When the terms of the first and now abandoned EU bailout deal for crisis-stricken Cyprus were announced, Russian President Vladimir Putin bared his fangs to describe the proposal as “unfair, unprofessional and dangerous.”
Russians have billions of euros deposited in Cyprus banks — some, but by no means all, in illegal tax evasion scams — and the 10 percent mooted levy on all bank deposits risked them losing chunks of their money.
However, when a week later Cyprus and its EU partners agreed a different bailout deal that some analysts believe may prove just as costly for Russians, Putin did not make the slightest criticism and instead suggested Russia could ease the terms of a 2.5 billion euro (US$3.21 billion) loan to Cyprus.
The Kremlin’s sudden change in tack raised a range of questions about the murky world of Russian money in Cyprus and the effect of the Cyprus bailout deal on the Russian economy.
The terms of the second deal were significantly different to the first. Rather than taking 10 percent from all deposits in all Cypriot banks, the levy was substantially increased, but restricted to just two banks, Bank of Cyprus and Laiki. Crucially, this excluded Russian Commercial Bank, which is the Cypriot unit of Russian state-controlled bank VTB, as well as other Russian-owned entities where Russian funds are concentrated.
“A key positive for us was that no Russian bank was part of the solution,” Renaissance Capital chief economist Ivan Tchakarov said.
Standard and Poor’s said that in the end, the terms of the bailout will have a “relatively marginal impact on the consolidated financials of rated Russian banks with a presence in Cyprus.”
Nevertheless, Russian depositors are sure to sustain losses and also be hit by the capital controls imposed by Cyprus.
According to the Vedomosti daily, Putin’s initial fury was as much irritation at not being consulted by the EU about the first deal as concern about its economic consequences.
The precise value of Russian deposits in Cyprus is disputed with estimates ranging from between 5 billion and 25 billion euros. Standard and Poor’s believes that the majority of the non-resident deposit base in Cyprus, which totaled 21 billion euros as of Jan. 31, came from Russia and other ex-Soviet states.
Neil Shearing at Capital Economics said that even under the new bailout, Russian investors could lose 5 billion euros, but he said that even this is “fairly small in the grand scheme of things” and unlikely in itself to have a major impact on the Russian economy.
However, there could be a more significant indirect effect, especially due to the imposition of capital controls, he emphasized in a note to clients.
The Russian government would like it to come home. Russian Deputy Prime Minister Igor Shuvalov said the crisis was proof of solidity of the Russian banking system compared with some of its partners and was a “good signal” to encourage Russians to invest more at home.
However, a substantial reverse flight is hardly likely.
“Russians keep part or all of their wealth abroad for a variety of reasons and while the Cyprus experience is not a good one ... there are plenty of other hubs out there,” Tchakarov said.
Hong Kong and the Netherlands — which has a relaxed tax regime — have been cited as possible destinations for Russian deposits, as well as the Baltic states, in particular Latvia. Latvian media reports have said Riga has already been warned by the European Central Bank that accepting Russian money from Cypriot offshores would harm its chances of joining the euro, but Latvia’s finance minister has said there is just a “very, very minor inflow” of Cyprus money.
When Putin started breathing fire over the first bailout plans, some analysts suggested that the Kremlin had ulterior motives and was eyeing bailing out Cyprus on its own in exchange for strategic interests. These could include a Mediterranean naval base — Russia risks losing its Tartus base in Syria if Syrian President Bashar al-Assad’s regime falls — and a share in Cyprus’ so far unexploited offshore gas reserves.
In the end though, all Nicosia got from Moscow was the possible restructuring of a loan that had looked ripe for restructuring before the current crisis even started.
KINGPIN: Marset allegedly laundered the proceeds of his drug enterprise by purchasing and sponsoring professional soccer teams and even put himself in the starting lineups Notorious Latin American narco trafficker Sebastian Marset, who eluded police for years, was handed over to US authorities after his arrest on Friday in Bolivia. Marset, a Uruguayan national who was on the US most-wanted list, was passed to agents of the US Drug Enforcement Administration at Santa Cruz airport in Bolivia, then put on a US airplane, Bolivian state television showed. “The arrest and deportation were carried out pursuant to a court order issued by the US justice system,” Bolivian Minister of Government Marco Antonio Oviedo told reporters. The alleged kingpin was arrested in an upscale neighborhood of Santa
ACTIONABLE ADVICE: The majority of chatbots tested provided guidance on weapons, tactics and target selections, with Perplexity and Meta AI deemed to be the least safe From school shootings to synagogue bombings, leading artificial intelligence (AI) chatbots helped researchers plot violent attacks, according to a study published on Wednesday that highlighted the technology’s potential for real-world harm. Researchers from the nonprofit watchdog Center for Countering Digital Hate and CNN posed as 13-year-old boys in the US and Ireland to test 10 chatbots, including ChatGPT, Google Gemini, Perplexity, Deepseek and Meta AI. Eight of the chatbots assisted the make-believe attackers in more than half the responses, providing advice on “locations to target” and “weapons to use” in an attack, the study said. The chatbots had become a “powerful accelerant for
SCANDAL: Other images discovered earlier show Andrew bent over a female and lying across the laps of a number of women, while Mandelson is pictured in his underpants A photograph of former British prince Andrew and veteran politician Peter Mandelson sitting in bathrobes alongside late sex offender Jeffrey Epstein was unearthed on Friday in previously published documents. The image is believed to be the first known photograph of the two men with Epstein. They are currently engulfed in scandal in the UK over their ties to their mutual friend. The undated photograph, first reported by ITV News, shows King Charles III’s disgraced brother and former British ambassador to the US sitting barefoot outside on a wooden deck. They appear to have mugs with a US flag on them
Since the war in the Middle East began nearly two weeks ago, the telephone at Ron Hubbard’s bomb shelter company in Texas has not stopped ringing. Foreign and US clients are rushing to buy his bunkers, seeking refuge in case of air raids, nuclear fallout or apocalypse. With the US and Israel pounding Iran, and Tehran retaliating with strikes across the region, Hubbard has seen demand for his product soar, mostly from Gulf nation customers in Bahrain, Qatar, Kuwait and the United Arab Emirates. “You can imagine how many people are thinking: ‘I wish I had a bomb shelter,’” Hubbard, 63, said in
RSS