Jeroen Dijsselbloem’s mixed messages on Monday in the aftermath of the bailout were widely reported, along with the national and international economic implications of the new deal, while the run-up to the negotiations on Sunday evening saw politicians across Europe attempt to shift the blame for the previous bailout deal’s most controversial dimension, the penalisation of small Cypriot savers, to Cypriot leaders

Hänska, Max

Keranen, Outi

Kyriakidou, Maria

Olivas, Jose Javier

Orsi, Roberto

Radice, Henry

LSE Research Online

Eurocrisis in thePress3/27/2013Reactions to the Second Cypriot Bailout Deal from acrossthe European Pressblogs.lse.ac.uk /eurocrisispress/2013/03/27/reactions-to-the-second-cypriot-bailout-deal-from-across-the-european-press/By Max Hänska, Outi Keranen, Maria Kyriakidou, Jose Olivas, Roberto Orsi and HenryRadice.Jeroen Dijsselbloem’s mixed messages on Monday in the aftermath of the bailout were widely reported, along withthe national and international economic implications of the new deal, while the run-up to the negotiations on Sundayevening saw politicians across Europe attempt to shift the blame for the previous bailout deal’s most controversialdimension, the penalisation of small Cypriot savers, to Cypriot leaders.Greek Press“Painful” and “destructive” for Cyprus is the way the Greek press has described the Eurogroup deal over theeconomic fate of the island in Europe. The negotiations have monopolised the front pages of Greek newspapers aswell as discussions on social media for the last ten days. After a momentary celebration of the “strength” and“bravery” of the Cypriot parliament in not accepting the initial bailout terms last week, the current coverage focusesonce more on the harsh conditions of the final agreement as well as the German role in the negotiations and itssubsequent increasing dominance over Europe.Centre-left Eleftherotypia described the bailout deal as the “execution of Cyprus”, which at the same time constitutesa message of warning for the other countries of the European South, on a front page with the headline “ÜBERALLES: German dominance threatens Europe”. In a similar vein, To Vima talks about a “New Yalta”, with Greeceand Cyprus being at the mercy of the global superpowers of the US, Russia and Germany – the dominance of thelatter being covered under the “euphemistic label” of Europe.Centre-right Kathimerini focuses more on the implications of the Cyprus bailout for Greece. Despite his later attemptto retract his words, Dijsselbloem’s hints that the Cyprus deal might set a new model for Eurozone bailouts isinterpreted as a threat that a “haircut” on savings is a possibility for Greek banks. Furthermore, the paper addressesthe details of the buyout of the Greek branches of Cypriot banks by the Greek Piraeus Bank.  Eleftheros Typos alsofocuses on the market implications of turning the case of Cyprus to a template for other bailouts and on the “shockand awe” caused on the island because of the Eurogroup deal.In short, the Cyprus bailout has reignited new fears for the domestic economy in the Greek press. At the same time,the anti-German discourse has never been so prominent. Wolfgang Schäuble’s statements that criticism againstGermany is an expression of jealousy of its European counterparts, covered by all Greek press, will probably not domuch to change this sentiment.French PressWith the bailout agreed, the difficult economic challenges ahead for Cyprus are coming to the fore. “Cyprus helpedbut not saved”, was the title of one piece in Le Monde. The vocal reactions of young Cypriots to the bailout are alsoreceiving attention. As elsewhere, Jeroen Dijsselbloem’s mixed messages on the implications of the bailout for therest of Europe on Monday came under close scrutiny in the French Press. Beyond the theatre of that particularcommunications mishap, one possible implication of the deal was taken up in a front page Le Monde editorialentitled “faster towards a banking union”.The run up to the negotiations on Sunday evening contained some interesting public positioning. There was little1/4discernible sympathy for Cyprus’ political class, but in places a sense of solidarity with its people was apparent.Ahead of Sunday evening’s negotiations, French Finance Minister Pierre Moscovici (who came under sometimescontroversial attack from the French far left in recent days) was at pains in an interview to adjust the narrative aboutwho had the average Cypriot’s best interests at heart. He was scathing about the character of the Cypriot economy,describing it as a “casino economy”. While reassuring French savers of the safety of their deposits and talking downthe risks of contagion, he was at pains to emphasise that France’s priority was not to penalise small Cypriotdepositors. Rather, he pointed out that in the previous round of negotiations Cypriot leaders had protected largerdepositors at the expense of small savers, who had taken to the streets and now deserved to be listened to.Moscovici’s “casino” characterisation, which was widely taken up across the