Will Cyprus pay the price to save banks?

This weekend, as we relax between two bank holiday weekends, maybe we should for a fleeting moment — anything longer would be too frightening — imagine ourselves Cypriot.

We might try to imagine what we could do if our entire banking system was tottering on the brink of collapse and the only way we could save it would be to allow — though that word probably infers too much power, tolerate might be better — a raid on our hard-won, after-tax bank deposits.

We might try to imagine how we would sleep if the prospect of losing all of our personal or business capital, if our Government could not pay employees, pensioners or social welfare dependents, was as real as it is in Nicosia this morning if a bailout deal is not agreed.

The sense of frustration, the sense of powerlessness, the sense of injustice and that you are being bullied by the biggest boy in the class, would be overpowering. So too would the worries about how you and your family will survive if your country is pushed back to some sort of insolvent Year Zero.

Just as our Government was painted into a corner on that infamous September night five years ago, the Cypriot government is struggling in an unequal battle of power politics. At that moment, when we lost our economic independence, there was a lot of talk about how unequal the power relationship was. How then must the ordinary Cypriot feel? After all, the population of greater Dublin is approaching double that of Cyprus — something around 1,804,156 as against 1,116,564. There are nearly 82m Germans.

So, how can the people of Cyprus, represented by a democratically elected government, get to a point where some sort of stability is restored to their economy, some sort of sanity to their affairs? They have been rebuffed by Russia, a central player in the tragedy because of multibillion-euro Russian deposits in Cypriot banks. They have been told by an increasingly impatient and hard-nosed EU that they — a population of just 1,116,564 remember — must find €6bn by Monday as their contribution to saving their banks.

Even at this juncture, hours away from the Monday deadline, it would require exceptional crystal ball gazing skills to predict what will happen, but the overriding sense and hope must be that a deal can be reached without imposing Draconian terms on Cyprus — or on the taxpayers of wider Europe who must foot the bill.

If Cyprus is the scene for the latest episode in a recurring and destructive drama then the recurring theme is the chaos that can be caused by unethical, unfettered banks constrained by little more than light-touch regulation.

Five years after the collapse of Bear Stearns in America, five years after our banks collapsed, what has changed to prevent a recurrence? What has happened to show that entities as powerful as the EU or America can control transnational banks and protect ordinary Cypriots and ordinary citizens everywhere from the very worst excesses of capitalism? Or is it the frightening reality that they are beyond control?