Cyprus bailout tax EU robbery signals 1930s chaos soon

[TonyGosling]

The EU has thrown Cyprus to the wolves
Steve Keen - 18 Mar, 6:56 AM
http://www.businessspectator.com.au/article/2013/3/18/politics/eu-has- thrown-cyprus-wolves
John Lennon’s best line in a lifetime of song-writing was “life is what happens when you’re busy making other plans”. I had planned today to write about the excellent Atlantic Monthly The Economy Summit 2013 conference I spoke at in Washington on Wednesday, where it seemed that senior figures in the US were finally starting to realise that private debt, not public, was the main game in a debt-deflation.

Then “I read the news today, oh boy”. I woke at 4am on Sunday to the news that the EU has confiscated 10 per cent of depositors' funds in its 'bailout' of Cyprus, in a move that will raise around €6 billion. Lennon didn’t go far enough. It seems political suicide is also what happens when you’re busy making other plans.

Now, Cyprus is racing to prevent a possible meltdown of its financial sector with parliamentary negotiations that aim to reach a compromise which will enable the bailout to pass, as its two largest banks are rapidly running out of money.

If there was one lesson that I thought the world had learnt from the Great Depression, it was the need to guarantee depositors’ funds. So much for that fantasy. Now the EU has shown that its obsession with austerity has gone so far that even this historical wisdom has been abandoned. Not only are depositors’ funds not guaranteed, they are being lost even in banks that have not (yet) failed.

Many banks are likely to fail however, if depositors come to believe – as this action gives them every right to believe – that their savings are not safe in banks. The public’s first response will be to no longer trust the digital ones and zeros in their bank statements, and to demand their funds in cold, hard cash. The only way to do this is to front up at the bank, present it with a withdrawal equivalent to the deposit balance, and wait for the teller to count out the notes.

The public will be waiting a while: the cash currently simply doesn’t exist. Currency constitutes only a tiny percentage of the aggregate money supply – whether defined as that found in bank at-call cheque and savings accounts (M2), or including term deposits and other not-at-call accounts (M3). If everyone wants it, then only one in twenty will get it, if Europe’s figures are at all comparable to America’s (see figure 1). That’s why a collapse in confidence in deposits is called a bank run: only those who run first to the bank get their money.

Figure 1: Currency is only a fraction of the money supply


Only Cypriots – and Russians, who apparently put substantial funds in Cyprus, probably in search of either a safe haven or high returns (that’s one trivia question I don’t know the answer to) – have an immediate motivation to demand cash, but they won’t be able to, thanks to a 'bank holiday' in Cyprus on Monday, and withdrawal restrictions from Tuesday on. But what about depositors in the other Mediterranean states – in fact, anywhere other than Germany? I can’t imagine them not queuing at their banks on Monday, and in large numbers.

With the inability of individuals to freely withdraw funds will come a political credit crunch. Commerce relies upon the easy transfer of funds from buyer to seller. Companies can’t have these restrictions imposed on their accounts without causing commerce to grind to a halt, but surely their suppliers – particularly tradesmen and small businesses – are going to demand cash payments in future. What happens when companies start demanding cash from their banks, rather than relying upon e-commerce?

What will happen to e-commerce after this? Would you trust the swipe of a card for a cappuccino now, or would you demand coin – even if they were euro coins? And what on earth will money markets make of this? What will a euro be worth on Monday morning?

Goldbugs will rejoice, I am sure – here comes the currency apocalypse they have eagerly anticipated. The Bitcoin community is going to rejoice as well – theirs is one form of e-commerce that is likely to prosper after this insane act. The great attraction of Bitcoin is that it is the creature of no state, and therefore it can’t be confiscated by one.

There will be political demands for the return to national currencies: better the national state you can control than the supra-national state that controls yours. I can’t think of any other act that could do more to bring the euro to an end than the news that a country has had 10 per cent of its deposits confiscated, because that nation was foolish enough to cede the right to issue its own currency to the European Union a decade ago.

This will also surely stir the Russian Bear. I have no idea which Russians have funds that are now being used to bailout European banks, but I doubt that Vladimir Putin will take kindly to this effective seizure of Russian assets. Putin certainly has to act: his strongman image in Russia would be in tatters if he does not.