press, was preceded on Saturday byan analysis in Le Monde by Philippe Ricard describing Cyprus as a “confetti state” (a label also used in a Libérationpiece), a pawn in a geopolitical game of chess between the EU and Russia (the penetration in the Cypriot bankingsystem of Russian funds of dubious origin being another frequent trope), one or other of which stood to gain anincreased degree of control over the Cypriot polity depending on the outcome of the crisis. It would seem then thatEurope looks like coming out on top at least in that respect.German PressThe German press coverage at the end of last week and over the weekend, perhaps most notably, signals a shift inthe general perception of the way events unfolded. Middle of last week the opposition in the German parliament sawa political opportunity to blame the government for the failure of the first bailout, believing that the levy on smalldeposits was initiated or at least approved by Wolfgang Schäuble. Towards the end of the week a consensusstarted to form that it was not Merkel and Schäuble who had sought a levy on small deposits but the CypriotGovernment itself. Subsequently the bailout agreement, and the Schäuble’s approach in the negotiations seemed tohave gained the backing of both government and opposition.The weekend also saw a fair amount of discussion about anti-German sentiment in Cyprus in particular and in theEU in general. Most of this reporting was quite descriptive, but the question is being raised what can be done tobetter the German image. The FAZ reported that, despite reported capital controls, the amount of transfers out ofCyprus had reached two to three times their normal volume, raising questions about who was allowed to transfertheir money out of the country. Overall the German press appears to look approvingly onto the deal that wasreached, and on Monday dedicated quite a few column inches to reporting on the social and economicconsequences of the bailout for Cyprus and question how the economy could be restructured.Italian PressThe press in Italy has followed the news from Cyprus  in the last few days without excessive emphasis, as Italianmedia are largely dominated by the developments of the political situation, and now covering the first attempt tocreate a government after the recent general elections. Nevertheless, the rather dramatic side of this story has beencaptured in a number of interesting articles, which have concentrated on the one hand on the possibility ofreplicating the “Cyprus model” of bailout, with a 40% levy on bank deposits over €100,000, for future situations offinancial distress in the Eurozone. On the other hand, some articles have attempted more nuanced historicalanalysis of the difficult situation in Europe and the relevance of this small Mediterranean island for the wholecontinent.On the first point, namely the replication of the measures adopted in Cyprus in other countries, it has to be recalledthat a 0.6% levy on bank deposits was imposed by the government led by Giuliano Amato in Italy in 1992, right inorder to meet the criteria at that time required to join the Eurozone. This has created a precedent which has neverbeen forgotten, and there is growing fear that it will happen again soon. It is therefore no surprise that a majorfinancial information website, Wall Street Italia, has immediately reported the words of Swedish MEP GunnarHokmark, according to whom the European parliament intends to introduce the principle that deposits in access of €100,000 may be systematically be involved in measures to support the financial stability of Eurozone members.2/4Repubblica has followed an analogous thread  originated by similar words pronounced in an interview by thepresident of the Euro Group Jeroen Dijsselbloem, but immediately rebuffed by his French colleague Benoit Coeure.Linkiesta has recalled the worrying series of faux pas which has characterized so far the beginning of Mr.Dijsselbloem’s mandate.On the second, more analytical point, interesting articles have appeared which try to set the Cypriot story in thecontext of the European project in its dynamic dimension. Federico Fubini, when still the crisis seemed to beheading towards a chaotic collapse of the state’s finances, envisaged for the Corriere della Sera  an interpretation ofMerkel’s unwillingness to “pay for the mistakes of the others”, but also offering an historical parallel with the 1920sand 1930s, as, in his opinion, today’s Germany is as unwilling to take international responsibilities as the US was inthe interwar period, against the background of the declining British Empire (in the context of today‘s Eurozone,France and Italy). Interwar analogies are also at the centre of Salvatore Brigantini’s piece for the same newspaper,in which he describes the dangers of the North-South fracture of the continent, largely in order to formulate an anti-austerity argument.Fabrizio Goria, again for Linkiesta, confirms his refined sense for sophisticated financial and political analyses in anarticle about the inevitable consequences that the Cypriot