Cyprus: A Moral Dilemma?

The volume of ink and airtime being propelled our way on the country of the week, dissecting and analyzing its past, present, and future, may well catapult the name of a small island at the eastern end of the Mediterranean into a verb.  How long before North Americans get “Cyprussed”?

The details of the Cyprus predicament, such as they are, or such as authorities will allow them to be known, are now burdens of discussions from San Francisco’s Market Street to Paris’ Champs Élysées.

We are spectators to the consequences when a country has surrendered  control over its currency, the final vestige of its sovereignty, to a foreign entity.  As we witness the beginning of an endgame when debt is out of control, we passively observe an inquisition and remain impotent bystanders as the inquisition evolves into an imposition.  On this imposition, there cannot be enough light shed.

Bank depositors are an ideal low hanging fruit and with a government’s help, become easy targets.  Rationalizing the ‘plucking’ is performed with reasonable dexterity, as we are informed that, well, after all, those are corrupt banks who launder cash, and tose deposits are half owned by Russian oligarchs, and other unscrupulous individuals from the Ukraine, or elsewhere across Europe, and we won’t hurt the little depositors too much.  And oh by the way, Russia uses these bank accounts to send arms to Syria.  Of course we shouldn’t here ask why these banks received any bailout money in the first place, or why they will receive more under any conditions, given that they are so fraudulent, . . . no point making the Euro leadership queasy.

We will hear much in the coming days about accelerated ‘restructuring’ of debt and  deleveraging of the worst banks and sovereigns, and we will be told that,  “this is a good thing so don’t worry too much about that ten percent (10%) being stolen outright from depositors. We’re cleaning up bank balance sheets, so we’re charging a small fee. It could be worse, we could let the banks just close their doors and the depositors would really be out tens of billions in cash.”

My personal favorite rationalization is the one that presents this decision by the EU as reducing the need to further tax the overburdened taxpayers, and diminishing reductions to the beneficiaries of public spending.  Sure. No point reducing spending, just go after the rich, especially the corrupt foreign rich holding cash in Cyprus.

All of the once-sovereign nations who adopted the Euro must go along with decisions made on their behalf by bureaucrats in Brussels, which to no-one’s surprise are supported by the IMF and its managing director Christine Lagarde, Ms. Statist Liberal herself.   The bankers are in control of the biggest game on earth and governments will tow the line guided by ideologically entrenched self-righteous and uninformed politicians and bureaucrats.

Brussels may also be tweaking Putin’s ears through these actions, requiring Putin to make a decision.   What could go wrong with that stroke of genius?  Keep in mind that Russian banks have tens of billions on loan to Russian controlled businesses based in Cyprus.  Putin really has no choice.  He could step in with three billion or so to shore up the banks in which he and his comrades have stashed billions, however, if he did so, Cyprus would slide further into the arms of the great bear to the North.  Putin would squeeze drastic concessions (called ‘gas deposits’) from the Cyprus leadership, and Brussels and the Europeans would be presented with a further quandary.  Hmm, make that a worse quandary.

European leadership in Brussels has dictated implementation of a historical decision, very consistent with the general socialist leanings of their governments which says,  Private Property Is NOT Sacrosanct.

Corruption in Cyprus is a side story diversion, and the structure of the final imposition is not relevant.  A decision was made.  The EU did nothing over the years to bring any real pressure to bear on the fraudulent bank practices prevalent in Cyprus, so now that there is a serious problem of debt, “the end justifies the means”?  This rather parallels the inaction of the Justice Department in Washington. Will the outcome also be duplicated here?  Will expropriation become common-place, . . . and justified as long as it’s not ME?  Does the Attorney General know enough, or does he have any will to enforce laws which were abused by senior bankers throughout the ramp-up to the economic implosion?  None that we’ve seen.

We may find it sad, perhaps even humorous in an unsettling way when dictators grab private companies and property in places like Venezuela, or some other foreign lands, but we can’t ignore it when leaders of ‘Western’ nations become convinced that wholesale cash-grabbing from private bank accounts makes any sense.

As if we don’t have enough anxiety, now we have to accept the very real potential which an older generation warned us of – banks and governments cannot be trusted to always do the right thing particularly when under pressure.  This is not a question of “if they can do it to Cyprus, will they do it here?”  They will do it.

Morals and principals have already been subdued by fear and self-interests.  It is now a question of, “when will we get Cyprussed?”   No morals to see here.  Move along.

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• Obama’s Blunder On Iran

We cannot listen to Iran’s Ahmadinejad posturing on the expansion of the Iranian atomic energy program, without recalling Obama’s dramatic reversal on the U.S. land based missile defense system in Europe only days ago. The blunder was not in the reversal, but in its timing and its process.