What might his comeback be – turning off Russian gas supplies to Europe perhaps, until Russian depositors are repaid? And probably in dollars rather than euros? What then in Europe, if strongman tactics force compensation for Russians, but none is forthcoming for Cypriots?

The most ominous political portent lies in the legitimacy this will bestow on the Far Right. This betrayal of the people of Cyprus by its politicians and bureaucrats will be seized upon by the fascist (and leftist) parties throughout Europe. The centrist parties whose politicians and bureaucrats have insisted on depositors contributing to a bank bailout to appease German voters have just thrown the centre away.

Gawd knows what the long-term consequences will be, but if I had to identify one single act that could lead to a rerun of the political chaos of the 1930s in Europe today, this would be it. I began this post with John Lennon. Maybe the story will end with the resurrection of Vladimir Ilyich Lenin. But in the interim I expect that the Right – and most immediately, Golden Dawn in Greece – will make the most political capital out of Brussels’s incredible folly.

I’ve written this quite literally 'up in the air' – flying from Washington to Los Angeles – wondering what else will have occurred by the time I touch down. Surely there will be further reaction by Cypriots and demonstrations elsewhere in Europe by both Left and Right. These might cause some backdown by the idiot bureaucrats and politicians who forged this plan, but even then it will be too late: the damage to the credibility of the euro and the entire European banking system will already have been done.

Monday is going to be a very interesting day in Europe. And Tuesday in Cyprus? I would not like to be a bank teller on that day.

Steve Keen is professor of economics and finance at the University of Western Sydney and author of Debunking Economics and the blog Debtwatch. His Minsky Kickstarter page is here.

[TonyGosling]

"All The Conditions For A Total Disaster Are In Place"
Submitted by Tyler Durden on 03/18/2013 - 09:16
http://www.zerohedge.com/news/2013-03-18/all-conditions-total-disaster -are-place
The Cyprus bailout package tax on bank deposits is a deeply dangerous policy that creates a new situation, more perilous than ever. It is a radical change that potentially undermines a perfectly reasonable deposit guarantee and the euro itself. Historians will one day explore the dark political motives behind this move. Meanwhile, we can only hope that the bad equilibrium that has just been created will not be chosen by anguished depositors in Spain and Italy. The really worrisome scenario is that the Cypriot bailout becomes euro-systemic – in which case the collapse of the Cypriot economy will be a sideshow. This will happen when and if depositors in troubled countries, say Italy or Spain, take notice of how fellow depositors were treated in Cyprus. All the ingredients of a self-fulfilling crisis are now in place: It will be individually rational to withdraw deposits from local banks to avoid the remote probability of a confiscatory tax. As depositors learn what others do and proceed to withdraw funds, a bank run will occur. The banking system will collapse, requiring a Cyprus-style programme that will tax whatever is left in deposits, thus justifying the withdrawals. This would probably be the end of the euro.
http://www.zerohedge.com/news/2013-03-18/all-conditions-total-disaster -are-place

[Whitehall_Bin_Men]

"It's long been clear that a considerable part of the Russian economy is managed from that offshore zone in Cyprus. Even people who are close to the Russian authorities keep their cash there, meaning they do not trust Russia or the Russian authorities to keep their money safe," he adds.
Experts say that the Russian rich will almost certainly seek to diversify to new offshore zones: The English channel islands, Hong Kong, Singapore, Switzerland, and even the former Soviet Baltic republic of Latvia are mentioned as possibilities.
http://m.csmonitor.com/World/Europe/2013/0319/Why-Russia-is-unhappy-ab out-the-Cyprus-bailout-tax

[TonyGosling]

How Russia Could Become the 'Savior of Europe'
Cyprus Shuts Banks Until Tuesday, Seeks Russia Aid
Published: Wednesday, 20 Mar 2013 | 1:21 PM ET By: Holly Ellyatt
http://www.cnbc.com/id/100571290
Cypriot banks will remain closed at least until Tuesday as negotiations between the country and Russia over financial assistance continue in Moscow.

Cyprus banks have been closed since Saturday to prevent a run on accounts after terms of a bailout called for a tax on bank deposits in return for receiving a 10 billion euro bailout from its euro zone partners. The country rejected the bank-deposit tax proposal on Tuesday.

The so-called troika of the European Commission, European Central Bank and International Monetary Fund is also set rejected Cyprus's "plan B" which proposed raiding the country's pension funds and turning them into government bonds to raise money to secure a bailout.

