A rotten Cypriot thought...Flashing amber lights ahead?

Why, we ask ourselves, have the EU/Eurozone  in dictating  unprecedented and uniquely onerous, bailout conditions on Cyprus risked a potentially zonewide crash of investor confidence in banks and other financial institutions by insisting on a highwayman act on individual nationals' and foreigners' bank accounts?

Could it just be that they see Cyprus as small enough for a reasonably risk free "It's a special case" live trial to see what happens when individuals are forced to take a serious haircut without  a serious danger of bringing down the whole house of cards across "the Community". And could it also be that, realising they might force Cyprus to walk away from the Euro, the EU/Eurozone heavies would have been equally happy for that to happen so that they could then watch the consequences,- eg how the transition from the euro back to a national currency would work/be managed, whether runaway inflation, collapse of employment , business and indeed the whole economy ensued, where the tipping points might be and what else might be learned at the expense of the small and unfortunate victim?

Could  there really be such a cynical and thuggish an approach by some of the big boys at the expense of the minnows? If you were a Cypriot,- or a citizen of any other small member state,- the Dutchman certainly didn't sound like a bundle of supportive fun, and nor did the rest in Brussells last weekend .If there is any chance of this trial scenario having a grain of reality  it would be a wakeup call to all member states to think seriously about where the EU is going and whether it's the sort of entity they really want to belong to, never mind be subject to.

French Armed forces face Massive Cuts.

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Despite the performance of the French armed forces during Operation Serval against Islamic extremists in Mali, massive cuts are expected to take place when the new defence review for 2014-2019 is completed and approved by President Hollande, probably in April. There is growing opposition to the plans across the Parisian political spectrum, saying the plans, -- as reported, -- are unrealistic, and some are even suggesting that the EU should exclude defence from its budget deficit target of 3 pct for all 27 member states. They point out this would relieve pressure not only on France, but also on the UK where defence spending is due to face a fresh squeeze as the government tries to reduce its own deficit.

One version of the White Paper now being drawn up would see France only able to provide 15,000 strong all-arms force, equivalent to a French div divison, in the event of a major high- intensity short conflict and then as part of a coalition. Analysts point out that in 2008, the figure was set at 30,000 while back in 1994, it was much more substantial at 50,000 men. The plan would see French defence spending cut to just under 1.3 pct of GDP compared with NATO's 2 pct target and a cut of 15 billion euros between now and 2020 in the defence budget. Today this stands at some 31.4 billion, with 10 pct committed to France's airborne and seaborne nuclear strike capability.

The 15,000 figure was specifically mentioned by General Madoux, the Army's chief of staff during work on the forthcoming White Paper represents what the Defence Ministry believes is a realistic approach given the financial constraints on state expenditure and is codenamed the "Y Draft" compared to the much tougher "Z Draft" backed by the Finance Ministry, involving cuts of 30 billion euros up to 2020. The latter version would "kill off " the Defence Ministry according to the head of the National Assembly's Defence Commission,Patricia Adam and apart from the cuts to the armed forces, would mean a loss of a further 30,000 jobs in the industrial defence sector.  Or as a parliamentary source said the "Z Draft" would see the country's armed forces limited to a nuclear strike capability, special forces and the gendarmerie.

"Y" is seen as the last hope before the armed forces are cut beyond the bone, but even so its implications are quite dramatic. Overall personnel will be cut by 50,000, all heavy tanks will be decommissioned with only 250 medium tanks kept in service, the sole aircraft carrier (the nuclear nuclear-powered Charles de Gaulle) will be withdrawn and possibly mothballed. The submarine nuclear strike force and attack submarine will be cut to four each, the airforce will be limited to 140 combat planes, orders for the new Airbus 400 military transport will cut to 11 from 14 while
the new 20 tonne armoured multi-role infantry vehicle will be reduced to 1,100 from a planned 2,300 units.

And apparently it would also involve closing French bases in the Gulf and operating from no more than two in Africa. But even the "Y Draft" will need some 4.5 billion euros in so far unbudgeted spending on equipment by 2020 if it is to work effectively.

-Humphrey Hudson-  

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