bailout has for the credibility of the Eurozone, which is,from now onwards, simply “no longer the same as before”, as the capital control measures imposed on the islandmean the return of policies which the very Eurozone construction was supposed to relegate to history.Also on Linkiesta, Alessandro Manzo Magno has written a very entertaining piece on the history of Cyprus from aWestern perspective, more precisely from a Venetian viewpoint, as the island was part of the Serenissima for abouta century between 1473 and 1570, when it was captured by the Ottomans. Magno links the loss of Cyprus to theunifying moment of the battle of Lepanto (1571), which failed however to restore the Western sovereignty on theisland. His point is however that Cyprus rarely enters the stage of European politics, but when it does, this hashistorically signaled a turning point.Finnish PressFinnish media reporting on the Cypriot crisis in the past week has been dominated by reminders that the levy ondeposits was the brainchild of Cypriot politicians rather than Eurozone members. While acknowledging the fury ofCypriot depositors, newspaper editorials and pundits alike have underlined the importance of shifting at least someof the burden from Euro zone tax payers to investors and wealthy depositors.As the details of the initial Cypriot package emerged, the Helsinki daily, Helsingin Sanomat, ran a commentaryoutlining the risks involved in levying a tax on the deposits and pondered why the Euro zone members opted forsuch radical measures. In echoing the view expressed frequently in the Finnish media during the past week, thecommentary suggested that the terms of the bailout were not dictated by the Euro zone members but the Cypriotgovernment in a bid to continue attracting foreign investment and deposits. The northern paper, Kaleva, and theTurku daily, Turun Sanomat, gave their support to the investor haircut arguing that Euro zone tax payers have bornunacceptable brunt in the previous rescue packages. Editorials in both papers noted that while the outrage ofCypriot depositors is understandable, protesters blaming Brussels are barking at the wrong tree. Culprits are thosewho failed to regulate the banking industry, according to the papers.The business daily Taloussanomat reported on the possible negative ramifications of the Cypriot crisis to thestruggling Finnish economy. If the crisis leads to the deepening of the Euro crisis, reaching the projected 1,5% ofgrowth in the next three years is unlikely, the paper warns. Another business daily, Kauppalehti, took a critical stanceon the package arguing that its only purpose was to alleviate the concerns of voters in Euro zone member statesrather than being credible attempt to deal with the crisis. It highlights the detrimental effects of the levy on smalldeposits to trust in the Euro zone banking sector.The final rescue package has been received favourably in the Finnish media. Much of the media sees the levy on3/4large deposits as the optimal solution from the point of view of the Finnish taxpayer, while expressing concern overthe damage caused by the initial package.Spanish PressThe discourse in the Spanish press concerning the Cypriot bailout has evolved vis-à-vis last week. Now mostnewspapers are clearly attributing the responsibility for the poor management of the Crisis mainly to the Eurogroupbut suggesting that Germany is behind the questionable decisions. The idea of Cyprus being a case of “exemplarypunishment” come across strongly in most media. Yesterday, a picture with Merkel knitting and smiling was on thefront page of several newspapers (El País, La Vanguardia, El Correo). This image tries to convey Merkel’ssatisfaction in having secured Germany’s preferred type of bailout. For instance in El País the image isaccompanied with a text expressing that Merkel celebrates that those that contributed to cause the problem areforced to assume the cost.Harsh criticisms are directed at the president of the Eurogroup, the Dutch Finance Minister Dijsselbloem for hisdeclarations on Monday that prompted a sharp fall in European stock markets (-2.23% for the Spanish Ibex).Centre-right El Mundo on the front page headline says “Merkel’s pawn sees possible (further) levies on savings”accusing Dijsselbloem’s “deadly message” of being the cause of an increase in the bond yields and fall in the stockmarkets in Italy and Spain. The economic newspaper Cinco Dias opens with “Dijsselbloem blunders” (la pifia). “Theculprit must pay” argues the influential El País’s columnist Vidal-Folch suggesting that Dijsselbloem should faceconsequences for publicly defending an illegality. Centre-left El Periodico de Catalunya’s one-word front pageheadline, “Irresponsible”, blames the Eurogroup for the crisis of credibility in the Eurozone. Similarly the onlinenewspaper ElDiario.es claims that “Brussels continues generating confusion about the solution of the Cypriot crisis”.4/4

Reactions to the second Cypriot bailout deal from across the European Press

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