European Manufacturing PMI for March breaking down - sharp move seen for Italy , Spain , Ireland - Greece the worst as usual ..... Cyprus updates - April 2 , 2013 - some capital controls to be eased Tuesday , Popular Bank assets transferred to Bank of Cyprus , Unemployment in cyprus hits 14 percent in February - worse days ahead , Investigative Commission on cyprus Banking Sector sworn in - but what shall they do , Cyprus house President reiterates Monday that Cyprus must exit bailout program , Natural Gas Linked Bonds in Cyprus - really , .....

http://www.keeptalkinggreece.com/2013/04/02/prosecutor-links-phone-tapping-scandal-with-ex-pm-assassination-plan/

Prosecutor links phone tapping scandal with ex PM assassination plan

Posted by keeptalkinggreece in Politics

A prosecutor has apparently evidence that makes a link between two ‘dark cases’ in Greece: the phone tapping scandal during 2004-2005 and a plan to assassinate Kostas Karamanlis, who was prime minister at that time. The plan against Karamanlis was revealed last year by the National Intelligence service (EYP) with the documents making references to “Russian agents” and attempts to destabilize the country.

These two cases have been pending and now the will investigated together as the Greek justice apparently has indicators that there were linkages between the two cases.

Justice tries to synthesize all the pieces of the puzzle that involves illegal phone tapping of government officials via Vodaphone, a company employee who “hanged himself”, Russian agents and even mysterious US Embassy employees.

Research material seems to prove that the illegal phone tapping did not stop in 2005, when the scandal broke with the apparent “suicide” of  Network Planning Manager for Vodafone Greece,Kostas Tsalikidis,  but also continued until 2007 – if not in 2008 – despite the fact there was an ongoing judicial investigation.

Citing sources dealing with the case, Greek media reported on Tuesday, that also other “showcase” companies (not telecommunication companies) have been involved in the case as revealed thought the lifting of phone secrecy of suspects.

Burgas-Alexandroupolis on the phone

A further elements linking the two cases is that among the intercepted phone conversations were those between Karamanlis and then Russian president Putin as well between Karamanlis and Bulgarian prime minister Parvanov on the construction of pipeline Burgas-Alexandroupolis.

These phone conversations took place in September 2006, while the story claims the Russian agents were in Athens two years later, in 2008.

American involvement

Investigation has also collected evidence for a “suspicious” mobile phone that was used by employees of the US embassy in Athens.  This phone together with three other card phones were bought at Akti Miaouli shop in Piraeus by a person that had declared false identity data. Investigators had identified ‘suspicious’ phone numbers in Maryland, USA, that had contact to the card-phones in Greece.

Greek wiretapping case of 2004-2005

The wiretapping scandal also referred to as Greek Watergate, involved the illegal tapping of more than 100 mobile phones on the Vodafone Greece network belonging mostly to members of the Greek government and top-ranking civil servants. The taps began sometime near the beginning of August 2004 and were removed in March 2005 without discovering the identity of the perpetrators.

The phones tapped included those of the Prime Minister Kostas Karamanlis and members of his family, the Mayor of Athens, Dora Bakoyannis, most phones of the top officers at the Ministry of Defense, the Ministry of Foreign Affairs, the Ministry for Public Order, members of the ruling party, ranking members of the opposition Panhellenic Socialist Movement party (PASOK), the Hellenic Navy General Staff, the previous Minister of Defense and one phone of a locally hired Greek American employee of the American Embassy. Phones of Athens-based Arab businessmen were also tapped. (full in wikipedia)

Investigation is apparently at the most crucial point.

Read also Russian spies revealed Karamanlis’ assassination plan

http://www.keeptalkinggreece.com/2013/04/02/troika-bailout-agreement-looting-cyprus-natural-resources/

Troika bailout agreement: looting Cyprus natural resources

Posted by keeptalkinggreece in Economy

The final terms of the bailout agreement between the Cypriot government and the troika of international lenders are to be worked out and have been finalized until Thursday, in order to be approved by the Eurogroup working group. The deal is based on the bailout terms agreed last November with the previous government.

Details of the memorandum of understanding (MoU) that Cyprus has to sign with the troika as part of its 10-billion-euro bailout were leaked to the media.

The terms include:

-raising the corporate tax rate from 10 percent to 12.5 percent

-increasing the tax on interest and dividends to 30 percent

-hiking value added tax from 17 to 19 percent.

-fire 5,000 civil servants to be fired by 2016

- increase their retirement age  by two years.

It also envisions 1.4 billion euros being raised from privatizations and calls on Nicosia to keep its lenders fully briefed regarding its plans for the exploitation of hydrocarbons.

“The draft bailout agreement between Cyprus and the troika, which was published in the Cypriot daily Phileleftheros on Monday, foresees the exploitation of offshore hydrocarbon deposits as part of an economic reform program aimed at putting the country back on the path to fiscal health.

The plan set out in Phileleftheros envisages the creation of infrastructure to exploit undersea reserves and of a fund that would manage state revenues derived from natural gas finds. It also gives Nicosia one more year than anticipated to post a primary surplus – setting a deadline of 2017 rather than 2016.” (ekahtimerini)

Below are some of the short- and medium-term financial, fiscal and structural measures.

