Show Hide image

EU proposes rescue plan for Cyprus

Willl involve radical cull of country's financial sector.

The European Union (EU) has proposed a rescue plan for Cyprus that includes bailing in uninsured bank depositors and drastic shrinkage of the country’s financial sector.

The confidential radical plan, including a haircut of 50 per cent on sovereign bonds, is expected to shrink the country’s financial sector by about one-third by 2015.

Under the plan, which is not approved by eurozone members, three options will be put forward as alternatives to a full-scale bailout.

The proposal will reduce the country’s bailout from €16.7bn to only €5.5bn by involving more foreign depositors and bond holders. In addition, the proposal is expected to cut Cyprus’s outstanding debt to 77 per cent of economic output, compared with 140 per cent in the current full bailout plan.

EU officials, howver, said that bailing in depositors was never considered in previous eurozone bailouts and warn such drastic action could restart contagion in eurozone financial markets.

The bail-in option would seek to raise corporate income tax to 12.5 per cent (from 10 per cent), and increase withholding tax on capital income to 28 per cent. It would also seek to extend the maturities on the €2.5bn loan that Cyprus received from Russia in 2012.

Cyprus’s bailout is small compared to Ireland, Portugal and Greece. The eurozone ministers are trying to agree the plan by March 2013.

Show Hide image

No, David Cameron’s speech was not “left wing”

Come on, guys.

There is a strange journalistic phenomenon that occurs when a party leader makes a speech. It is a blend of groupthink, relief, utter certainty, and online backslapping. It happened particularly quickly after David Cameron’s speech to Tory party conference today. A few pundits decided that – because he mentioned, like, diversity and social mobility – this was a centre-left speech. A leftwing speech, even. Or at least a clear grab for the liberal centre ground. And so that’s what everyone now believes. The analysis is decided. The commentary is written. Thank God for that.

Really? It’s quite easy, even as one of those nasty, wicked Tories, to mention that you actually don’t much like racism, and point out that you’d quite like poor children to get jobs, without moving onto Labour's "territory". Which normal person is in favour of discriminating against someone on the basis of race, or blocking opportunity on the basis of class? Of course he’s against that. He’s a politician operating in a liberal democracy. And this isn’t Ukip conference.

Looking at the whole package, it was actually quite a rightwing speech. It was a paean to defence – championing drones, protecting Britain from the evils of the world, and getting all excited about “launching the biggest aircraft carriers in our history”.

It was a festival of flagwaving guff about the British “character”, a celebration of shoehorning our history chronologically onto the curriculum, looking towards a “Greater Britain”, asking for more “national pride”. There was even a Bake Off pun.

He also deployed the illiberal device of inculcating a divide-and-rule fear of the “shadow of extremism – hanging over every single one of us”, informing us that children in UK madrassas are having their “heads filled with poison and their hearts filled with hate”, and saying Britain shouldn’t be “overwhelmed” with refugees, before quickly changing the subject to ousting Assad. How unashamedly centrist, of you, Mr Prime Minister.

Benefit cuts and a reduction of tax credits will mean the Prime Minister’s enthusiasm for “equality of opportunity, as opposed to equality of outcome” will be just that – with the outcome pretty bleak for those who end up losing any opportunity that comes with state support. And his excitement about diversity in his cabinet rings a little hollow the day following a tubthumping anti-immigration speech from his Home Secretary.

If this year's Tory conference wins the party votes, it’ll be because of its conservative commitment – not lefty love bombing.

Anoosh Chakelian is deputy web editor at the New Statesman.