The degree to which Iran has advanced its uranium enrichment capabilities will remain an unknown factor, and the international community reaction will continue to be perplexed, and marooned in paralysis of fear. Iran will not let anyone into whatever enrichment facility exists. No one will see what the ayatollahs do not wish to make public, sending us into recollections of the disastrous outcome following a long hide-and-seek dance with Saddam Hussein seven years ago. This leaves the world, Israel and the U.S. in particular, with a conundrum of literally seismic proportions. Iran’s nuclear progress is not new, nor is it news. What is new is the loss of one very powerful strategic negotiating tool that could have been useful in addressing Iran’s dangerous belligerence – the land-based European missile defense system.

When Obama backed off the deployment of a missile defense system in Europe, he did so without gaining a single concession from Putin and Russia. Russia had long blustered and railed against the U.S. missile deployment plan. Putin claimed the missiles were intended to threaten Russian sovereignty in the region, and that they were not meant to defend against Iran. The hovering menace from the U.S. was a significant affront to Putin's self-image. Obama’s abrogation of such significant “stance” on behalf of the United States suggests that this Administration learned nothing from the Ronald Reagan approach to international negotiations. Reagan changed the world when he boasted of his Strategic Defense Initiative satellite based defense system. The long list of concessions extracted from Gorbachev by Reagan, as well as his brilliance throughout the process of negotiations, should be compulsory reading for any student of Presidential impact on history.

Disclosure that Obama has known about Iran’s second uranium-enrichment facility all along, and that he has supposedly sprung an international trap for Iran, as some media such as the Washington Post are now suggesting, is peculiar analysis, as well as it is pandering in the extreme. Obama gave up a major negotiating card that could have been used to push Russia toward joining the strengthening of sanctions against Iran. China cannot be counted on to assist any future confrontation with Iran, having taken itself out of the equation with investments in Iran to feed its own requirements for energy and natural resources. The only other power, whose advocacy is truly needed in the region for serious containment of the ayatollahs in Tehran, is Russia. China and Russia provide Iran with enough trade to successfully finance the Ayatollahs through many more elections no matter what sanctions Obama might think of adding to the existing limitations. Iran’s path to becoming a nuclear power appears unobstructed.

The alternative to the controversial land based system being mothballed, according to Obama, is cheaper, quicker and more effective. This means the decision to embrace the new technology is very likely a good one. If you had this information in hand, would you have run headlong into an announcement, given that the planned European shield had been a major thorn under Putin’s belly? The diplomatic clout that the West’s tension with Iran has provided Putin still remains, and no concessions have been extracted, nor are we likely to see any extracted in the near future. Russia’s response has been to provide more rhetoric, and more blustering. The Russian envoy to NATO, Dmitry Rogozin, said, “… Americans have simply put their own mistake right. And we are not duty-bound to pay for someone to put their own mistakes right.” Putin will continue to view Iran as an economic opportunity that will be exploited without interference from the West. The threat of crisis and instability in the region will also maintain energy prices at levels that Russia requires to finance its annual operating budget.

Adding to the confusion of signals emanating from the White House, Obama suggested that he could resurrect the European missile defense plan if Russia doesn’t help with the threat presented by Iran. This kind of accessory statement further weakens America’s hand. It suggests a lack of resolve on the initial reversal of the strategy, and it also infers apprehension about the new strategy and the underlying technology. Can America rely on the new capabilities and technologies or not? Are the interceptor capacities more flexible and cost-effective? Are the advanced sensor technologies capable of detecting and tracking enemy missiles, or aren’t they? Why would Obama even hint at such uncertainty?

The signals showered on Americans and their allies by this Administration’s decisions and announcements are confusing, but to Russia, they seem to be welcome and they reinforce its strategy of saber rattling. Sanctions have also not deterred Iran's ayatollahs. Now, with the loss of a major strategic and negotiating option against the Kremlin, the enlistment of the Russian bear’s assistance will undoubtedly be impossible, and will lead to a more belligerent Iran. We can expect an increase in its destabilizing activities in Iraq and Afghanistan, and its financing of terrorism. The violence we witnessed against the Iranian people after the recent elections should be indication enough that a strategy pursuing, "engagement that is honest and grounded in mutual respect," as Obama wishes it, is simply just that, … wishful thinking.

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• Obama’s Russian Misadventure

The recent representation of America at the Moscow summit delivered a mutually agreed-to target for the removal of some nuclear warheads and launchers. Almost. The relationship was neither improved nor set back, and America achieved little beyond being dealt a little embarrassment at the hands of Putin. The mainstream media (MSM) is applauding the event as a job well done. What meeting could it possibly be writing about with such approval and commendation?

