I don’t know if Germany still has guilds of criminals like those portrayed in the Fritz Lang movie “M” but Russia certainly has “thieves-in-law” – oftentimes tattooed with certain symbols including the crucifix to indicate the thieves crucified with Jesus Chris – so it was amusing this morning to hear an apoplectic Russian president, Dmitri Medvyedev describing the EU as just plain thieves. President Medvyedev was commenting on the latest bailout deal for Cyprus that was hammered out in Brussels last night and in addition to calling the bailout terms “theft” is reported to have said “the stealing of what has already been stolen continues”
You see, the Russian concept of “thieves in law” relies on thieves respecting a basic code of conduct.
In Germany’s case, it insisted in November 2010 as part of the €85bn Irish bailout, that Ireland repay the (widely perceived to be) substantial German bondholders in Irish banks, as part of that bailout. As a result, we’re all presently shouldering €70bn of bank bailout debt – equal to 43% of our GDP – including €6bn of state-aid premiums that NAMA paid when it acquired loans from the banks.
Now, Germany has insisted on a deal in Cyprus which will see both senior bondholders and large depositors at two Cypriot banks burned; in the case of Laika Bank, the burning might be 40% of deposit balances over €100,000. Russians are understood to have somewhere between €5-20bn in Cypriot deposits, so the Russians are set to heavily lose out. Germany benefits from the Cypriot deal because another pesky competitor in the EuroZone has been taken out of action, with depositors set to flee Cyprus as soon as they can get their hands on their cash. Germany itself was not exposed to losses in Cyprus. The alternative would have been the provision of additional funds from Germany, for which there would be risk.
So, you see, Germany has broken the thieves-in-law code by imposing two different deals which, in both cases, protected German interests.
Just common thieves so.