by Dionisios Chrissikos

In the aftermath of the EU Summit on March 14-15, Cypriot president Nicos Anastasiades was presented with the terms for a EU bailout of Cyprus. €10 billion was offered in loans by the EU, but in exchange €7 billion would have to be raised by the Cypriots to release the €10 billion for their use. A levy on Cypriot bank deposits was recommended as the method for raising the necessary funds.

The decision to impose a bank levy turned out to be a dismal failure. The Cypriot parliament has rejected the terms of the EU bailout, while the Cypriot population is fundamentally against any sort of bank levy. Cyprus is now turning to Russia for financial assistance in desperation, but it remains to be seen if Russia will step in and keep Cypriot banks from collapsing.

What this entire fiasco has shown so far is that the European Union elite is out of touch with reality. The EU continues to impose austerity measures that are deeply unpopular in the affected countries and of dubious effect. The continued insistence on adopting a moralizing approach to the economic crisis (courtesy of German ordoliberalism) only serves to keep the crisis going by destroying confidence in economic recovery and stymieing growth. It has been five years since the start of the EU crisis, yet still lessons have not been learned from past failures.

Every mistake that the EU elite makes serves the anti-EU agenda and the nationalist rhetoric that has been flourishing in the economic mess. It’s bad enough that the union suffers from a democratic deficit as an elite-driven project. Blatant hypocrisy has been demonstrated by avoiding real debt mutualisation schemes and a real push for supranationalism on the grounds of EU legal considerations. EU officials had no problems with a Greek debt haircut (the trigger of the Cypriot banking crisis), or openly threatening to kick member states out (legally impossible according to EU treaty law), or imposing a bank levy on deposits under €100,000 (which are guaranteed under EU law). The law is selectively applied and broken as seen fit.

So what is to be done? It may be too late to save the legitimacy of the European Union at this point. The fact that the Cypriots decided to turn to Russia for help is a sign that EU officials should read very carefully; loyalty has to be earned, not commanded. President Anastasiades is a keen supporter of the EU and had good relations with EU member state leaders, Germany in particular. Even a fervent cheerleader, then, can be cast into the winds and left for dead. Europe’s elite has crossed a red line with their demands for bailing out Cyprus, and there is no going back at this point. If the European political elite don’t want to play by the rules and want to socialize their mistakes, then why should the common man or woman play by the rules?