Revenue measures

1.2. Ensure additional revenues from property taxation of at least 70 million by: (i) updating the 1980 prices

through application of the CPI index for the period 1980 to 2012; and/or (ii) amending tax rates for the value bands.

1.3. Reduce the expenditure on various housing schemes by at least EUR 36 million by consolidating and streamlining the schemes for the displaced and the Comprehensive Housing Scheme, discontinuing the special grant for acquiring a first residence and ceasing the provision of loans and loan guarantees related to house construction and acquisition under all government-administered housing schemes.

1.4. Increase the statutory corporate income tax rate to 12.5%.

1.5. Increase the tax rate on interest and dividend income to 30%.

1.6. Increase the bank levy on deposits raised by banks and credit institutions in Cyprus from 0.11% to 0.15% with 25/60 of the revenue earmarked for a special account for a Financial Stability Fund.

1.7. Undertake a reform of the tax system for motor vehicles, based on environmentally-friendly principles, with a view to raising additional revenues, through the annual road tax,

 3 The 2013 deficit target may be revised to take into account the potential compensation of pension funds’ losses

on deposits in Cyprus Popular Bank not covered by deposit guarantee scheme the registration fee and excise duties, including motor fuel duties. The reform will take into account the related study of the University of Cyprus.

The agreement foresees also reduction of health care expenditure and introduction of a co-payment system for medical services and pharmaceuticals.

Increase fees for public services by at least 17%.  (Full MoU here)

“Having inherited an atomic bomb, the government managed to neutralize it and in doing so saved the country from total bankruptcy,” government spokesman Christos Stylianides told reporters Monday.

President Nicos Anastasiades told daily Phileleftheros, he would allow casinos to operate in Cyprus and also proposed tax incentives for companies that reinvest profits in Cyprus.

After the pillars of its economy have been crashed, Cyprus seeks alternatives in gambling…

See also: ekathimerini,  Cyprus Mail,

http://beforeitsnews.com/economy/2013/04/brics-dumping-euro-us-dollar-set-back-a-generation-2506400.html

BRICS Dumping Euro: “US Dollar Set Back A Generation”

Tuesday, April 2, 2013 3:15

0

(Before It's News)

According to this news report from Russia Today, the emerging economies in Brazil, Russia, India, China and South Africa are dumping the Euro 'en masse'. How will this sell off of the Euro affect the US dollar? According to this report, the US dollar has now been set back a generation as it rapidly loses its status as the world's reserve currency. Meanwhile, this revelation offers us a 'shocking glimpse' at the severity of our monetary crisis.

Brussels has been forced to eat a generous slice of humble pie: A massive sell-off of the euro is underway in the wake of a persistent financial crisis, as holdings in the European currency by emerging economies were slashed by almost 8 percent last year.

Emerging economies – including Brazil, Russia, India, China and South Africa (BRICS) – are dumping the euro, having sold €45 billion of the currency in 2012, according to data gathered by the International Monetary Fund.

Last week, China and Brazil agreed to a $30-billion swap deal that would give each the ability to borrow the other's currency in the event of future turbulence in the global financial system. The move undercuts the need to use the dollar as a reserve currency; given China’s increasing economic might, Beijing appears to be steadily promoting its national currency, the renminbi.

This ‘euro flight’ is disturbing news for Brussels and the eurozone: The euro's challenge to the international status of the US dollar has been “set back a generation,” as new data show developing countries dumping the European currency from their official reserves, FT reported, citing IMF data. More below.

This retreat of the European currency, once heralded as a serious rival to the ubiquitous dollar, offers a shocking glimpse at the severity of Europe's sovereign debt crisis, which recently saw Cyprus take the unprecedented step of penalizing wealthy bank depositors in order to avoid bankruptcy.

http://www.zerohedge.com/news/2013-04-02/overnight-levitation-driven-yen-carry-despite-relentless-european-deterioration

Overnight Levitation Driven By Yen Carry Despite Relentless European Deterioration

Submitted by Tyler Durden on 04/02/2013 - 07:05

The driver of today's episode of "make the futures levitate" is not so much a rise in the EURUSD as Europe reopens - a very unhappy Europe where Italy's Monte Paschi was already halted down once on news from this weekend it was the first peripheral bank to suffer a depositor "run" - but curiously the USDJPY which after tumbling to under 93 and pushing the Nikkei 225 down by another 1% to just over 12,000 has been ramping gradually all morning to end well above the start of Japanese trading and was back to 93.25 at last check. It certainly is not the European economic news which continue to be about depressionary and getting worse: fresh unemployment record at 12%, final manufacturing PMIs well into contraction and getting worse especially for the doomed PIIGS: Italian PMI dumping even more to 44.5 vs Flash 45.4 and down from 45.8 last, Spain PMI crashing to 44.2, vs flash 46.2 and 46.8 last, UK 48.3 vs Flash 48.7, Germany 49.0 vs Flash 48.9 down from 50.3; France 44.0 vs Flash 43.9 and so on, rumors that the Cypriot Finance Minister is about to be sacked, and most disturbingly, the Slovenia central bank vice-governor Fabijan said that "Slovenia must start credible measures to avoid aid." Where was the last place we heard this.... Oh, yes, Cyprus. The same Cyprus, which paradoxically, is presented by some as the reason for the overnight "rally", with pundits attributing the Troika's "easing" of MOU terms by pushing back the fiscal target from 2016 to 2017 as reported yesterday. How that is even remotely news is shocking since none of the actual austerity measures themselves have been eased. But any goal seeked narrative is fair in the central banks' intervention in the farce formerly known as the "market."

