The European Union sovereignty and Russian fury as banks closed to avert run after the introduction of levy on deposit funds

The tension between European Union and Russia about the losses imposed on Cyprus' Banks savers have roughly mounted up after the Russian envoy to the European Union suggested that Cyprus's banking system could collapse.

Russia condemning the bail out as unfair faced of course the prospect of losing billions in an EU plan to bail out Cyprus. In brief, Russian businessmen and companies are panicking behind the possibility of a 10% levy over big capitals in deposit.

Rumors say that some member European Union Parliament replied that «this is what happen when money are saved in fiscal paradise».

The rightful interest of Russian Government for the saving of Russian VIP in Cyprus' Banks nevertheless struggles with European Union jurisdiction over a full member of European Union and Eurozone and reflects the willingness of European Union to fight the fiscal paradises within its own territory, which, after all is nothing but a clear type of unfair competition between member states of European Union.

After a deep analysis of the circumstances, other than the destiny of Russian savings, which is part of the risk taken by any saver, especially when the reason over the choice is to avoid fiscal pressure, the very interesting bit in this matter attains to the destiny of art. 50/60 of European Union Treaty.

Plus the European Union decision to provide such said levy shed more than a doubt that this kind of decision won't be a one off, but although the reassuring statements of Mr. Dijsselbloem, can become the first of other similar provisions and could be rolled out to other countries.

Although such fears were dismissed as such as sordid, nasty little anti-European propaganda, me as many others think that this kind of decision can have a negative effect over the extra UE investments and savings as a result of such anti — European propaganda.

Nowadays we are facing a war not fought by conventional weapons but fought by a new harmful gun, which means the spread and the capability of a country to attract foreigner capitals.

Actually, I reckon that in the European Union shouldn't be place for fiscal paradises and for countries which are not to enforce the European laws, because the ultimate reason why the European Union was created is to ensure equal rights, rules and obligations allover the European Territory.

Stated that, the free movement of capital in the EU market shall be defended as one of the prior principle of the Single Market and is one of its inviolable 'four freedoms'. To prevent the saver to withdraw their own money to avoid the levy to be applied is, as Russian Government said, undemocratic.

But what I question is that such decision was an independent decision taken by European Union ultra vires.

To be honest, against all odds I think the Cypriot government in front of the perspective to make the saving cuts, took the decision to not simply whack the rich.

In my opinion, the provided levy appears to be a political move from Cypriot Government to take the bail out, addressing all responsibilities on European Union.

On the other hand, I reckon that the European Institution should take a clear position against fiscal difference between states and against the lack in the legal obligation enforcement.

Many little states, among the new entries, enjoy a position of advantage and adopted a politic of lax fiscal and banking policies to attract foreigner capitals and investment in damage of biggest countries which finance with higher taxes the fund bails addressed to such countries and often close more than one eye about the origin of before mentioned investments.

Eventually, I am not convinced of the utility of such levies and I don’t think that such extreme measures will be issued in future, but I will be more convinced about that when the European Europe will start to act as the United States of Europe, getting over contradictions and individual interests of its members. 

In conclusion, I am firmly sure that nothing similar will ever happen in a reliable country as such Germany, Italy or France, where rules are (more or less) clear and there won't be any surprise around the corner.

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