Getting rid of antiquated and cumbersome warheads, 2,200 down to 1,500 or so, and trimming delivery rockets from 1,600 to around 1,000, is a good thing, if it ever happens, but such reduction would have absolutely no impact on either nation’s present realities. Elimination of a few war heads, or WVMDs, (weapons of very massive destruction), leaves entrenched and siloed enough destructive power to annihilate everything living on the face of the Earth a few times over. We shall hear over the coming months whether the Administration’s claims of these reductions ever actually come to pass. The odds are not terribly favorable to the President’s claims. Any part-time student of international affairs knows that Putin will not allow any such compliance under his watch, if the U.S. proceeds with its defense shield deployment in Poland and Czech.

Did America advance ground on obtaining any cooperation whatsoever on its objective of reigning-in Iran? Not a nod. Putin is very comfortable with selling Iran anything nuclear that it wishes to put its hands on. He has to sell Iranians something, anything, since they won’t buy his cars. Iran strategically presents the most critical foreign relations pillar to potential peace in the Middle East, and for now it remains an ace in Putin’s hand.

Countries expected by Putin of remaining within the “Russian sphere of influence,” such as Ukraine and Georgia, are making efforts to slip away from the bear’s grasp through entry into NATO. While the U.S. supports their inclusion, this stance is considered a direct threat to Russian hegemony in the region, further aggravated by the U.S. ballistic missile defense system intentions. Putin is not buying the sales pitch that this deployment is intended as a deterrent against Iran, no matter how the U.S. presents it. Putin just can’t take a joke. Of course it’s intended to protect against Russian aggression, however, in reality, well, it would augment the threat looming over Moscow, … just in case.

When Obama said to a business audience in Moscow, “Along the way, you gave us a pretty good deal on Alaska. Thank you,” was this intended to liven the discussion? Was it delivered to remind them Czar Alexander II, who received less than a penny per acre in gold for it, had shafted them? ... Under 21st Century Russian perception it is worse than a really bad deal. Is this a novel method of referencing a long history of trade? Russians never quite swallowed that pill, and Obama might have thought twice, or thrice, before raising this caustic historical Russian forget-me-not on Russian soil. Given Alaska’s current importance as a source of natural resources, it should have been evident that such recollection would rub some salt on an old wound. It should also have been obvious that it would be received as a backhand smack at Putin’s urgent quest for new productive oil and gas fields in Siberia, and more recently in contested areas of the Arctic. It would serve little here to imagine in much detail how the MSM might have treated Bush, had he made such a gaffe. Obama should understand that he is addressing a humiliated empire, desperate for a return to former glory.

Some of Putin’s highest priorities are oil and gas, their control, and their prices. He will support any measures that can sustain oil prices above $65 per barrel so that he can continue to fund his expensive power base. America's wishes are for something less than $40 per barrel, rendering Putin's ears deaf to any such discussion on this topic. Putin also needs to be seen as the nation’s strongman, and has been almost Hollywoodian in the shaping of that image. He must be seen as the defender of the motherland, and he enjoys approval by a comfortable majority of his countrymen. While Obama’s insecurity surfaces as arrogance, IMHO, Putin’s insecurity effuses as “My ego will take no prisoners, and my superiority doesn’t care what you think.” Any slights to his ego can only result in automatic and deep setbacks to pretense of cozy relations even though there is a long laundry list of expectations by each side.

The MSM has applauded Obama’s appeal to Russia’s youth that they should ignore past agenda (Putin), and take responsibility for a new 21st century agenda. Such communing with young Russians should help negotiations along astonishingly well with the country’s boss. Still, the MSM considers this strangeness, “a solid foundation,” for the future of the relationship. There is always something to be said for looking at a glass as being half full. There is also something to be said for realistic assessment, which provides a viable platform for effective strategic thinking. This U.S. representation in Moscow, IMHO, established absolutely no inroads that might provide launching pads for addressing the serious confrontational bargaining sessions that Putin’s long-established, aggressive and firm belligerence might budge for.

Obama apologists have excused him with commentary that he was simply stating historical fact. Such perception is baffling. Putin has been around a while, perhaps when visiting him, Obama should have taken more care to recall that his title is that of Prime Minister. No one in Russia does anything of import that his iron fist does not pre-approve. This too is historical fact, but perhaps Obama was tired, and when he mentioned Stalin, well, Stalin is part of Russian history after all, is he not?

The Moscow trip was not a favorable photo-op as it turned out, with Putin doing his best to appear nonplussed, and the meetings seemed to have accomplished nothing of substance. What was the point? The warheads will likely stay where they are, the missile shield has a doubtful future, and Putin will continue feeding Iran’s dreams of nuclear power. Putin understands America’s overwhelming military power. He cannot replicate it, however, he will remain an irritant, unwilling to appear acquiescent to any demands from America and the West. We can be assured that any backwards move Putin might relent to, he will extract maximum price for.

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