http://www.zerohedge.com/news/2013-04-02/visualizing-cypriot-deposit-confiscation

Visualizing The Cypriot Deposit Confiscation

Submitted by Tyler Durden on 04/02/2013 14:52 -0400

• Ben Bernanke
 
• Recession

From 'why Cyprus could not bail out its banks' to its failed financing needs and the road to confiscation, Demonocracy provides the 'everything you wanted to know about Cyprus' infograph 'but were afraid to read'.

Via Demonocracy,

The big depositors will get hit harder than expected, because a lot of money left the banks right before the banks went into lock-down.

Cyprus' Banks are the first during the last 147 banking crises that will not get a single Euro from EU to bail out the banks. Greek branches of Cyprus banks had €15 Billion in deposits,they were sold last minute to another bank, by so they will not be included in sharing the losses- obviously suspicious. Some people are offering depositors to get their money out of Cyprus for a 20% fee. Cyprus officials are throwing around slogans such as "time for responsibility' (to pay up) just to turn around a week later and oppose it.

With the lack of backbone, the next political move is rather unpredictable. EU officials say Cyprus is a unique case, but EU has many countries with over-sized banking sectors.

The crash of Cyprus financial sector and government bailout sentences Cyprus to a long period of recession and debt. The list of demands by EU to Cyprus for accepting the €10 billion bailout includes things such as freeze on pensions, massive tax increase on just about everything and more taxes.

For America: Bernanke Fails to Answer Concerns about a Cyprus-Style Seizure of American Bank Deposits

http://hat4uk.wordpress.com/2013/04/02/cyprus-exclusive-what-they-knew-and-what-we-didnt/

CYPRUS EXCLUSIVE: What they knew, and what we didn’t

Electricity Authority withdrew €19.5m four days before bailin

Troika agreement specifically includes gas/energy clauses

Details of a memorandum signed between Nicosia and troika officials leaked to the media stress the creation of infrastructure to exploit the island’s undersea reserves, and of the need for a fund to “manage” State revenues derived from natural gas finds. And Nicosia’s Electricity Authority was one of the biggest withdrawers prior to the depositor haircut announcement.

Both Greeks and Cypriots are pondering this morning about evidence of hard bargaining in the detail of the Troika/Cyprus deal – a deal leaked to the media late yesterday. The final signed memorandum gives Nicosia one more year than anticipated to post a primary surplus – setting a deadline of 2017 rather than 2016 – and is being seen by some as the price the EU/IMF/ECB axis had to pay to get what they wanted: access to the gas reserves around the island.

Significantly, the National Electricity Authority was allowed to withdraw its entire holding in Cyprus Bank…..suggestive of either a tip-off from the Cypriot negotiators, or turning a blind-eye by the Troika as another negotiating point to achieve its ends. There is cynicism in Nicosia about who will handle and control the “fund” to be set up to “manage” income from the energy reserves. If the bailin now signed – and the debt Nicosia faces – go according to  normal procedure (ie, the debt keeps going higher, and the GDP lower – as in this case it must do) the chances are that both the income and the assets will fall into EU hands.

Which, let’s face it, was probably the idea.

Meanwhile, President Nicos Anastasiades said he would allow casinos to operate in Cyprus – another cultural improvement designed to attract innocent investors – and continued to refute reports that a firm owned by his son-in-law’s father transferred €21m euros abroad a few days before the Eurogroup levy imposition on depositors in Cyprus. Unfortunately for him, the data tend to support his accusers.

There seem to be two types of investor who got out of Cypriot banks before the EC goosestepped in: people known to the Government, and mobsters. This is a representative snapshot of the biggies:

The Cyprus Electricity Authority withdrew €19.5m on 12.3.13: just 96 hours before the depositor
larceny levy was announced.

Octala Services withdrew $26m, 7.3.13. Asmad Octala Jr. is a 46 year old property developer and real estate agent based in Miami Florida, he is a member of the Octala family (suspected Mob connections) and was charged with Grand Larceny in 1995.

ATED Investments Ltd works from a small serviced office space in London, but is an obvious front for Russian money. Listed as dormant, it has not issued any accounts since 2008.  It withdrew 48m Rubles on 14.3.13

Oneworld Ltd  provide financial services solutions to corporate clients based in Cyprus and internationally. They specialise in ‘tax-efficient jurisdictions’, and are reputed to manage wealth for several Cypriot MPs. Oneworld withdrew €19.5m on 14.3.13

Seymour Enterprises. Based in London and again, dormant since 2005, the company withdrew $20m between the 5th and 8th March 2013.