Cypriot finance minister Michael Sarris, meanwhile, is in Moscow for talks with Russian officials. He told CNBC that the country hoped to get some support from Russia, saying "The discussions will last as long as it takes. We will be here until we get some agreement."

The talks sparked a rumor that Cyprus had struck a deal to sell its Popular Bank to Russian investors, but a government spokesman denied such a deal.

"The government denies reports that the Cyprus Popular Bank has been sold to foreign investors," Christos Stylianides told Reuters in a statement, giving no further comment.

"It would make sense for the Russian banking system perhaps to to go in and sort out the Cypriot banks, why not if such a large amount of the deposits are Russian anyway? It provides a nice way out for Cyprus while relieving Europe of the obligation to rescue Cyprus," Edmund Shing, European Index Strategist at S&P/Dow Jones Indices, told CNBC.

What Russia Wants Out of the Cyprus Bailout
Wednesday, 20 Mar 2013 | 1:00 PM ET
The EU says Cyprus must put forth an alternative rescue plan, reports CNBC's Michelle Caruso-Cabrera. Meanwhile, CNBC's Steve Sedgwick reports on the enormous business activities in Cyprus, and what they want out of the bailout.

Ivan Tchakarov, chief economist at Renaissance Capital, told CNBC that the situation could allow Russia to become the "savior of Europe" as the relationship between Cyprus and its European Union peers grew increasingly acrimonious. The European Commission squarely placed the blame with Cyprus in a statement on Wednesday, saying an alternative solution, preferably without a levy on deposits below 100,000 euros would be acceptable. "The Cypriot authorities did not accept such an alternative scenario," the Commission said.

"This situation presents a fantastic opportunity for Russia and even President Putin to take moral high ground and to extend another loan to Cyprus and to become a savior of Europe," Tchakarov told CNBC in Moscow on Wednesday.

"From now on, Russia will play a pivotal part in negotiations, the mistake [to leave Russia out] before has been corrected for the moment," he said, adding that Russia had a vested interest in helping Cyprus too.

Russia has already extended a $3.2 billion loan to Cyprus which the country has asked to extend and thirty to forty percent of Cypriot bank deposits are estimated to belong to Russian businesses and individuals.

"At the end of the day we're only talking about an additional seven to eight billion dollars of additional money that is needed to have a complete package for Cyprus, this is small change for Russia,"he added.

Russia's leaders President Vladmir Putin and Prime Minister Dimitry Medvedev condemned the European proposal to levy a 15.6 percent tax on deposits over 100,000 euros. Putin called the move "unfair, unprofessional and dangerous" and Medvedev said it was tantamount to the "confiscation" of people's money.

Could Russia Become the 'Savior of Europe'?
Ivan Tchakarov, chief economist at Renaissance Capital, tells CNBC that the Cyprus crisis presents an opportunity for Vladimir Putin to take the moral high ground and become the 'savior of Europe'.

"You can understand why the Russians are very upset about that. Yesterday we had the Russian finance minister saying that we had been left in the dark [during negotiations] and we were not happy about it. Giving all the financial links between Russia and Cyprus, it seems strange that Russia was not brought in on the talks," he said.

Tchakarov said that $70 billion of Russian money would be exposed to the risk of capital controls in Cyprus should a bailout solution not be found. Helping the country was therefore a logical step for Russia.

Analysts and economists have told CNBC that Europe's proposed levy on Cypriot deposits was an indirect way of tackling what is seen as money laundering practices by Russians in Cyprus.

Shing that Europe had made a "major mistake" in targeting every Cypriot depositor, despite the charge of money laundering.

"They haven't proved any money laundering — get the proof first rather than saying all depositors are going to be treated as if they're guilty. It's as if they've been proven guilty before being given the chance to show themselves as being innocent," he told CNBC Europe's "Squawk Box."

[TonyGosling]

One possible outcome of Russia's talks with Sarris -- who characterized the ongoing talks as "very constructive, very honest ..." -- could have Russia gaining a naval base on Cyprus. Cyprus is asking Russia to extend the maturity of an existing €2.5 billion loan, due in 2016, by five years. It also wants the loan’s 4.5 percent interest rate to be cut. Finally, Cyprus is asking Russia to contribute toward recapitalizing at least one local bank.
http://www.ibtimes.com/cyprus-finance-minister-michael-sarris-moscow-p leading-rescue-eu-imf-ecb-talking-cyprus-about
One unknown is whether or not Germany and the euro zone's creditor nations will give the troika a nod to ease lending terms.

