Mick Wallace (Wexford, Independent) | Oireachtas source

Latest events in Cyprus once again place a serious question mark over any notion of European solidarity. Where is the solidarity? How could the people of Europe think there is any such thing? The programme of austerity has proven to be a disaster. Europe is dominated by an absence of growth, by unemployment and by levels of youth unemployment in particular which vary from 30% to 60%. Europe is dominated by all the social problems which represent the fallout from these frightening unemployment figures. Is it a price worth paying?

In 1998, when Condoleezza Rice was asked if the deaths of 500,000 Iraqis in the 1991 bombing campaign was a price worth paying in order to control the price of oil, she replied, "It is a heavy price but, Yes, it is worth paying." The powers of central Europe would probably give the same answer if asked about the ravaging effects of austerity across Europe but the majority of Europeans would not.

The Cyprus experience marks an escalation in what is called austerity economics. This is an effort to pay for the cost of this now six year old global crisis in a new way. It is an effort to fund the bailout of banks in a new way. This new way was agreed last week by the European forces in control, the ECB, the EU and the IMF. It imposes on Cyprus a new step which is literally to snatch money from the bank accounts of many of the citizens of Cyprus. It is a form of blackmail. The officials of the banks and the political leaders are saying to the people, "This awful deal makes you - who have nothing to do with the crisis and did not get any bailout - pay the cost of the crisis and the bailout. You must do this because if not, we will do even more damage to you and your economy. So, give us your deposits, give us your money, pay more taxes, put up with fewer social programmes, because if not, we will impose even worse on you." This is the basic idea of austerity.

On the decision to take money from depositors, a depositor, whether a business or an individual, puts his or her money into a bank in the belief that its security is guaranteed because otherwise, no one would put their money in banks. Shareholders and bondholders may be investors and speculators but depositors are not. The plan is to take the depositors' money, thereby destroying all confidence and the presumption of security or insurance, in the language of these politicians, in order to recapitalise and restructure our banks. Translated into simple English, they will take the depositors' money and bail out the banks. In other words, the money leaves the accounts of the depositors and goes into the account of the bank itself. The banks, through the government, are stealing from their own depositors.

A woman struggling to run a family business in Cyprus said the whole point of the bailout was to shrink the banking sector but instead they destroyed the entire economy. It is simply an attempt to save private banking. It is a refusal to confront private banking, not just in Cyprus or Greece but across the world, that has driven us into a catastrophe of global proportions.

Governments are doing everything to fix the situation without imposing on them and without questioning their failed performance. It is an amazing study in how to solve a problem by refusing to confront its cause. In The Guardiantoday, political editor, Seumas Milne, does not mince his words when he writes:

The deal forced on Cyprus by the German-led Troika at the weekend isn't a bailout: it will effectively destroy the island's economy. Instead of getting a grip on its grossly inflated banks, it will impose a brutal credit contraction, combined with sweeping cuts and privatisations, wiping out perhaps a quarter of Cyprus's national income. Ordinary Cypriots, not Russian oligarchs, will pay the price.

Some have hailed the fact that the raid was carried out on Cypriot bank deposits over €100,00 rather than on the public purse. At last, it has been said, the rich and those responsible for private banking failures are being made to cough up. That would have been a good thing but it is savers not bankers or shareholders who are taking the 40% hit. Many of the targeted depositors include pensioners, who are scarcely rich, and small businesses, which will now go bust. The Cypriot Government should have learned from Iceland instead and taken over the banks, isolated the bad loans, protected deposits, imposed losses on the wealthy and used a publicly-owned banking sector to rebuild the domestic economy. This would have offered citizens a better future - almost certainly, I admit, outside the eurozone - and encroached on private capital's privileges. Clearly, that could not be tolerated. Instead, in classic EU style, Cypriots have been given no say while German MPs vote on the deal. Across Europe, people are being held to ransom by banks, bondholders and corporations determined to ensure they do not bear the cost of the crisis they created and by politicians who regard it as their job to oblige them.

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