Cyprus looks for plan B

There is no plan B.

At 10am Cyprus time, the Cypriot government started to hammer out another vote on whether they have a plan B to present to the European Central Bank. If they do not have an alternative to the mooted deposit tax by Monday, the bank will cut off emergency liquidity assistance to Cyprus' two biggest banks, plunging them into bankruptcy, and putting Cyprus on a path which will inevitably lead them to an exit from the euro, and possibly the EU altogether.

Cyprus does not, currently, have a plan B.

The plans to be put in front of Parliament cover the winding up of Laiki, one of the two troubled banks (the other is the Bank of Cyprus), splitting it into "good" and "bad" banks, hopefully ensuring that the depositors in the good bank – those with insured deposits under €100,000 – do not immediately withdraw their money once the banks reopen.

That proposal has received a "cautious" response from eurozone finance ministers, according to the Financial Times, but doesn't go anywhere near solving the problem.

In giving the Monday deadline, the European diplomats and ministers who ultimately hold sway over Cyprus also clarified their position about what an acceptable solution would be, and in doing so made things much, much worse.

We already knew that their initial proposal to the Cypriot government offered a loan of €10bn and required the government come up with a further €7bn itself in order to fund the €17bn needed for recapitalisation of the banks. But, reports Felix Salmon:

The stated reason why Europe won’t lend more than €10 billion is that Europe refuses to allow Cyprus’s debt level rise above a certain level.

That means that, at a stroke, most of Cyprus' alternative solutions are bust. It can't take a loan from the Russian government, it can't borrow from its own pension funds, it can't confiscate deposits and replace them with post-dated bonds.

The EU is basically confirming to Cyprus that its options are:

  1. Pass the deposit tax.
  2. Find some other tax which will get €7bn – a little under a third of GDP – in a weekend.
  3. Leave the eurozone.

In a way, though, the background situation has got better for Cyprus in the last week. On Monday, the country was deathly afraid of the deposit tax because it could have signalled the death of Cyprus as a destination for offshore banking. That appears to have been the reason why it took the disastrous choice to "spread the pain" by hitting insured depositors with a tax on top of uninsured.

Now, it doesn't have to worry about that, because its role as an offshore banking destination is dead already. It is, bluntly, inconceivable that the "solution" to the crisis, whatever it is, won't result in deposit flight from overseas depositors. The only hope left is to ensure that it doesn't also result in Cypriots moving their money offshore.

With that in mind, it may turn out to be the case that the best solution for Cyprus is the one it was offered at the start: soak the (largely foreign) rich with a 15 per cent deposit tax, look after the poor's deposits, and move on to trying to find an alternative basis for its economy.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The triumph of Misbah-ul-Haq, the quiet grafter

How Misbah redeemed Pakistani cricket.

It was an incongruous sight: the entire Pakistani cricket team doing press-ups on the revered pitch at Lord’s, led by its captain, Misbah-ul-Haq. This unusual celebration marked not merely a Test match victory over England on Sunday but something greater: the rehabilitation of Pakistani cricket.

Seven years earlier, the Sri Lankan team bus was en route to the cricket stadium in Lahore for the third day of a Test match against Pakistan when it was attacked by Islamist militants. Gunfire killed six police officers and a driver; several Sri Lankan cricketers were also injured. That was the last Test match played in Pakistan, which, despite protestations, opponents consider too dangerous to visit.

A year later, Pakistan toured England for a Test series. The News of the World alleged that in the final match at Lord’s three Pakistani cricketers had conspired to bowl no-balls in exchange for money. All three received bans of five years or more for corruption. The entire squad was lampooned; police had to shield its members from abuse as they arrived home.

Misbah was on the periphery of all of this. Aged 36 at the time, he was dropped from the squad before the English tour and seemed unlikely to play international cricket again. But the turbulence engulfing Pakistani cricket forced the selectors to reassess. Not only was Misbah recalled but he was made captain. “You have to ask yourself,” he later said: “‘Have I been the captain because they supported me, or because they had no alternatives?’”

Pakistani cricket prizes and mythologises teenage talent plucked from obscurity and brought into the international side. During his decade as captain, Imran Khan picked 11 teenagers to make their debuts, often simply on the basis of being wowed by their performance in the nets. Misbah shows that another way is possible. He grew up in Mianwali, a city that was so remote that: “The culture there wasn’t such that you thought about playing for Pakistan.”

At the behest of his parents, he devoted his early twenties not to his promising batting but to gaining an MBA. Only at 24 did he make his first-class debut, strikingly late in an age when professional sportsmen are expected to dedicate all their energy to the game from their teenage years.

Pakistani cricket has always been “a little blip of chaos to the straight lines of order”, Osman Samiuddin writes in The Unquiet Ones. Misbah has created order out of chaos. He is unflappable and methodical, both as a captain and as a batsman. His mood seems impervious to results. More than anything, he is resilient.

He has led Pakistan to 21 Test victories – seven more than any other captain. He has done this with a bowling attack ravaged by the 2010 corruption scandal and without playing a single match at home. Because of security concerns, Pakistan now play in the United Arab Emirates, sometimes in front of fewer than a hundred supporters.

Misbah has developed a team that marries professionalism with the self-expression and flair for which his country’s cricket is renowned. And he has scored runs – lots of them. Over his 43 Tests as captain, he has averaged at 56.68. Few have been so empowered by responsibility, or as selfless. He often fields at short leg, the most dangerous position in the game and one usually reserved for the team’s junior player.

Misbah has retained his capacity to surprise. As a batsman, he has a reputation for stoic defence. Yet, in November 2014 he reached a century against Australia in just 56 balls, equalling the previous record for the fastest ever Test innings, held by Viv Richards. The tuk-tuk had become a Ferrari.

Late in 2015, Misbah tried to retire. He was 41 and had helped to keep Pakistani cricket alive during some of its darkest days. But the selectors pressured him to stay on, arguing that the team would need him during its arduous tours to England and Australia.

They were right. His crowning glory was still to come. The team arrived in England following weeks of training with the national army in Abbottabad. “The army people are not getting much salaries, but for this flag and for the Pakistani nation, they want to sacrifice their lives,” Misbah said. “That’s a big motivation for all of us. Everyone is really putting effort in for that flag and the nation.”

Now 42, almost a decade older than any cricketer in England’s side, Misbah fulfilled a lifetime’s ambition by playing in a Test match at Lord’s. In Pakistan’s first innings, he scored a century and celebrated with push-ups on the outfield, in homage to the army’s fitness regime and those who had had the temerity to mock his age.

When Pakistan secured victory a little after 6pm on the fourth evening of the game, the entire team imitated the captain’s push-ups, then saluted the national flag. The applause for them reverberated far beyond St John’s Wood.

“It’s been a remarkable turnaround after the 2010 incident,” Misbah-ul-Haq said, ever undemonstrative.

He would never say as much, but he has done more than anyone else to lead Pakistan back to glory. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt