Σάββατο, 10 Νοεμβρίου 2012
marilena: CIA Director Petraeus resigns, admits extra-marita...: CIA Director David Petraeus resigned as head of the leading U.S. spy agency on Friday, saying he had engaged in an extramarital affair ...
CIA Director David Petraeus resigned as head of the leading U.S. spy agency on Friday, saying he had engaged in an extramarital affair and acknowledging he "showed extremely poor judgment."
In a letter to the CIA workforce, Petraeus, 60, said he met with PresidentBarack Obama at the White House on Thursday and asked "to be allowed, for personal reasons, to resign from my position."
"After being married for 37 years, I showed extremely poor judgment by engaging in an extramarital affair," he wrote. "Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours."
Πέμπτη, 8 Νοεμβρίου 2012
marilena: A Monet for £27m? The real price of the art boom i...: As a Christie's sale is criticised for not offering enough 'trophy property', it's clear to see what the art world has become True colo...
As a Christie's sale is criticised for not offering enough 'trophy property', it's clear to see what the art world has become
True colours … the 1905 water lily painting by Claude Monet that sold for almost $43.8m (£27.4m) in New York on Wednesday. Photograph: Christie's Images Ltd
marilena: Obama's victory is a harsh lesson for Republicans: By David Horsey November 7, 2012 , 5:02 a.m. The people have spoken. President Obama has won a chance to move beyond the stun...
By David Horsey
November 7, 20125:02 a.m.
The people have spoken. President Obama has won a chance to move beyond the stunted progress of his first term and, perhaps, become a historic president. On the losing side, theRepublican Party remains shut out of the White House and has blown a chance to take over the U.S. Senate, largely because it catered to the narrow concerns of tea party zealots and social conservatives who imagined themselves as the only authentic Americans but who are, in fact, way out of step with most of the people in this country.
If Republicans fail to learn the lesson of this election they are fools. If they continue to let Rush Limbaugh and Sean Hannity set the angry, extreme tone for their philosophy; if they continue to let anti-science religious fundamentalists dictate their social agenda; and if they think Mitt Romney fell short because he was not conservative enough when, in fact, he only began to catch on with moderate voters when he suddenly veered from his self-proclaimed “severe conservatism” and transformed back into a Massachusetts moderate; then they are doomed to become a party of the past.
Obama was reelected by a coalition representing what the United States is becoming. Sure, a lot of aging, parochial white people do not like it – they do not like gays getting married or Latinos getting a chance at citizenship or urban liberals telling them that we are not just a nation of self-reliant cowboys, but a diverse, multiracial society that needs to be more tolerant and economically egalitarian. But this was quite possibly the last election in which a party that seemed to represent only this traditional, white America had a shot at victory.
That does not mean a conservative cannot become president. A pragmatic fiscal conservative with an enlightened view of immigration and a tolerant attitude on social issues could do quite well. Romney could have run as just such a candidate. He certainly tried to pose as one in the final weeks of the campaign, but it was too late for him to take back all his primary campaign pandering to the right wing.
Speaker of the House John A. Boehner can take the first step in a new direction for the GOP as soon as Congress is back in session. Just because his party has gerrymandered its way into a fairly safe majority in the House does not mean he can continue to carry on as if this election did not happen. Boehner should make it clear the time has come for compromise and deal-making. He needs to tell the tea party purists in his caucus that they had their shot and it did not work. All the obstructionism and all the weird rhetoric about rape and birth control and birth certificates ultimately hurt the Republican cause.
The election was very close, but there is no disputing the outcome. President Obama won.
The country needs a fresh start. Obama needs to be magnanimous, but he deserves a new level of respect. No more unyielding opposition at every turn. No more credence given to paranoid slanders from right-wing loud mouths and Internet trolls. We have a lot of challenges to deal with, from renewing the struggling middle class to facing up to the looming perils of climate change. We need both parties engaged in finding sane, smart solutions.
Republicans say they love America. For their own sake, and for the sake of the country, they need to start showing a little love for the new USA – the USA that just gave President Obama four more years.
Los Angeles times
The Acropolis hill with the Parthenon temple is covered with smoke during during a violent demonstration in central Athens November 7, 2012. Greek police fired teargas and water cannons to disperse thousands of protesters who flooded into the main square before parliament on Wednesday in a massive show of anger against lawmakers due to narrowly pass an austerity package.
marilena: PRESIDENT AS ENIGMA: THE SEVEN MYSTERIES OF BARACK...: By Philippe Boulet-Gercourt NOUVEL OBSERVATEUR /Worldcrunch PARIS - Naive or arrogant? Daring or cautious? Four years after he entered...
PARIS - Naive or arrogant? Daring or cautious? Four years after he entered the White House, Obama remains an enigma.
Naive or cunning?"I never saw someone so competitive. What is the only thing that Barack Obama hates more than losing? Losing twice," confides Robert Gibbs, his former press advisor. But Obama wants to win fair and square. When he plays basketball, he is furious if he thinks any of his opponents are letting him win.
One possible psychological explanation: fatherless and marked by the feeling of being "different," Obamahas struggled all his life to be an insider, at Harvard, the University of Chicago, or Washington, by proving his exceptional qualities.
This, however, is the same Obama that the left calls naïve, and accuses of having wasted nearly two years trying to compromise with the right on healthcare reform, before finally being forced to pass the measure without a single conservative vote.
Instead of gauging his strength and coming into the arena ready to fight, Obama believed his popularity and charisma would be enough to create a spirit of compromise, just as he let himself be persuaded that he could demand that Israel's Benjamin Netanyahu stop any further settlements in the West Bank and it would just happen. This seems strangely naive for a fierce competitor.
Outgoing or solitary?A rock-star president who enthralls crowds, with a radiant smile and contagious charisma-- everyone thought that Obama's arrival at the White House would be the end of the boring, early-to-bed George and Laura Bush era. 1600 Pennsylvania Avenue would be an open house for artists, welcoming, engaged.
The reality, four years later: a solitary president who spends his free time mostly with his family. "This is the best spot in the whole White House," he recently told journalist Michael Lewis, pointing to a second-floor balcony. "Michelle and I come out here at night and just sit. It’s the closest you can get to feeling outside. To feeling outside the bubble."
As with Bill Clinton, people get goose bumps when Obama comes into the room. He electrifies those he meets. But the comparison stops there. Clinton was a virtuoso of relationships with the political world, alternating phone calls, cocktail parties and backslaps. Obama, though, often is the despair of his advisors, refusing to pick up the phone to thank, cajole or consult people.
Trusting or arrogant?The president’s nickname "No-drama Obama" has stuck in all fairness. Obama keeps his temper under control and does not react impulsively. This could be seen during the 2008 primaries, when he was far behind Hillary Clinton, but never seemed to panic. As president, he has never given the impression of reacting erratically to events, like Bill Clinton.
Obviously, there is a thin line between self-confidence and arrogance. Bush's strategist Karl Rove once said maliciously about Obama, "He’s the guy at the country club with the beautiful date, holding a martini and a cigarette, that stands against the wall and makes snide comments about everyone who passes by." That is unfair. But there was a hint of Obama's top-of-the-class arrogance in the last televised debate, when he said: "I think Governor Romney maybe has not spent enough time looking at how our military works."
Inexperienced or skillful?Dan Germain, a Texas Republican, says, "I don't know why Obama was elected. What had he accomplished until then? He had spent two years in the Senate without doing anything. Then as soon as he gets elected, he gets the Nobel Peace Prize!"
For the past four years, the Republicans have been trying to promote the image of an accidental, novice president, incapable of guiding the country out of the crisis, while Mitt Romney, in contrast, "knows how jobs are created and destroyed."
A learning period is a reality for every president, and there was no ready solution for a crisis this brutal and unpredictable. Of course, Obama did not arrive at the White House completely unprepared. He was surrounded by many Clinton-era advisors. It is true, though; that it took him a while to understand how Washington works.
According to Ron Suskind in Confidence Men: Wall Street, Washington and the Education of a President, Larry Summers once confided to then Budget Director Peter Orszag, "You know, Peter we're really home alone. There's no adult in charge. Clinton would never have made these mistakes."
Daring or cautious?Obama is both. Cautious, when he acted to promote the Stimulus Package or to help millions of homeowners struggling with their mortgages. Cautious, too, when he decided to treat Wall Street with kid gloves in order not to rock the finance boat.
Cautious, however, in foreign policy in relation to China, Russia, or Israel, to the point of being described as a president who "leads cautiously from the back."
That was a few weeks before the Bin Laden operation, and no one since then has accused Obama of being timorous. But he does sometimes-- and only sometimes-- give the impression of being calculating, to the point of backing off from an obstacle rather than trying to overcome it at the risk of injury.
On the left or in the center?An essay published this fall in Harper's magazine caused a stir in the microcosm of the American left. Thomas Frank, an influential thinker, writes, What Barack Obama has saved is a bankrupt elite that by all means should have met its end back in 2009. He came to the White House amid circumstances similar to 1933, but proceeded to rule like Herbert Hoover.” The left, in particular, cannot understand how the president could have surrounded himself with men close to Wall Street, like Larry Summers or Tim Geithner.
Paul Krugman, who won the Nobel Prize for economics, is critical too, admonishing the president for a too-timid Stimulus Plan. Krugman does admit the historic importance of the healthcare reform, for which Obama risked his presidency. If he is re-elected, Obama will be able to implement the most important healthcare reform in the American security system since Medicare, the health insurance for the old created by Lyndon Johnson in 1965. That is on the left, isn't it?
Dove or hawk?It is one of the most familiar zinger of Mitt Romney's campaign: Obama began his presidency with an “apology tour” abroad. This is not true, of course, but that does not keep Romney from hammering away at the theme. "I will not and I will never apologize for America." Implied, of course, is: as a good Republican, I will be a hawk, unlike Obama who was a dove like Carter.
The accusation is absurd when addressed to the man who approved the extraordinarily daring raid to kill Bin Laden. What is true is that Obama has never given a clear picture of his views on military force. When is it legitimate or excessive, necessary or superfluous? This could be seen in Libya, even if, in the end, it was Obama himself, against the advice of his generals, who decided to save Benghazi. This is seen, too, in Syria. "They had a hard time getting into step with the Arab Spring," says James Mann, author of The Obamians, a book on Obama's foreign policy.
First they changed the paradigm, going from support for dictatorial regimes to a preference for democracy. It was an enormous change, but they have encountered a number of problems in applying this principle to countries like Bahrain. So they have opted for support of "reform." Translation: reform does have to mean a regime change.
Τετάρτη, 7 Νοεμβρίου 2012
Τρίτη, 6 Νοεμβρίου 2012
marilena: Americans Don't Want The Truth In US Election, He ...: Regardless which candidate wins the US presidential election on Tuesday, neither of them has been honest to the American people about t...
marilena: Mourning the vanishing Greece of my childhood: By Theopi Skarlatos BBC News, Athens Biting austerity, protests with tear gas, and the growth of the far right - it's a far cry from the ...
By Theopi SkarlatosBBC News, Athens
Biting austerity, protests with tear gas, and the growth of the far right - it's a far cry from the Greece I knew as a child and have visited regularly throughout my life.
I am standing in the square of Agios Panteleimonas reminiscing about the Greece I used to know as a six-year-old girl.
I remember playing in a similar square next to a decorated church, buying chocolates from the kiosk, skipping with my friends, old Greekgiagiades - grandmothers - looking on.
Somehow back then, the breeze carried, along with the summer pollen, this intense notion that you lived in the best place on earth.
But now off Acharnon Street migrant children play ball games on a floor scrawled with graffiti which says "Greece is for Greeks".
On the corner, plain-clothed policemen handcuff Somalis without papers and a one-legged man limps past on crutches, begging for money.
The stone walls beneath the church are stained with the words Chrisi Avgi- Golden Dawn - the far-right party whose ideas are gaining popularity here at an incredible pace.
A mile up the road some more graffiti reads: "Down with the fascists!"
The Greece from my childhood, it seems, is nowhere to be seen. And people are fighting to try to reclaim it. They have to, they say, for the government has no real plan.