Harveyson Investments is a fake trading name: it doesn’t exist as a company anywhere. Another probable Russian front, it withdrew 5m rubles between 5th and 16th March 2013. There is a Harvey Son company in the UK, but no connection to any of this is apparent.

So there we have it – or rather, Cyprus doesn’t: the bad guys didn’t like the play, and left after the First Act. On the whole, they weren’t a very prepossessing lot….and thanks to Inspector Clousseau of the Brussels Sureté, they got clean away.

My sympathy lies 100% with the innocent citizens of Cyprus, wealthy or otherwise: they have had their past savings and future income stolen, and there is no excuse for it.

Cyprus Finance Minister Resigns

Submitted by Tyler Durden on 04/02/2013 08:17 -0400

As per rumors first reported in the overnight summary article, the Cypriot finance minister has joined the other rats dumping the sinking island:

• CYPRUS FINANCE MINISTER SARRIS SAYS HE RESIGNS
• SARRIS SAYS RESIGNS DUE TO ONGOING INVESTIGATION IN CYPRUS
• SARRIS SAYS CYPRUS PRESIDENT ACCEPTED RESIGNATION

Investigation?
Did he also funnel cash into London ahead of Confiscation Day? But fear
not, all shall be well, the now ex-finmin promises:

• SARRIS SAYS CAPITAL CONTROLS WILL BE EASED GRADUALLY

Surely, if this great news doesn't send the S&P to new all time highs, nothing will.

and Spain down the drain....

Tuesday, April 02, 2013 3:13 AM

Spain's Deficit Set to Soar; GDP Poised to Plunge; Job Losses Fastest in 3 Years; IIF Wants Permanent Tax Hikes

The situation in Spain took another sharp turn for the worse. Employment losses are the greatest since 2009, tax revenue is declining, the deficit is increasing and the IIF wants economically insane tax hikes.

GDP Poised to Plunge, Deficit Poised to Rise

El Economista reports IIF believes that the Spanish economy will contract by 2% in 2013. 

 The Institute of International Finance (IIF) believes the Spanish economy contraction will accelerate to register a gross domestic product (GDP) decline of 2%.

"The decline in GDP seems likely to accelerate to 2% in 2013 after 1.4% in 2012, as high unemployment, tight monetary conditions and current lower wages further reduce domestic spending and weak demand contain domestic exports," said the IIF in a report on the eurozone.

The agency believes that this growth outlook "much weaker" have made ​​the agreed deficit targets for 2013 and 2014 are "unreachable", and believes that this year will close above 6%.

The IIF notes that the 2013 Budget predicted that the deficit falls to 4.5% of GDP this year down and 3% in 2014. "However, these growth forecasts for this year especially, seem unlikely," the report says.

In the current context, tax revenues will be lower than expected and that social spending will increase as a result of high unemployment. This will bring the deficit back above 6% of GDP, even if the government implements all the measures it has promised.

It warns the expiration of temporary tax increases such as income tax hikes approved by the Government in 2012, will cause the deficit to rise again in 2014 to 6.7%.

To ensure greater deficit reduction in 2014, the government needs to extend temporary tax increases more than expected or identify other measures to compensate their withdrawal.

Decline in Manufacturing Accelerates

The Markit Spain Manufacturing PMI shows Decline in manufacturing production accelerates in March.

 Key Points:

Faster falls in output and new orders
Sharpest decline in employment since December 2009
Input costs decrease for first time in eight months

Summary:

March saw an accelerated deterioration in business conditions in the Spanish manufacturing sector,
with output, new orders and employment all falling at faster rates than in February. This contrasted
with business conditions coming closer to stabilisation earlier in 2013.

The seasonally adjusted Markit Purchasing Managers’ Index dropped to 44.2 in March, from 46.8 in the previous month. This was the lowest reading since October 2012, and represented the twenty-third successive deterioration of business conditions in the sector.

New orders fell at a steeper pace in March, with the latest decline the fastest since November 2012.
New export orders also decreased, ending a three-month period of growth. The rate of job cuts also
quickened, and was the steepest since December 2009.

Comment:

Commenting on the Spanish Manufacturing PMI ® survey data, Andrew Harker, economist at Markit and author of the report, said: “The March PMI data for Spain make grim reading for the manufacturing sector. Moreover, the latest figures have brought an end to the recent period of moderating declines, and cast doubt on any hopes of recovery for the rest of the year. The employment index again highlighted the extent of the problems currently afflicting the manufacturing sector and the wider Spanish economy, with jobs cut at the fastest pace in more than three years.”

The IIF wants Spain to hike taxes (extend temporary hikes if you prefer). Either way, the IIF is totally nuts. How long is Spain going to put up with this?

