In Cyprus, there is good news – very good news, actually – and bad news.
The good news is that the €10bn emergency international rescue of Cyprus, arranged almost exactly 12 months ago, is working. The economic slump triggered by the collapse of the island’s inflated banking sector is less severe than first feared. The hero of the hour is Haris Georgiades, Cyprus’s finance minister. If he sticks around, he ought to be the Financial Times’s next European Finance Minister of the Year. Read more
It’s a competition with some questionable talent, scorned for its lack of taste, and yet the Eurovision Song Contest has an audience of 125m and brings pundits out in force to discuss what it says about the state of Europe today. With this year’s final coming up this Saturday in Malmö, Sweden, we give you the best pieces on how it works and why Europeans care, so that you can mingle with confidence at Eurovision parties.
More on the Great Tax Race
♦ Luxembourg is set to share currently confidential information about multinationals’ bank accounts, showing how much it wants to shed its image as a tax haven at a time of a political and popular backlash against tax avoidance.
♦ One of the biggest hedge fund service businesses on the Cayman Islands has tried to block sweeping reforms to make the tax haven more transparent.
♦ Jeffrey Sachs writes about how austerity has exposed the threat of global tax havens: “In the new world of austerity following the 2008 crash… they are increasingly seen as a cancer on the global financial system that must be excised.”
The rest of the world
♦ Despite Dutch politics being roiled by waves of populist anger and anti-elitism, Willem-Alexander ascends to the throne amid an outpouring of popular enthusiasm – polls show support for preserving the Dutch monarchy running as high as 85 per cent.
♦ President Hamid Karzai acknowledges that the Central Intelligence Agency has been dropping off bags of cash at his office for a decade: “Not a big amount. A small amount, which has been used for various purposes.”
♦ Reuters takes a look through the confidential report prepared for the Cypriot central bank, which found that the Bank of Cyprus had been willing to invest in risky, high-yield Greek debt in its efforts to offset an erosion of its balance sheet from non-performing loans. The report also alleges that 28,000 files, containing emails from a crucial period during which the Bank of Cyprus spent billions of euros buying Greek bonds, were erased before investigators could copy them.
♦ A singer’s lament for Syria, broadcast on “Arab Idol”, has become a hit in the Arab world.
♦ Bangalore, once an advertisement for a new, confident India, is losing some of its sheen. Read more
By Gideon Rachman
In the end, the Cypriots swallowed the bitter medicine. Facing national humiliation and a bleak future many complain their small nation has been forced to succumb to the will of a larger, merciless power – Germany.
Today brought yet another headline about the apparently relentless rise of the Chinese economy. The OECD predicts that China will be the world’s largest economy (in PPP terms) by 2016. Not long, now.
Yet there are still many China bears – both inside the country and outside it. Those who suggest that there is something rotten in the state of China point to many things, from the environment to corruption. One of the most popular bearish arguments is the extent of capital flight from the country. If everything is so good in China – say the bears – how come so many rich Chinese are eager to get their money out of the country? Perhaps they know something we don’t? Read more
What lies ahead for Cyprus and the eurozone?
After a failed bailout plan that involved taxing the deposits of small savers, Cyprus is now the epicentre of the eurozone crisis. Lawmakers are now seeking an alternative before Monday, when the European Central Bank will cut emergency liquidity to Cyprus’s foundering banks. Kerin Hope, Greece and Cyprus correspondent; Peter Spiegel, Brussels bureau chief; and Patrick Jenkins, banking editor, join Ben Hall to discuss what’s happened and what lies ahead.
For a man who suffered the indignity of having to stand down after one term as president of Russia to make way for the return of Vladimir Putin, Dmitry Medvedev appears comfortable in his own skin.
Meeting the Financial Times and representatives of six other European newspapers this week, Russia’s prime minister seemed relaxed, sometimes jocular – in spite of the pressures many political observers believe he is under. Compared with the somewhat tense and nervous figure the FT first interviewed just after his election as president in 2008, he seems comfortable with the trappings of power – even if they are now diminished from what they were.
Today, a conservative or hardline faction in the Kremlin, emboldened by Putin’s return to the presidency, is seen as jostling to replace the more liberal Medvedev with its own premier. Putin, too, is thought ready to jettison Medvedev as a scapegoat in the event of a crisis such as an economic slowdown – and Russia’s economy has got off to a weak start this year.
For now, the premier remains in the same Gorky-9 compound he occupied as president, in which Boris Yeltsin spent his second presidential term, just off the chic Rublyovskoye Shosse 15km beyond Moscow’s outer ring road. Read more
More on the island rescue
Elsewhere in the world
By Gideon Rachman
European leaders must surely know that they are taking a big risk with Cyprus. The danger is obvious. Now that everybody with money in Cypriot banks is being forced to take a hit, nervous depositors elsewhere in Europe might notice that a dangerous precedent has been set. Rather than run even a small risk of an unwanted financial “haircut” in the future, the customers of Greek, Spanish, Portuguese or Italian banks might choose to get their money out now. If that starts to happen, the euro crisis will be back on again – with a vengeance.
Here’s today’s food for thought: