Dead Broke: Cyprus turns to Russia after EU terms rejected

by deLiberation
Thursday, March 21st, 2013

Russia is rumored to be talks with Cyprus to restructure their loans in return for a Russian Base and Gas Exploration rights..

This is devastating to the EU Troika.

Published on Mar 20, 2013 by RT

Scenes of relief and celebration greeted the Cyprus Parliament’s rejection of a tax on bank deposits. The one-off levy linked to an EU bailout deal would have seen millions of account holders lose up to a tenth of their savings, and had been condemned by officials and the public alike. But the country now finds itself on the brink of bankruptcy and having rejected the EU’s terms, it may have to turn to Russia for assistance. RT’s Egor Piskunov reports.



Whilst officially there for a tourism exhibition, Cyprus’ Energy Minister George Lakkotrypis’ presence in Moscow was fueling rumours that Gazprom – Russia’s energy giant, had put forth its own assistance plan, in exchange for exploration rights to Cyprus’s offshore gas deposits. Now that Cyprus has called the EU’s bluff and rejected the European Central Bank’s (ECB) highly unpopular proposal, this puts the EU in a tricky position of having to loan the 10 billion euros without the stringent conditions of levying savings funds, or letting Cyprus go elsewhere to finance the bailout, losing out on access to lucrative energy resources if Cyprus accepts Gazprom’s offer.

In addition to the exploration rights to Cyprus’s off-shore gas deposits, there is also talk of a new Russian base in Cyprus. Russia docked warships in the Cypriot port of Limassol last year but currently has the use of only one foreign base at Tartus in Syria. To gain another here would strengthen Russia’s global strategic position considerably.

‘Financial insiders’ claim there is a massive money-laundering operation where up to £30billion of Russian money is stashed on the island, used by oligarchs and plutocrats who are attracted by its low tax rates. Sounds very similar to Jersey, the Cayman Islands and other off-shore tax havens where the rich of Europe and US stash their excess money for tax evasion and laundering purposes. It is doubtful that we will see these measures introduced in those places for quite a while.

Cyprus ranks as the largest source of foreign direct investment into Russia – money that is mostly Russian in origin and passes through Cypriot banks before being sent back to Russia.. In a lot of ways this was an attempt to steal money by the ECB after the banks engineered the massive losses suffered by the Greek economy with their unethical financial practices. It was recognised as such by Russian President Putin and Prime Minister Medvedev, who said the eurozone decision seemed to be aimed at confiscating someone else’s property.

As Cyprus is perceived to be the money laundering repository of Russian oligarchs, many see this levy as covert way of seizing Russian money. However, British ex-patriots say the move was going to harm them and ordinary Cypriots more. The levy would have meant those with between €20,000 and €100,000 would have lost 6.75 per cent of their savings. Whilst those with more than €100,000 would have 9.9 per cent of their savings taken.

The Eurozone ‘paymaster’ Germany faces elections this year with an electorate that appears increasingly weary of ‘bailing out’ the more vulnerable economies of southern Europe, hence the insistence upon the unprecedented levy on savings. Angela Merkel Germany’s Chancellor is said to be furious at this latest vote by Cyprus to reject the EU’s terms.

Feelings are running so high in Cyprus, that Archbishop Chrysostomos of the Church of Cyprus, a major shareholder in Cyprus’s third-largest domestic lender, Hellenic Bank has said:



‘The entire wealth of the Church is at the disposal of the country … so that we can stand on our own two feet and not on those of foreigners.’


Cyprus is keeping its options open as it considers whether or not to acquiesce to terms offered by Russia.

River to Sea Uprooted Palestinian  
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