Mike "Mish" Shedlock

and......




http://www.businessinsider.com/european-march-pmis-indicate-deep-recession-and-crisis-worse-than-cyprus-2013-4

We Just Got To See The European Crisis That's Far Bigger Than Cyprus Or Italy

Joe Weisenthal | Apr. 2, 2013, 4:14 AM | 5,956 | 13

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REUTERS/Arnd Wiegmann

Over the last hour or so, Eurozone countries reported their PMI readings for March.

A PMI reading is a gauge of a country's manufacturing sector. Anything above 50 indicates expansion from the month before. Anything below 50 indicates contraction.

Every single reading was below 50 this month. The numbers were completely disastrous.

Via Markit, here's a breakdown of some of what we just saw.

First, the general Eurozone chart. You can see it deteriorated, and is well below 50, indicating deep contraction.

Markit

And here's a summary of some themes we saw across countries. There was really terrible news on the output, new orders, and employment front.

Markit

Now here's the really ugly chart, showing each country's trajectory.

Markit

March was a truly horrible month for Europe. This is of course, in addition to the crisis in Cyprus and the political turmoil in Italy, which still doesn't have a government.

But really this is the biggest one. Europe is seeing non-stop economic decline, which is a state of affairs that's terrible for banks. Terrible for national finances. And it's terrible for politics.

If growth heals all, then recessions exacerbates all.

Unfortunately, nobody has any clear idea how to address the situation. The ECB hasn't been doing much. And mostly the demands of the elites regard austerity.

http://hat4uk.wordpress.com/2013/04/02/cyprus-exclusive-what-they-knew-and-what-we-didnt/

CYPRUS EXCLUSIVE: What they knew, and what we didn’t

Electricity Authority withdrew €19.5m four days before bailin

Troika agreement specifically includes gas/energy clauses

Details of a memorandum signed between Nicosia and troika officials leaked to the media stress the creation of infrastructure to exploit the island’s undersea reserves, and of the need for a fund to “manage” State revenues derived from natural gas finds. And Nicosia’s Electricity Authority was one of the biggest withdrawers prior to the depositor haircut announcement.

Both Greeks and Cypriots are pondering this morning about evidence of hard bargaining in the detail of the Troika/Cyprus deal – a deal leaked to the media late yesterday. The final signed memorandum gives Nicosia one more year than anticipated to post a primary surplus – setting a deadline of 2017 rather than 2016 – and is being seen by some as the price the EU/IMF/ECB axis had to pay to get what they wanted: access to the gas reserves around the island.

Significantly, the National Electricity Authority was allowed to withdraw its entire holding in Cyprus Bank…..suggestive of either a tip-off from the Cypriot negotiators, or turning a blind-eye by the Troika as another negotiating point to achieve its ends. There is cynicism in Nicosia about who will handle and control the “fund” to be set up to “manage” income from the energy reserves. If the bailin now signed – and the debt Nicosia faces – go according to  normal procedure (ie, the debt keeps going higher, and the GDP lower – as in this case it must do) the chances are that both the income and the assets will fall into EU hands.

Which, let’s face it, was probably the idea.

Meanwhile, President Nicos Anastasiades said he would allow casinos to operate in Cyprus – another cultural improvement designed to attract innocent investors – and continued to refute reports that a firm owned by his son-in-law’s father transferred €21m euros abroad a few days before the Eurogroup levy imposition on depositors in Cyprus. Unfortunately for him, the data tend to support his accusers.

There seem to be two types of investor who got out of Cypriot banks before the EC goosestepped in: people known to the Government, and mobsters. This is a representative snapshot of the biggies:

The Cyprus Electricity Authority withdrew €19.5m on 12.3.13: just 96 hours before the depositor
larceny levy was announced.

Octala Services withdrew $26m, 7.3.13. Asmad Octala Jr. is a 46 year old property developer and real estate agent based in Miami Florida, he is a member of the Octala family (suspected Mob connections) and was charged with Grand Larceny in 1995.

ATED Investments Ltd works from a small serviced office space in London, but is an obvious front for Russian money. Listed as dormant, it has not issued any accounts since 2008.  It withdrew 48m Rubles on 14.3.13

Oneworld Ltd  provide financial services solutions to corporate clients based in Cyprus and internationally. They specialise in ‘tax-efficient jurisdictions’, and are reputed to manage wealth for several Cypriot MPs. Oneworld withdrew €19.5m on 14.3.13

Seymour Enterprises. Based in London and again, dormant since 2005, the company withdrew $20m between the 5th and 8th March 2013.

Harveyson Investments is a fake trading name: it doesn’t exist as a company anywhere. Another probable Russian front, it withdrew 5m rubles between 5th and 16th March 2013. There is a Harvey Son company in the UK, but no connection to any of this is apparent.

So there we have it – or rather, Cyprus doesn’t: the bad guys didn’t like the play, and left after the First Act. On the whole, they weren’t a very prepossessing lot….and thanks to Inspector Clousseau of the Brussels Sureté, they got clean away.

My sympathy lies 100% with the innocent citizens of Cyprus, wealthy or otherwise: they have had their past savings and future income stolen, and there is no excuse for it.

and.....

http://www.cyprus-mail.com/opinions/our-view-what-do-we-really-have-lose-keeping-capital-controls-place/20130402

OUR VIEW: What do we really have to lose by keeping capital controls in place?

