Russia Sees Cyprus Plan as 'Unfair' Plot to Seize Money of Its Citizens
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Version 0 of 1. MOSCOW — Russians from President Vladimir V. Putin on down expressed fury on Monday over the European Union’s proposal to bail out the banking system in Cyprus in a manner seen in Moscow as specifically designed to extract money from Russian depositors who are estimated to hold at least a quarter of the deposits in the Mediterranean island’s banks. Mr. Putin took the unusual step of calling an emergency meeting with Kremlin staff and economic advisers on Monday morning, at which he denounced the proposed tax on deposits as “unfair, unprofessional and dangerous,” according to his spokesman, Dmitry S. Peskov. All banking customers face a one-time tax on their deposits, but among foreign clients of Cypriot banks, the Russians have the most to lose. According to the Regional Banking Association of Russia, Russians hold €15.4 billion, or the equivalent of $19.9 billion, of deposits in Cyprus, of a foreign total of €26.8 billion and an overall total of €64.8 billion. Moody’s, the rating agency, gives a higher figure of $31 billion in deposits from Russian companies, individuals and banks. A prominent businessman, Aleksandr Lebedev, wrote on his Twitter account that the seizure of funds was “a Cypriot neo-Marxist blow to the global economy.” Prime Minister Dmitri A. Medvedev said in comments broadcast by NTV television that the measure “looks like confiscation of strangers’ money.” The din of criticism from Moscow signaled the importance of Cypriot offshore financing for the Russian economy. The island has long served as an escape valve for Russian businessmen. Some are surely dodging local taxes. Others, paradoxically, are seeking better courts in the British law system practiced in Cyprus. Offshore domiciles are so ingrained in the post-Soviet way of doing business in Russia that Cypriot shell companies are linked not only with money launderers and organized crime, but well-established companies like the metals giant Norilsk Nickel. However, the official outrage in a country that famously defaulted in 1998 also drew scorn from Russians well aware that most of the country’s citizens are far too poor to stash wealth in foreign banks. Artemy Troitsky, a writer and critic, noted in an interview on the Echo of Moscow radio station that only in Russia did the government call an emergency meeting over a proposal for the seizure of funds from an offshore tax haven — in fact, money from the rich who have sought to avoid Russian laws and taxes. “The hat burns on the head of a thief,” he said of the high-level outrage, citing a Russian expression. Many real estate investments in Russia, for example, are structured through Cyprus offshore accounts, and that is where the dividends accumulate. Assuming most Russians are large depositors, a 9.9 percent tax would cost the Russians as much as $3.1 billion. Moscow could also incur indirect costs from the freeze on bank transfers, as Russian banks have large outstanding loans to Cypriot companies, an economic problem made no more palatable by the fact that many of them are in fact front companies for Russians. The Russian minister of finance, Anton Siluanov, said Russia may not roll over a $2.5 billion credit extended to Cyprus in 2011, in an earlier phase of the island’s financial crisis, because the European Union had not consulted authorities in Moscow about the plan — announced early on Saturday — to seize funds from depositors. “We had an agreement with your colleagues from Europe, that we would act in a coordinated manner,” Mr. Siluanov said, according to Interfax, a Russian news agency. “Our role was a possible relaxation of the terms for returning earlier credits. As it turns out, the decision to tax deposits was taken without discussion with Russia. Therefore, we will review our participation in restructuring earlier credits.” The Cypriot minister of finance, Michalis Sarris, had been scheduled to visit Moscow on Monday for talks, but that meeting was postponed until Wednesday. In an indication of how far-reaching the current crisis could become, the Russian energy giant Gazprom was reported on Monday to be elbowing in on the bailout talks. A Cypriot television station, Sigma, said that Gazprom had offered to prop up Cyprus’s failing banks in exchange for natural gas exploration rights off the country’s coast. Sigma reported that Gazprom presented the proposal to the office of the Cypriot president, Nicos Anastasiades, on Sunday evening, but without success. The report cited other news organizations and anonymous sources described as close to the president. Later on Sunday, Interfax reported, the head of the Association of Regional Banks in Russia, Anatoly Aksakov, issued a statement advising Russians to withdraw funds from Cyprus. Gazprom’s spokesman, Sergei Kupriyanov, denied the gas company had made such an offer. However, the company’s media office did not exclude the possibility that its banking subsidiary, Gazprombank, was in talks with the Cypriot government about extending aid. A spokesman for Gazprombank, Sergei Perminov, declined to comment. |