Eroding union

Cypriots can be excused for feeling like they have had their pockets picked while they were sleeping in their own beds,in the security of their own homes. A savings tax has been imposed on all citizens,contingent on a bailout deal struck in faraway Brussels. Everyone with savings in the bank must pay a one-time tax on their holdings. This was apparently the only way to eliminate the risk of default,but the financials need not detain us. The damage that this deal has brought on is political,and it challenges yet again the idea of Europe,which has taken a bit of a battering in recent times.

The European Union is often taken to be an economic interest group,perhaps because an economic community preceded it. But it is essentially a political idea,an attempt to bind the military powers of Europe so close together that they could never go to war again. Nations join it or keep away according to the political will of their citizens. Its institutions are founded on many-tiered systems of acceptance and trust,running up from citizens to the centres of decision-making in Brussels and Strasbourg. The savings tax in Cyprus appears to undermine that network of trust. Previous deals have impacted the savings and earnings of citizens,but at one remove,in the aggregate. This tax offers an eerie blend of remoteness and proximity — brokered in Brussels,in a process which citizens cannot influence,it is nevertheless a direct tax,an unprecedented trespass on individual sovereignty.

Last year,when Greece teetered on the edge of bankruptcy,the government had taken the unusual step of encouraging local barter economies. It was a fine idea,reducing dependence on an uncertain currency,but it also seemed to encourage mistrust of a remote,insensitive financial system. Since citizens could not control it,the only freedom was to sidestep it. The rhetoric on the streets of Nicosia this week suggests that the EU’s financial system is not only insensitive,putting banks before people,but possibly worse,colluding to siphon money out of private accounts without consent. The tax is a bad precedent,eroding the continent-wide network of trust on which the EU is founded.