Ahead lies only a sea of endless debt.
This week another set of spending cuts and tax measures has been presented to parliament - 13.5bn euros (£11bn) worth.
The prime minister is quick to point out the chaos that would ensue should they not be passed promptly. Rarely these days does he talk about the chaos that is now.
Debts are rising, the economy is shrinking. There is high unemployment, an increase in drug use, depression and prostitution. People have been filmed foraging for food in bins after dark, and schoolchildren are reported to have collapsed from malnutrition. It seems a long way from the pretty pictures on dusty postcards at stalls beneath the Acropolis.
Golden Dawn, with its 18 seats in parliament, gains voters by talking of a golden Greece that once was - a Greece under Alexander the Great, prosperous and at the forefront of science and philosophy.
If it were in power, the party says, there would be no more orders from the German Chancellor, Frau Merkel. Immigrants or "invaders" as it likes to call them would be sent back home. Greece is for Greeks.
Members see it as their right to take law and order into their own hands. They have been accused of beating up, even stabbing immigrants, trashing their market stalls, and of stripping and humiliating women.
At the shop belonging to Golden Dawn MP Ilias Panagiotaros, staff are busy printing T-shirts emblazoned with swastika-like symbols, when I visit with Newsnight economics editor Paul Mason. The party is preparing, Panagiotaros says, for "a civil war" with "everybody".
"It's not nice, but someone's got to do the hard stuff," he says matter-of-factly.
The anti-fascists take to their motorbikes to protest, but they get little sympathy from the authorities.
It's been reported that half of the police force support Golden Dawn. Some protesters say they have been imprisoned and tortured by officers who openly praised Stalin and Hitler.
The police deny the allegations, but forensic evidence confirms that some detained protesters suffered "grievous bodily harm by a sharp object". One will be off work for a month. The public order minister has ordered an inquiry.
One of Golden Dawn's latest targets is the director of the controversial play, Corpus Christi, which depicts Jesus and the Apostles as gay men.
On opening night, arm in arm with nuns and priests, party supporters managed to shut down the theatre. They glued the locks of the entrance door shut and threw rocks at ticket holders.
The director, Laertis Vassiliou, cannot control his emotion when he says that his parents receive daily phone calls telling them their son will soon be delivered to them in tiny pieces.
Eventually he cancelled all performances.
Freedom of speech here is under pressure - as is freedom of the press.
One journalist was tried for publishing the names of 2,000 well known Greeks who hold Swiss bank accounts. Two more have been suspended from state TV after accusing the government of censorship.
And so it has fallen to the international media to portray as true a picture as possible of what is happening in the country that once gave birth to democracy, but which is now struggling to show it is still in possession of it.
I no longer feel sad when I leave a country that without fail manages to take hold of my heart every time I visit it. This time, I am sad about what I am leaving behind.
I am sceptical about whether I will ever see that Greece again - the Greece that my six-year-old self, playing in the square, has managed to keep alive in my memory for so long.
Δευτέρα, 5 Νοεμβρίου 2012
marilena: 'Bronco 'Bama and Mitt Romney' too much for four-y...: http://www.guardian.co.uk/world/video/2012/nov/05/bronco-bama-mitt-romney-abigael-video CNN
marilena: GREEK PROTESTERS ALLEGE POLICE BRUTALITY...: http://edition.cnn.com/video/?hpt=ieu_c2#/video/world/2012/11/05/chance-greece-police.cnn Added On November 5, 2012 Some Greek p...
marilena: Greece makes austerity push, workers gear for stri...: By Renee Maltezou and Lefteris Papadimas ATHENS | Mon Nov 5, 2012 2:19pm EST (Reuters) - Greece's government presented a new aus...
By Renee Maltezou and Lefteris Papadimas
ATHENS | Mon Nov 5, 2012 2:19pm EST
(Reuters) - Greece's government presented a new austerity package to parliament on Monday as a week of strikes and protests kicked off over proposals that lawmakers must approve if the country is to secure more aid and stave off bankruptcy.
Parliament is expected to vote on Prime Minister Antonis Samaras's 13.5 billion euros ($17 billion) package of cost cuts and tax hikes on Wednesday along with measures making it easier for firms to hire and fire workers.
Despite public exasperation at four years of belt-tightening that has helped wipe out a fifth of the economy and leave a quarter of Greeks jobless, the package and a tough budget slated for a vote on Sunday are expected to scrape through parliament.
Greece's powerful main public and private sector unions will launch a 48 hour strike against the legislation on Tuesday and plan marches in the centre of Athens. Journalists, doctors, transport workers and shopkeepers also planned stoppages.
Approval of the reforms and the passage of the 2013 budget are crucial to unlocking 31.5 billion euros in aid from an International Monetary Fund and European Union bailout that has been on hold for months.
"These will be the last cuts in wages and pensions," Samaras said in a speech aimed at galvanizing the members of his centre-right New Democracy party.
"We promised to avert the country's exit from the euro and this is what we are doing. We have given absolute priority to this because if we do not achieve this everything else will be meaningless."
Without the aid, Greece will not be able to redeem a 5- billion euro treasury bill falling due on November 16. The bulk of the new aid tranche, some 25 billion euros, is earmarked to recapitalize Greece's struggling banks and kick-start moribund lending, a prerequisite to climbing out of recession.
But union leaders say the measures will simply deepen an economic contraction expected to run into next year.
"Our labor action next week will be part of efforts to avert policies that will sink the country deeper into recession and destroy the fabric of society," Yannis Panagopoulos, head of the GSEE private sector umbrella union, told Reuters.
The capital's 14,000 taxi drivers are on strike and office workers complained of long commutes due to a halt on the city's metro, tram and city trains, which serve 500,000 people a day.
Protests will intensify on Tuesday, ratcheting up pressure on coalition deputies whose parties have slid in polls since a June election in the Mediterranean country of 10 million.
On Friday, a poll showed New Democracy's support had fallen to 22 percent, from 30 percent in the June election. Its Socialist PASOK partner had fallen to 7 percent, down from 12.3 percent according to the PULSE survey.
"Everything is black and it will only get worse. They have exterminated us. They have turned us into prisoners," said Eleni Tatsou, 38, who works in a kebab shop in central Athens.
"I haven't been paid for eight months, but I know nothing will change if I quit, so I'm waiting. Maybe I'll get paid one day. Maybe a miracle will happen."
The smallest party in the ruling coalition, the Democratic Left, has pledged to stay in government but rejects the plans to cut wages and severance payments and scrap automatic wage hikes, saying they will devastate workers who have borne the brunt of the crisis.
"We will not vote in favor of these measures," Dimitris Hatzisokratis, a Democratic Left spokesman, told Reuters. "But we will support the budget, which means we are giving our vote of confidence to this government."
PASOK is struggling to shore up support for the measures after one of its deputies quit on Thursday in the wake of a narrow victory in pushing through a privatization bill also demanded by the lenders, cutting PASOK's numbers to 32 seats.
At least five of those members have said they may not back the reforms. Without them, New Democracy and PASOK's remaining members are expected to muster around 154 of parliament's 300 votes, a move analysts say is vital to the government's survival and Greece avoiding insolvency later this month.
"The measures will pass, but the majority will be so slim that it will raise questions over the government's future viability," said Costas Panagopoulos, head of Alco pollsters.
Greece is hoping the "troika" of the IMF, European Commission and European Central Bank lenders extend a deadline to achieve a primary budget surplus of 4.5 percent, a measure of public finances minus debt maintenance costs.
That would give the battered economy breathing room, but the government has said it would shrink more than forecast in 2013 and debt would peak at 192 percent of GDP in 2014, 10 percentage points higher than earlier forecast.
That has increased the prospect of another round of debt restructuring, a source of conflict between the IMF and Greece's biggest EU creditor Germany who both privately say the Greek debt trajectory is unsustainable. ($1 = 0.7785 euros)
(Writing by Michael Winfrey; Editing by Peter Graff)
marilena: Bailing Out Oligarchs EU Aid for Cyprus A Politica...: The EU is likely to bail out the banks of tiny member state Cyprus with 10 billion euros of credit. But a secret German intelligence repo...
