurozone’s governance (and European politicians inability so far to separate bank from sovereign debt) what Cyprus is faced with is the collapse of a banking sector that grew too big for its own good and made far too many bad decisions.

There is still a lot to play for, not least a parliamentary vote to approve the bail-out deal. Until then there is time and room to reconsider how the burden will be spread among depositors, and there are many proposals on the table on how to shield small depositors and reduce their contribution to the bail-out pot of money. Some reports talk about reducing to 3 per cent the levy imposed to deposits up to €100.000.

One last thing. The situation in Cyprus shows that in an interconnected world we are not immune to what happens “over there”. Capital as well as people are mobile, the banking sector interconnected and as a result banks and people’s savings are affected, irrespectively whether we are part of the Eurozone or not. The fact that British citizens who live and hold deposits in Cyprus will have to be part of the bail-out levy shows how important it is for the British government to be as involved as possible in Eurozone governance and EU-wide efforts to address the systemic faults of Europe’s financial sector.

Photograph: Getty Images

Petros Fassoulas is the chairman of European Movement UK

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The politics of the kiss

From the classical period via the Kremlin to the Clintons: a brief history of political smooching.

Iowa and New Hampshire are behind us. Super Tuesday beckons. For fans of the competitive sport of baby-kissing, this is as good as it gets.

Meanwhile, closer to Britain, kissing’s in our very constitution. Jeremy Corbyn’s future, depending on his success, could involve taking a trip to the Palace to kiss hands as Prime Minister – and as a republican. Being sworn into the Privy Council in November, he even managed a peck on the royal paw, but reportedly stood fast and did not kneel.

Why is there so much snogging in politics? 

Ancient Romans and Persians established – dare we – a pecking order on meeting. This ritual would make it instantly clear if they were equals (full-on, mouthy kiss, the basium), separated by a slight gap (cheeky peck, an osculum), or vast unequals (foot-kissing accompanied by much grovelling). Even heads of state greeted people in this way.

And there was nothing more dramatic – and bizarre – than the socialist fraternal kiss. Kremlinologists would even measure its intensity, to see how close Communist leaders were. The rule was to do three alternate kisses on the cheek, aping the Ancien Régime’s Orthodox Easter greeting. When two leaders were especially chummy – like then Soviet leader Leonid Brezhnev and GDR head Erich Honecker at the 30th anniversary of the GDR in East Berlin in 1979 – the world would witness a big, sloppy lip-plant. Paris Match splashed Régis Bossu’s iconic black-and-white image of the socialist snog across a double-page spread. Le Baiser, they called it.

Nikita Khrushchev, Joseph Stalin’s successor, locked lips with USSR chairman Klim Voroshilov when returning from a US visit in 1959. In July 1937, Stalin planted a decidedly non-frigid one on Ivan Spirin, a polar explorer and state hero.

But Brezhnev was the true practitioner. The joke in Russia went that he described a Warsaw Pact comrade “as a politician, rubbish...but a good kisser!”

Aside from the steamy Kremlin, social kissing on the mouth declined with the Black Death.

The courtly handkuss (kiss on the hand) generally went the same way with the fall of the German and Russian monarchies in 1917-18, though hung on longer in Austria. 

But French president Jacques Chirac made it his trademark, playing to the gallery with French élégance. An Associated Press story from 1967 chronicles the sad plight of European diplomats who had chanced it in Washington. One congressional wife jumped back, claiming she had been bitten; another said a stone was missing from her ring. “Chivalry has its drawbacks,” the story observed.

But back to the babies. We see kissing-as-canvassing in William Hogarth’s 1755 series The Humours of an Election

And in a close-fought 1784 Westminster by-election, we read of 24 women out canvassing with kisses – including the Duchesses of Rutland, Argyll, Ancaster, and (somewhat infamously) Devonshire. 

Kissing voters’ wives – now probably frowned upon by CCHQ – was customary fare for the 18th-century candidate. It’s only in the following century that we see the desexualisation of the electioneering kiss, moving to babies as innocuous. 

In 1836, Charles Dickens has his character Pickwick go to witness a post-Reform Act by-election in Eatanswill. “He has patted the babies on the head,” says the candidate’s election agent, trembling with anxiety. Roar of applause. “He has kissed one of ‘em!” Second roar. “He's kissing ‘em all!” The crowd’s shouts are deafening. And the candidate Slumkey coasts home to Parliament.

US presidents Richard Nixon, Grover Cleveland and Benjamin Harrison forswore baby kissing, grasping for a higher-minded political plane. Bernie Sanders, too. 

But how are the rest of today's politicians doing, kiss-wise?

Barack Obama: After two terms, a kisser to be reckoned with. With adults. Apparently he doesn’t relish kissing babies, and has been called fatally ill-at-ease holding one. Full points for his lucky save with a reticent Aung San Suu Kyi in 2014, ending with a perfectly creditable side-hug and ear-kiss.

Pity Michelle, photographed rolling her eyes as Barack went in for the selfie with, say, Danish Prime Minister Helle Thorning-Schmidt in 2013. (For her part, Michelle fobbed off Silvio Berlusconi with a fully outstretched arm, taking no chances.)

David Cameron: Utterly denied by SamCam after his Tory conference speech in October 2015. Lord Grantham says in Downton he spent most of Eton avoiding the kisses of other boys; clearly, the Prime Minister didn’t get much practice while at school.

Angela Merkel: In her first meeting with Nicolas Sarkozy, out she came with a businesslike German handshake just as he ducked for the Gallic kiss. In a moment of British romantic awkwardness last May, during Cameron’s EU reform tour, we saw the Prime Minister lean in, short of closing the deal, as she pulled back and possibly searched for some new regulations to beat him away with.

Hillary Clinton: Is said to enjoy kissing babies. Is said not to enjoy kissing Bill, as in the 2008 Correspondents’ Dinner when she expertly ducked one from him.  And scored one from Obama instead. But maybe she ought to lay off the baby-kissing: a journal article in Political Psychology suggests voters are 15 per cent less likely to vote for women candidates when their adverts evoke female gender stereotypes.

Donald Trump: In August, his baby-kiss in Alabama went viral – the baby’s mother just a bit too keen, the baby’s confusion mingled with slight fear reflecting the views of many of us. “That baby is us,” wrote blogger Stassa Edwards.

It’s a long road from here to the US election in November. And Cameron can look forward to kissing up to Merkel and a hot summer of Italian, Dutch, and even French kisses too.

So this Valentine’s Day, spare a thought for the babies. And the bureaucrats.