Published on April 2, 2013

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IF THERE is one thing we can say with a large degree of certainty, given how bailout terms and conditions are changing every day, is that the Cyprus we knew has been annihilated.
The two big banks that financed our affluent lifestyle have collapsed, and the Bank of Cyprus, which will be allowed to survive, will be operating under so many restrictions and debilitating debts that it will be unable to fund business activity, let alone growth.
Some say that the Bank of Cyprus will be so heavily over-capitalised after the re-organisation and bail-in of deposits that its future would be secured. Estimates are that its core tier 1 capital will be at 17 per cent, almost double the minimum set by the European Central Bank (ECB), but this is hardly something that can raise even a glimmer of hope. The fact is that the banking sector has been devastated and it will take more than a decade for the Cypriot banks to regain the trust and confidence they once enjoyed, no matter how well-capitalised they may be.
Will any money be left in the Cypriot banks, once the current controls on capital transfers and withdrawals are lifted? The Central Bank had said that these controls would be in place for a few days but that is absurdly unrealistic. Had it said a few months it would have been slightly more realistic but still excessively optimistic. It is under pressure from the ECB and the Eurogroup not to maintain controls for too long because neither wants restrictions on the movement of money in a eurozone country. The ECB had wanted the banks - apart from Laiki and BoC to open last Tuesday - to open without any restrictions on withdrawals, but this move was blocked by President Anastasiades.
He should carry on blocking it, regardless of what the ECB might say, because we have nothing to lose by keeping controls in force. It is not as if this would destroy our reputation as a financial services centre or a tax haven or discourage businesses from setting up operations here. By keeping controls, the banks based here may have the deposits that would allow them to operate as banks, offering some loans to business, instead of turning into debt-collection agencies.
Our Eurogroup partners might not approve of a eurozone country with restrictions on the movement of capital, but they should have thought of that when they took the decision to ‘reorganise’ our banking sector and pull the plug on the business model of our economy. Cyprus will now be eurozone mark II. 

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_02/04/2013_491278

Cyprus to ease some capital controls, central bank source says

Cyprus is expected to announce a partial relaxation of currency controls on Tuesday, raising the ceiling for financial transactions that do not require central bank approval to 25,000 euros from 5,000, a central bank source said.

Cypriot authorities have also decided, in consultation with international lenders, to unblock 10 percent of a 40 percent effective freeze on large deposits in Bank of Cyprus BOC.CY under a bail-in arrangement.

The bail-in sees another 37.5 percent of deposits exceeding 100,000 euros converted to equity in the bank and an additional 22.5 percent used as a buffer which could, if circumstances warrant it, also be converted to equity.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_02/04/2013_491259