[TonyGosling]

Cyprus Bank Battle: The Long-planned Deposit Confiscation Scheme
Politics / Credit Crisis 2013
Mar 24, 2013 - 03:26 PM GMT - By: Ellen_Brown
http://www.marketoracle.co.uk/Article39626.html
http://www.globalresearch.ca/the-cyprus-bank-battle-the-long-planned-d eposit-confiscation-scheme/5328098

“If these worries become really serious, . . . [s]mall savers will take their money out of banks and resort to household safes and a shotgun.” — Martin Hutchinson on the attempted EU raid on private deposits in Cyprus banks
The deposit confiscation scheme has long been in the making. US depositors could be next …
On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout. Reuters called it “a stunning setback for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, “The voice of the people was heard.”
The EU had warned that it would withhold €10 billion in bailout loans, and the European Central Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks, unless depositors – including small savers – shared the cost of the rescue. In the deal rejected by the legislature, a one-time levy on depositors would be required in return for a bailout of the banking system. Deposits below €100,000 would be subject to a 6.75% levy or “haircut”, while those over €100,000 would have been subject to a 9.99% “fine.”
The move was bold, but the battle isn’t over yet. The EU has now given Cyprus until Monday to raise the billions of euros it needs to clinch an international bailout or face the threatened collapse of its financial system and likely exit from the euro currency zone.

The Long-planned Confiscation Scheme
The deal pushed by the “troika” – the EU, ECB and IMF – has been characterized as a one-off event devised as an emergency measure in this one extreme case. But the confiscation plan has long been in the making, and it isn’t limited to Cyprus.
In a September 2011 article in the Bulletin of the Reserve Bank of New Zealand titled “A Primer on Open Bank Resolution,” Kevin Hoskin and Ian Woolford discussed a very similar haircut plan that had been in the works, they said, since the 1997 Asian financial crisis. The article referenced recommendations made in 2010 and 2011 by the Basel Committee of the Bank for International Settlements, the “central bankers’ central bank” in Switzerland.
The purpose of the plan, called the Open Bank Resolution (OBR) , is to deal with bank failures when they have become so expensive that governments are no longer willing to bail out the lenders. The authors wrote that the primary objectives of OBR are to:
¦ensure that, as far as possible, any losses are ultimately borne by the bank’s shareholders and creditors . . . .
The spectrum of “creditors” is defined to include depositors:
At one end of the spectrum, there are large international financial institutions that invest in debt issued by the bank (commonly referred to as wholesale funding). At the other end of the spectrum, are customers with cheque and savings accounts and term deposits.
Most people would be surprised to learn that they are legally considered “creditors” of their banks rather than customers who have trusted the bank with their money for safekeeping, but that seems to be the case. According to Wikipedia:
In most legal systems, . . . the funds deposited are no longer the property of the customer. The funds become the property of the bank, and the customer in turn receives an asset called a deposit account (a checking or savings account). That deposit account is a liability of the bank on the bank’s books and on its balance sheet. Because the bank is authorized by law to make loans up to a multiple of its reserves, the bank’s reserves on hand to satisfy payment of deposit liabilities amounts to only a fraction of the total which the bank is obligated to pay in satisfaction of its demand deposits.
The bank gets the money. The depositor becomes only a creditor with an IOU. The bank is not required to keep the deposits available for withdrawal but can lend them out, keeping only a “fraction” on reserve, following accepted fractional reserve banking principles. When too many creditors come for their money at once, the result can be a run on the banks and bank failure.
The New Zealand OBR said the creditors had all enjoyed a return on their investments and had freely accepted the risk, but most people would be surprised to learn that too. What return do you get from a bank on a deposit account these days? And isn’t your deposit protected against risk by FDIC deposit insurance?
Not anymore, apparently. As Martin Hutchinson observed in Money Morning, “if governments can just seize deposits by means of a ‘tax’ then deposit insurance is worth absolutely zippo.”

The Real Profiteers Get Off Scot-Free
Felix Salmon wrote in Reuters of the Cyprus confiscation:
Meanwhile, people who deserve to lose money here, won’t. If you lent money to Cyprus’s banks by buying their debt rather than by depositing money, you will suffer no losses at all. And if you lent money to the insolvent Cypriot government, then you too will be paid off at 100 cents on the euro. . . .
The big winner here is the ECB, which has extended a lot of credit to dubiously-solvent Cypriot banks and which is taking no losses at all.
It is the ECB that can most afford to take the hit, because it has the power to print euros. It could simply create the money to bail out the Cyprus banks and take no loss at all. But imposing austerity on the people is apparently part of the plan. Salmon writes:
From a drily technocratic perspective, this move can be seen as simply being part of a standard Euro-austerity program: the EU wants tax hikes and spending cuts, and this is a kind of tax . . . .
The big losers are working-class Cypriots, whose elected government has proved powerless . . . . The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo.
But that was before the Cyprus government stood up for the depositors and refused to go along with the plan, in what will be a stunning victory for democracy if they can hold their ground.

It CAN Happen Here
Cyprus is a small island, of little apparent significance. But one day, the bold move of its legislators may be compared to the Battle of Marathon, the pivotal moment in European history when their Greek forebears fended off the Persians, allowing classical Greek civilization to flourish. The current battle on this tiny island has taken on global significance. If the technocrat bankers can push through their confiscation scheme there, precedent will be established for doing it elsewhere when bank bailouts become prohibitive for governments.
That situation could be looming even now in the United States. As Gretchen Morgenson warned in a recent article on the 307-page Senate report detailing last year’s $6.2 billion trading fiasco at JPMorganChase: “Be afraid.” The report resoundingly disproves the premise that the Dodd-Frank legislation has made our system safe from the reckless banking activities that brought the economy to its knees in 2008. Writes Morgenson:
JPMorgan . . . Is the largest derivatives dealer in the world. Trillions of dollars in such instruments sit on its and other big banks’ balance sheets. The ease with which the bank hid losses and fiddled with valuations should be a major concern to investors.
Pam Martens observed in a March 18th article that JPMorgan was gambling in the stock market with depositor funds. She writes, “trading stocks with customers’ savings deposits – that truly has the ring of the excesses of 1929 . . . .”
The large institutional banks not only could fail; they are likely to fail. When the derivative scheme collapses and the US government refuses a bailout, JPMorgan could be giving its depositors’ accounts sizeable “haircuts” along guidelines established by the BIS and Reserve Bank of New Zealand.

Time for Some Public Sector Banks?
The bold moves of the Cypriots and such firebrand political activists as Italy’s Grillo are not the only bulwarks against bankster confiscation. While the credit crisis is strangling the Western banking system, the BRIC countries – Brazil, Russia, India and China – have sailed through largely unscathed. According to a May 2010 article in The Economist, what has allowed them to escape are their strong and stable publicly-owned banks.
Professor Kurt von Mettenheim of the Sao Paulo Business School of Brazil writes, “The credit policies of BRIC government banks help explain why these countries experienced shorter and milder economic downturns during 2007-2008.” Government banks countered the effects of the financial crisis by providing counter-cyclical credit and greater client confidence.
Russia is an Eastern European country that weathered the credit crisis although being very close to the Eurozone. According to a March 2010 article in Forbes:
As in other countries, the [2008] crisis prompted the state to take on a greater role in the banking system. State-owned systemic banks . . . have been used to carry out anticrisis measures, such as driving growth in lending (however limited) and supporting private institutions.
In the 1998 Asian crisis, many Russians who had put all their savings in private banks lost everything; and the credit crisis of 2008 has reinforced their distrust of private banks. Russian businesses as well as individuals have turned to their government-owned banks as the more trustworthy alternative. As a result, state-owned banks are expected to continue dominating the Russian banking industry for the foreseeable future.
The entire Eurozone conundrum is unnecessary. It is the result of too little money in a system in which the money supply is fixed, and the Eurozone governments and their central banks cannot issue their own currencies. There are insufficient euros to pay principal plus interest in a pyramid scheme in which only the principal is injected by the banks that create money as “bank credit” on their books. A central bank with the power to issue money could remedy that systemic flaw, by injecting the liquidity needed to jumpstart the economy and turn back the tide of austerity choking the people.
The push to confiscate the savings of hard-working Cypriot citizens is a shot across the bow for every working person in the world, a wake-up call to the perils of a system in which tiny cadres of elites call the shots and the rest of us pay the price. When we finally pull back the veils of power to expose the men pulling the levers in an age-old game they devised, we will see that prosperity is indeed possible for all.
For more on the public bank solution and for details of the June 2013 Public Banking Institute conference in San Rafael, California, see here.
Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com.
Ellen Brown is a frequent contributor to Global Research. Global Research Articles by Ellen Brown


Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

[TonyGosling]

or perhaps not...
Another small island leading the way!
Maybe a bigger island can do it too??

