Cyprus' power is dwindling as markets cease to care

Things are stabilising. That's not good for Cyprus.

The worst thing that could happen for Cyprus right now is that the markets stabilise. Cyprus' leverage will be based on whether the financial markets care - and it looks like they're beginning to lose interest. Greece has been dented slightly, but Italy was up 0.5 per cent today.

Here's Sebastien Galy from SocGen, on Cyprus' weakening position over the last couple of days:

First, the Eurogroup blinks and provides much more funds. Second, the Eurogroup stands firm and Cyprus is eased out of the EZ with ECB liquidity support ensuring a relatively orderly exit. Third, some face-saving compromise is found but where Cyprus would still deliver the bulk of the €5.8bn in question. Fourth, Russia enters the stage as a white knight. I doubt the Eurogroup will blink, and the next 24 hours will be dominated by the negotiation between it and Cyprus. Negotiation 101 tells you the most important factor is which of the parties hold the strongest cards. My estimation is that Cyprus holds the weakest cards.

Meanwhile, there are talks going on in Russia. JP Morgan's Alex White doubts Anastasiades will make much progress here:

He will put a renewed series of proposals to whomever will meet with him (possibly junior officials). These may include the offer of further rights over Cypriot gas deposits in return for accepting an increased depositor haircut. It is not impossible that Russia agrees, but we believe it will be harder to get a deal than people may imagine. A deal with Russia could also lead to European objections.

And with Cyprus' dwindling power it's looking less and less like a financial centre with a future that people want to protect.

What does Cyprus do now? Well at the moment it is coming down heavily on the side of the Russians. Here from the FT:

Andreas Charalambous, a senior finance ministry official, said raising the levy on accounts over €100,000 would have a “detrimental effect” on Cyprus as an international financial centre.

Mr Charalambous said Nicosia wanted to “explore other avenues of financing to lessen the burden of these extraordinary measures”. One option would be for Gazprombank, the lending arm of Russia’s energy giant, to take over and recapitalise Laiki, the second-largest Cypriot bank.

 

A view of Cyprus' second largest bank. Photograph: Getty Images
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Commons Confidential: What happened at Tom Watson's birthday party?

Finances, fair and foul – and why Keir Starmer is doing the time warp.

Keir Starmer’s comrades mutter that a London seat is an albatross around the neck of the ambitious shadow Brexit secretary. He has a decent political CV: he was named after Labour’s first MP, Keir Hardie; he has a working-class background; he was the legal champion of the McLibel Two; he had a stint as director of public prosecutions. The knighthood is trickier, which is presumably why he rarely uses the title.

The consensus is that Labour will seek a leader from the north or the Midlands when Islington’s Jeremy Corbyn jumps or is pushed under a bus. Starmer, a highly rated frontbencher, is phlegmatic as he navigates the treacherous Brexit waters. “I keep hoping we wake up and it’s January 2016,” he told a Westminster gathering, “and we can have another run. Don’t we all?” Perhaps not everybody. Labour Remoaners grumble that Corbyn and particularly John McDonnell sound increasingly Brexitastic.

To Tom Watson’s 50th birthday bash at the Rivoli Ballroom in south London, an intact 1950s barrel-vaulted hall generous with the velvet. Ed Balls choreographed the “Gangnam Style” moves, and the Brockley venue hadn’t welcomed so many politicos since Tony Blair’s final Clause IV rally 22 years ago. Corbyn was uninvited, as the boogying deputy leader put the “party” back into the Labour Party. The thirsty guests slurped the free bar, repaying Watson for 30 years of failing to buy a drink.

One of Westminster’s dining rooms was booked for a “Decent Chaps Lunch” by Labour’s Warley warrior, John Spellar. In another room, the Tory peer David Willetts hosted a Christmas reception on behalf of the National Centre for Universities and Business. In mid-January. That’s either very tardy or very, very early.

The Labour Party’s general secretary, Iain McNicol, is a financial maestro, having cleared the £25m debt that the party inherited from the Blair-Brown era. Now I hear that he has squirrelled away a £6m war chest as insurance against Theresa May gambling on an early election. Wisely, the party isn’t relying on Momentum’s fractious footsloggers.

The word in Strangers’ Bar is that the Welsh MP Stephen Kinnock held his own £200-a-head fundraiser in London. Either the financial future of the Aberavon Labour Party is assured, or he fancies a tilt at the top job.

Dry January helped me recall a Labour frontbencher explaining why he never goes into the Commons chamber after a skinful: “I was sitting alongside a colleague clearly refreshed by a liquid lunch. He intervened and made a perfectly sensible point without slurring. Unfortunately, he stood up 20 minutes later and repeated the same point, word for word.”

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era