The EU is likely to bail out the banks of tiny member state Cyprus with 10 billion euros of credit. But a secret German intelligence report reveals that the main beneficiaries of the aid would be rich Russians who have invested illegal money there. It's a big dilemma for Chancellor Angela Merkel
Last Friday, the sun was shining in this paradise for Russians. The sky was a deep blue and the palms along the beach promenade swayed in a light breeze as the the temperature climbed to 29 degrees Celsius (84 degrees Fahrenheit) before noon. No doubt Limassol offered a welcome relief from the cold and wet autumn weather of Moscow. Russians appreciate this spot on the southern coast ofCyprus.
The boutiques sell sable coats even in summer, the restaurants serve salted herring and vodka, apartments near the pier cost upwards of €300,000 ($383,000) and there's no shortage of luxurious villas priced at millions of euros.
The city park has a bust of Russian poet Alexander Pushkin, there's a Russian radio station, Russian newspapers, a Russian Orthodox church, private schools offering Russian diplomas and signposts in Cyrillic writing. The mayor of Limassol himself speaks fluent Russian and studied in Moscow during the Soviet era.
There's one drawback, however: all the yachts, however luxurious they may be, are moored in the rather dreary old port. But relief is in sight. The new Limassol Marina will be finished soon, and if you you put your name down soon for one of the 650 available berths, you can get a special rate: €150,000 per year, depending on the size of your boat.
There's something else that is probably a greater cause for concern for the Russians of Limassol, though. They are at risk of losing their paradise because Cyprus is virtually bankrupt. The island's economy has been dragged down by the recession ravaging Greece, with which it has close business ties. In addition, Cypriot banks bought billions of euros in Greek government bonds that are practically worthless now. The banks have already had to write off large portions of their investments, and are in trouble as a result.
Application for EU Aid
This prompted the government of President Dimitris Christofias to make a pre-emptive application for EU aid in the summer. Russia had already provided a loan of €2.5 billion. That money has been used up and Russian President Vladimir Putin is reluctant to provide a further €5 billion.
Now the euro countries, and especially Germany, will have to step in with a €10 billion aid injection to prop up the island's banks. That will confront German Chancellor Angela Merkel, Finance Minister Wolfgang Schäuble and their European colleagues with a major dilemma because a secret report written by the German foreign intelligence service, the Bundesnachrichtendienst (BND), outlines who would be the main beneficiaries of the billions of euros of European taxpayers' money: Russian oligarchs, businessmen and mafiosi who have invested their illegal money in Cyprus.
The Russians don't just love Cyprus for its great climate. The shell companies here are conveniently anonymous, the banks discreet and the taxes are low. Dirty money bestowed a lasting boom on Cyprus and the inhabitants of "Limmasolgrad" are still doing well.
The European aid will help the country stabilize its controversial core industry and keep it going for the next few years. In Brussels and in the EU capitals, the Cypriot financial sector doesn't enjoy an especially good reputation. Cyprus and its banks are widely seen as a tax haven and a money-laundering base.
Domino Theory Makes Refusal Impossible
But refusing aid is not an option. Angela Merkel has become a firm believer in the domino theory, which in this case would take on the following shape: allowing Cyprus to fall would put the entire euro zone at risk of collapsing. It would be a disastrous message to send to financial markets. Why should the Europeans save Spain or Italy if they can't even bail out a dwarf like Cyprus?
The German government is in an awkward position. It is forced by overriding considerations to make decisions that it can't really justify. There are considerable political risks. "A rescue package for Cyprus could be very incendiary," one member of her government admitted. Merkel is in danger of discrediting her entire euro policy by agreeing to bail out Cyprus.
The Europeans won't be able to plead ignorance, either. The BND has analyzed the situation in Cyprus and then debated it with experts from the "troika," made up of the European Commission, International Monetary Fund and European Central Bank (ECB).
The BND officers didn't bring good news. Formally, the island nation sticks to all the rules on combating money laundering laid down by the EU and other international agreements, the agency said. The country had passed the necessary laws and set up the required organizations. But there were problems when it came to implementing those rules, it added. They weren't being applied properly. The Cypriots, the BND said, sign everything, pledge a lot, but keep few of those promises.