President announces ‘Guaranteed Minimum Income’ for all citizens
http://cyprus-mail.com/2013/07/26/president-announces-guaranteed-minim um-income-for-all-citizens/

PRESIDENT Nicos Anastasiades on Friday announced the complete reform of social policy based on the principle of securing a Guaranteed Minimum Income for all citizens.

It should be fully in place by June 2014, he said.

“Beneficiaries will be all of our fellow citizens who have an income below that which can assure them a dignified living, irrespective of age, class or professional situation,” Anastasiades said in a statement.

He said the level of the Guaranteed Minimum Income would take into consideration the needs of every citizen and every household concerning nourishment, clothing, consumption of electricity and other indispensable items.

At the same time, it will guarantee the right for housing of the economically weaker groups of the population, he said. This will be done either through the subsidisation of the rent if the beneficiaries don’t own their own residence, or through the subsidisation of the interest on housing loans in the cases where people own a house but face problems in paying instalments.

“Also covered will be unforeseen expenses, which unfortunately come up in every household, such as, for example, absolutely necessary construction and repairs to houses, municipal taxes, etc,” he said.

“What I want to stress emphatically is that the Guaranteed Minimum Income will also be provided to thousands of our fellow citizens who, in spite of their needs, are not covered to this day by the existing system and they did not receive any substantial assistance from the state,” the president said.

He said these would include unemployed graduates of schools and universities, working people with particularly low earnings will have their income supplemented to reach the Guaranteed Minimum Income, and the self-employed, who have found themselves out of work and who, until now were not covered.

“Many of the pensioners with low pensions, without adequate contributions to the Social Insurance Fund, will also receive higher payments than they receive today,” said Anastasiades.

He said the general principle of the plan was that there would not be any citizen who was “not guaranteed the minimum needs for a dignified living in a European Country”.

The Guaranteed Minimum Income will replace, but will also be financed by a large number of allowances have been until now not targeted and often arbitrarily, given by different ministries and different services of the state.

“The policy of non-targeted and scattered allowance is terminated,” Anastasiades said.

“ A policy which, in spite of burdening significantly the public finances and the taxpaying citizens, did not manage to reduce the inequalities and often ignored fellow citizens who are truly in need.”

The new policy of social welfare will from now would be concentrated under the same authority – in other words, there will be a merging of services that until today were giving subsidies, whether these refer to the Ministry of Labour and social Insurance or the Ministry of interior or the Ministry of Finance.

Allowance that concern students will remain under the Ministry of Education.

The president said the level of the Guaranteed Minimum Income would be determined in an objective and scientific way by the Statistical services, with the International Labour Office playing a catalytic advisory role.

At the same time, the new policy provides for the continuation of the unemployment allowance at the level and duration that applies today, in other words six months.

“For the first time, however, with the introduction of the new system, our fellow citizens who continue to be unemployed will be able to continue to live with dignity, since they will be receiving the Guaranteed Minimum Income,” Anastasiades added.

“The single but absolutely necessary precondition is that they don’t refuse to accept offers for employment and to participate in the policies of continuous employment that are determined by the state,” he said.

The policies of active employment will be financed mainly by the European Social Fund, and they will aim to encourage and to facilitate the unemployed in their effort to find employment. They will concern programs for education, practical training or subsidized employment.

Beyond the Guaranteed Minimum Income, the Unemployment Allowance, and the policies of active employment, the new social welfare policy of the state will be supplemented through separate allowances that concern other groups of the population which have certifiable needs, such as, for example, paraplegics and the children with special needs and a stack of other similar categories.

He said the troika had accepted the government’s proposal “for a modern conceptualization on the policy of social welfare and prosperity”.

He said dialogue would start immediately for implementation of the new system by June 2014.