BoE says deposits transferred to Bank of Cyprus Britain's banking supervisor said on Tuesday that all deposits at Cyprus Popular Bank UK, operating under the name of Laiki Bank UK, will be transferred to the Bank of Cyprus UK and protected under Britain's rules. The switch in accounts follows a bail out the government of Cyprus and restructuring of its banking sector. The Bank of England's Prudential Regulation Authority said the deposits will be covered under Britain's compensation scheme which protects deposits up to 85,000 pounds. "The agreement does not affect access to bank accounts and therefore all customers who had an account with Laiki Bank UK will be able to access funds as normal and do not need to do anything,» the PRA said in a statement. [Reuters] http://famagusta-gazette.com/eurostat-unemployment-in-cyprus-reaches-in-february-p18797-69.htm Eurostat: Unemployment in Cyprus reaches 14% in February FAMAGUSTA GAZETTE • Tuesday, 02 April, 2013 Unemployment in Cyprus reached 14% of the active population in February, compared to 13.7% in January, while unemployment among men was 13.9% and women 14.1%, according to Eurostat. Unemployment among young persons under the age of 25 was 31.8%, based on December data. The Euro area seasonally-adjusted unemployment rate was 12% in February 2013, stable compared with January. The EU27 unemployment rate was 10.9%, up from 10.8% in the previous month. In both zones, rates have risen markedly compared with February 2012, when they were 10.9% and 10.2% respectively. Eurostat estimates that 26.338 million men and women in the EU27, of whom 19.071 million were in the Euro area, were unemployed in February 2013. Compared with January 2013, the number of persons unemployed increased by 76 000 in the EU27 and by 33 000 in the Euro area. Compared with February 2012, unemployment rose by 1.805 million in the EU27 and by 1.775 million in the Euro area. Among the member states, the lowest unemployment rates were recorded in Austria (4.8%), Germany (5.4%), Luxembourg (5.5%) and the Netherlands (6.2%), and the highest in Greece (26.4% in December 2012), Spain (26.3%) and Portugal (17.5%). Compared with a year ago, the unemployment rate increased in nineteen Member States and fell in eight. The highest increases were registered in Greece (21.4% to 26.4% between December 2011 and December 2012), Cyprus (10.2% to 14.0%), Portugal (14.8% to 17.5%) and Spain (23.9% to 26.3%). The largest decreases were observed in Latvia (15.6% to 14.3% between the fourth quarters of 2011 and 2012), Estonia (10.8% to 9.9% between January 2012 and January 2013) and Ireland (15.1% to 14.2%). Between February 2012 and February 2013, the unemployment rate for males increased from 10.7% to 11.9% in the Euro area and from 10.1% to 10.9% in the EU27. The female unemployment rate rose from 11.2% to 12.0% in the Euro area and from 10.3% to 10.9% in the EU27. In February 2013, 5.694 million young persons under 25 were unemployed in the EU27, of whom 3.581 million were in the Euro area. Compared with February 2012, youth unemployment rose by 196 000 in the EU27 and by 188 000 in the Euro area. In February 2013, the youth unemployment rate was 23.5% in the EU27 and 23.9% in the Euro area, compared with 22.5% and 22.3% respectively in February 2012. In February 2013, the lowest rates were observed in Germany (7.7%), Austria (8.9%) and the Netherlands (10.4%), and the highest in Greece (58.4% in December 2012), Spain (55.7%), Portugal (38.2%) and Italy (37.8%).  — (KYPE) http://famagusta-gazette.com/investigative-commission-on-cyprus-banking-sector-sworn-in-p18798-69.htm Investigative Commission on Cyprus banking sector sworn in The commission is chaired by Georgios Pikis, a former Supreme Court President and former member of the International Court of Justice in The Hague. The other two members are Panayiotis Kallis and Yiannakis Constantinides, both former Supreme Court judges. FAMAGUSTA GAZETTE • Tuesday, 02 April, 2013 A three-member investigative commission to probe possible civil, criminal or political liabilities concerning developments in Cyprus’ banking sector and the economy was sworn in here today, during a ceremony at the Presidential Palace. The commission is chaired by Georgios Pikis, a former Supreme Court President and former member of the International Court of Justice in The Hague. The other two members are Panayiotis Kallis and Yiannakis Constantinides, both former Supreme Court judges. The ceremony took place in the presence of Cyprus President Nicos Anastasiades, Justice Minister Ionas Nicolaou and Attorney General Petros Clerides. Speaking during the ceremony, President Anastasiades said that the appointment of the commission is something “the state owes to the people”. He added that the present situation is the result of a combination of factors, actions or omissions by people who were in charge of handling the economy and the banking sector. These, he added, have led the country to near collapse and led one of Cyprus’ largest banks to a breakup. Moreover, President Anastasiades asked the commission to investigate as a priority and with “great strictness” direct or indirect claims relating to diverting funds abroad which concern him personally or his immediate family. He also asked the commission to extend its inquiry to transactions by the law firm he was partner to until recently, before assuming his duties as President in February this year. “Innocent compatriots of ours are called to bear the consequences” the President said, adding that the people are justly asking for retribution. Finally, Anastasiades praised the members of the commission for offering their services to the country, without pay. Speaking on behalf of the investigative commission, Pikis pledged to carry out their duties in full, adding that this is something they owe to all people. http://famagusta-gazette.com/cyprus-must-exit-the-bailout-program-says-house-president-p18788-69.htm Cyprus must exit the bailout program, says House President House President Yiannakis Omirou FAMAGUSTA GAZETTE • Monday, 01 April, 2013 House President Yiannakis Omirou on Monday reiterated that Cyprus must exit the bailout program with its international lenders and called on everyone to work in order to create an environment of national unity and solidarity. Speaking to the press and commenting on the situation in Cyprus following the Eurogroup decision on the country’s bailout program, Omirou pointed out that the deposits haircut affects the entrepreneurs’ activities and as a result, the market enters a crisis. Invited to comment on recent press reports about Cypriot politicians whose loans were wrote off, Omirou pointed out that nobody should be excluded from the probe and that all the related information should be put before the investigating committee and should be given to the Parliament as well.  — (KYPE) http://famagusta-gazette.com/comment-issuing-credible-natural-gas-linked-bonds-in-cyprus-p18789-69.htm Comment: Issuing Credible Natural Gas Linked Bonds in Cyprus Converting natural resources into proved reserves has to follow a predefined path which ensures that the likelihood of extracting monetary value from an asset commands confidence. By Constantinos Hadjistassou*, PhD In attempt to stave off bank runs the President offered as a reward to depositors not withdrawing their savings from financial institutions, for a two years period, a bond tied to the island’s “natural wealth”– presumably natural gas. Under the circumstances financial resources aimed at averting a default were rather limited and thus any incentives to depositors were unavoidably somehow linked to projected (future) returns. One could wonder how pragmatic is it to commit potential future revenues from hydrocarbons? From the energy policy standpoint, the Aphrodite gas field is perhaps the most recognisable achievement of the previous Government’s legacy but it comes with a few caveats. Converting natural resources into proved reserves has to follow a predefined path which ensures that the likelihood of extracting monetary value from an asset commands confidence. In the petroleum jargon, natural gas or oil proved reserves (or P90 reserves) are those which “by analysis of geological and engineering data have at least a 90% probability of being commercially recoverable under existing economic conditions, operating methods, and government regulations.” Unless a quantity of gas or oil is proved it cannot be included in the assets of an oil company. For the purpose of reporting to investors, major stock exchanges (e.g., New York stock exchange) require oil companies to substantiate their claims of holding assets by valuing them as proved reserves. More than a year has elapsed since Noble Energy discovered about 200 billion cubic metres (bcm, gross mean) of natural gas, in block 12, the gas field has yet to be classified as a proved reserve. Usually, appraisal drilling is necessary to upgrade a resource into a reserve. Field appraisal is the process of converting probable reserves, with a probability of at least 50% of being recovered, into proved reserves. In doing so, at least one (appraisal) well is drilled in the formation. The wells designed to delineate the extent of the reservoir, provide more reliable information as to the quantity of the hydrocarbons, characterisation of the reservoir (i.e., pressure, temperature, porosity, etc.) and facilitate future production. More importantly, the objective of field appraisal is to quantify uncertainties regarding the commercial value of the discovered accumulation and to help make a decision as to whether the field is worth developing or not. Depending on the complexity of the geological formation, the volume of the hydrocarbons and the availability of other pertinent information, the appraisal process could span from a few months up to three years. Once the appraisal process concludes independent consultants or specialised companies undertake the task of verifying the proved reserves. Even though the appraisal process is time consuming and cost intensive it is justified in the sense that it mitigates risk which very often outweighs the cost of field appraisal. Simply put a proved reserve offers assurances to potential investors. Only then it is possible for a company or country to attach a credible monetary value to the reserves which when in-situ command a lower price per barrel of oil or $/million BTU for natural gas. Yet higher value can be earned from the reserves if the infrastructure exists to extract the hydrocarbons and source them to consumers, often, via the international market. Even greater benefits can be realised from the host country if the local oil & gas industry is actively engaged in all phases of developing hydrocarbons, namely: exploratory, appraisal, development, production and decommissioning. As expected an offshore field development, which comprises a floating platform, subsea wells, and possibly a submarine pipeline, requires considerable investments especially when in ultra-deep waters and away from the shore. The development of the Aphrodite gas field is expected to cost about $1.5-2 bn. Prior to developing the Aphrodite field one should consider the fact that the Noble-Delek-Anver consortium will need to recover their costs with a reasonable level of profit. Add to that the cost of the unitisation agreement between Cyprus and Israel due to the fact that the Aphrodite field borders with Israel’s Exclusive Economic Zone (EEZ) expected to be somewhere between 80% for Cyprus and 20% for Israel. Only when the host Government is granted the permission from the company/ies which hold the concessions rights it is possible for the country to issue hydrocarbon related bonds tied to its share of the reserve. According to unverified sources, provided the oil companies recover their costs, about 70% of the gas sales from the Aphrodite field will end-up in state coffers. Returning back to the scenario of issuing natural gas linked bonds prospects are not so rosy. Provided that the Cypriot parliament legitimises the Cyprus National Hydrocarbons Company (or KRETYK), any bonds will bear the same rating, from credit rating agencies, as the national oil company’s (NOC’s) host country. The same holds true for other NOCs such as Petrobras and Gazprom which have the same credit rating as Brazil and Russia, respectively. Hence, if Cyprus’s bonds are rated as “junk” the same would apply to the KRETYK gas bonds. Due to their inherent risk, subordinate bond ratings bear the burden of offering higher returns. In turn this yield is usually tied to the interest at which the host country raises money from lenders by issuing government bonds. However, a higher return on investment implies that the extraction costs of the natural gas need to be competitive. By virtue of their nature ultra-deep offshore, in water depths exceeding 1,500m, gas fields are capitally intensive projects requiring costly equipment. Notwithstanding the optimism there is an upper limit to the value of the bonds an NOC can issue. A couple of other hurdles will also need to be clarified before issuing natural gas bonds. First, investors will require a “roadmap” for exporting the natural gas from Cyprus. Cyprus’s minute natural gas needs for power generation, estimated at about 1.2 bcm/year, do not financially justify the development of the Aphrodite gas field. To make such a development economically viable there is a need to export an appreciable amount of the natural gas, most probably, in liquefied form. A starting point would be to build a one train Liquefied Natural Gas (LNG) plant with an export capacity of about 5 million tons (of LNG) per annum (mtpa). Raising an estimated €7 billion for a 5 mpta LNG plant is no easy task. Second, either more natural gas fields will need to be discovered by the companies which hold concessions in the Cypriot EEZ or Israel and Cyprus should monetise their reserves and decide to go for jointed exports. For the latter to happen, Israel has first to approve the export of natural gas and reinforce ties with Cyprus. Crucially important prior to issuing gas bonds there is a need to undertake the necessary studies which probably would include a pre-end engineering design (FEED) study, a feasibility analysis, and identifying potential gas buyers. To summarise, gas bonds can appeal to bank savers only when they are credible financial instruments. Surely natural gas offers hope in the gloominess. Drilling for oil, as indicated by Total, adds to the optimism. If only we had luck with our side and some more space for manoeuvring, that is in retrospect, time.