Money laundering is facilitated by generous provisions for rich Russians to gain Cypriot citizenship, according to the BND which found that some 80 oligarchs have gained access to the entire EU in this way.
In 2011 alone, some $80 billion flowed out of Russia and much of that money had been channelled though Cyprus, according to the BND. Russians have deposited $26 billion in Cypriot banks, says the BND. That is well above the annual GDP of Cyprus.
The figures show the scale of the problem. The Cypriot government is banking on the Europeans being unable to refuse aid. When the euro finance ministers voiced criticism, their Cypriot counterpart reacted furiously, saying his country would solve its problems without the Europeans if necessary and threatening to leave the single currency.
EU Taxpayers Protecting Illegal Money
The BND regards that as an empty threat, though. If Cyprus leaves the euro zone, its business model will no longer be as attractive, it says.
But the BND's conclusions also mean that if Cyprus gets an EU bailout so that it can keep the euro, the money of German and other European taxpayers will be protecting illegal Russian money.
Cyprus has been a tax haven since the 1970s. At first, it kept taxes low to attract shipping companies that registered their ships in Limassol. But the big boom didn't come until after the collapse of the Soviet Union.
The billions made out of that then needed a safe haven and found it in Cyprus. The Russian oligarchs, businesspeople and Mafiosi channelled funds to Cypriot companies to keep tax costs down and to be able to re-invest at least part of it in Russia at a later date.
Cyprus became a member of the EU in 2004 and joined the euro zone three and a half years later. And suddenly it was in more demand than ever. The number of firms registered has doubled since it acceded to the EU. The country had to tighten up its regulations on money laundering before it was accepted into the EU but in practice it only stopped the most flagrant abuses.
Since then, the Cypriot economic model has been highly attractive. The country is a tax haven within the EU, but has been given a clean bill of health by the OECD because it supposedly does enough to stop money laundering.
However, a paper by the European Parliament about organized crime in Russia mentions Cyprus in a number of places. And a World Bank report on 150 international corruption cases cites several companies and accounts in Cyprus.
Mistakes Made With Greece Being Repeated
The European Commission, the EU's executive body, is more lenient with the new member, though. German government officials complain that the Commission has never seriously urged Cyprus to take tougher action to fight money laundering and close tax loopholes.
In the case of Cyprus, many of the mistakes made by Greece are now being repeated. Greece was allowed to join the euro despite blatant misaccounting. And Cyprus was allowed in even though it isn't implementing EU standards for a clean financial center.
And now the EU has to help this of all countries. Compared with the other European rescue packages the planned €10 billion aid for the banks of Cyprus is miniscule in financial terms. But it's a political minefield. The share of the aid to be paid by German taxpayers amounts to €2 billion. This poses a new challenge for Merkel.
She is already having trouble justifying continuous aid payments to Greece because Athens has proven itself to be an unreliable partner that keeps coming up with new excuses for its omissions. Now she has to explain payments to a country whose success rests on illegal money.
Cyprus a Political Problem for Merkel
In addition, the beneficiaries of the help won't be ordinary workers or farmers but a caste of nouveau-riche immigrants that shamelessly boast their wealth while making virtually no contribution to solving the country's problems. Companies registered in Cyprus pay just 10 percent in taxes.
Germany's opposition Social Democrats, which have voted in favor of previous bailouts in the crisis, are determined to challenge Merkel this time and to attach conditions to their approval of support for Cyprus.
"Before the SPD can approve loan assistance for Cyprus, the country's business model must be addressed," SPD budget expert Carsten Schneider said. "We can't use German taxpayers' money to guarantee deposits of illegal Russian money in Cypriot banks."
Merkel is unlikely to disagree with the SPD's demands. But will she be able to force Cyprus to meet them? If she doesn't, she won't be able to rely on opposition support in a German parliamentary vote on aid to Cyprus. And she needs opposition votes because EU aid to Cyprus is so controversial in her coalition that she won' be able to rely on securing her own majority.
As one Merkel confidant put it: "Cyprus isn't an economic problem, it's long since become a political one."