• Cyprus
  • Is Capitalism’s Social Contract under Collapse?

  • By Yiannos Katsourides | 12 Apr 13 | Posted under: Cyprus
  • Cyprus is currently experiencing dramatic moments that are expected to subvert the entire network of social relations and daily life of our people. The recent agreement of the Cypriot government with Eurogroup overturns violently the main pillar of the capitalist structure; namely, the banking sector.

    The effective resolution of the Popular (Laiki) Bank and the transfer of its liabilities on the shoulders of the Bank of Cyprus, combined with the haircut of deposits of the Bank of Cyprus create a new banking landscape on one hand and on the other it reinforce the feeling of uncertainty as to the viability of the project.

    In the last few weeks, the Cypriot people experienced an unprecedented intimidation by European and government officials, academics, economists and analysts of all sorts. The common thread of their analysis was to create a setting of asphyxiating pressures and demonise any alternatives. There was a conscious effort to present the bail-in agreement and the accompanying memorandum as the only way out. Any reference to other options is treated with irony and is ranked in the realm of utopia and romanticism.

    Many "analysts" and political parties have attempted to get a message through that Cypriots are to blame for this whole situation, as a result of their lifestyle and the exaggerations in their personal life and because “they performed money-laundering activities”. A consequence of this view is the notion that it is a good thing that Europeans have come to wake us up. This classless approach is false, historically ignorant and what it aims at is to conceal the contradictions of capitalism and the responsibilities of a small banking elite and its political supporters. Without denying the excessive lifestyle of the Cypriot people, even their mistakes, as well as the structural problems of Cypriot economy, the primary cause of our suffering is the system itself that produces and reproduces the crises. Crises are inherent in the capitalist system, which constantly seeks to maximise profit and in periods of crises it pursues to socialize any losses.

    The majority of Cypriots is currently going through a shock experience that involves the refutation of expectations and collapse of myths that have been diligently built for many years. This mainly concerns the EU; a construction which they strove to present to people as a club of equality, justice and solidarity. Those declarations prove to be nothing more than “bounced cheques”; something the Left had always warned of and was mocked for. It is further revealed that the loss of state sovereignty in the process of European integration has serious implications concerning the welfare of the people since member states are deprived of fundamental tools for exercising independent monetary and economic policy.

    With regard to Cyprus the issue at stake is a lot more than a financial decision; it is a wider geopolitical one. What it is attempted is a form of neo-colonialism in order to safeguard, in the long-term, the geostrategic interests of major Western states. The stance of Troika, and the EU in general, towards Cyprus, can only be understood, apparently, if placed within a wider geopolitical context. This frame is determined by the discovery of natural gas deposits in Cyprus, by the recent normalization of Israel - Turkey relations and the achievement of a solution to the Cyprus problem. All the above seem to create a complex situation of geopolitical factors upon which the ruling circles of the system decided to reach to 'solutions', i.e. closure. The former Secretary General of NATO, Javier Solana, has already written an article on this topic. Moreover, as very bluntly put by the President of the Eurogroup, Dutch Dijsselbloem and reasserted by Commissioner Oli Rehn, the recipe implemented in Cyprus will become a model for other problematic countries.

    What happened in Cyprus, however, raises, in essence, a much bigger issue that touches upon the core characteristic of capitalism. Eurogroup's decision bluntly violated the altar of capitalism; i.e., private property. Not only foreign investors but also thousands of small depositors lost their long-life savings in a matter of seconds. Individual ownership and its protection, as well as the welfare state, comprise the social contract of capitalism with the people. This is what ensures coherence in a system that is based on the unrestrained pursuit of profit and exploitation, which, in turn, nourishes an illusion and a hope that, one day, each of us can become a Rockefeller. Once these two components are removed from the equation (the welfare state has been under attack for decades) the message passed to the world, even if they do not realize it, is that the foundations of the whole construction are shaken. This is indicative of the depth of the crisis, of the intentions of part of the capitalists to step over dead bodies to ensure their profit, as well as of the contradictions of a system that lives by exploiting everything: humans and nature.


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