News / Europe

Cyprus Poses Fresh Crisis as EU Questions Russian Investment

Cyprus Poses Fresh Euro Crisis as EU Questions Russian Investmenti
X
March 21, 2013 11:23 PM
Political leaders in Cyprus appear to have abandoned plans for a one-time levy on bank deposits in return for a financial bailout from the European Union. Its exposure to Greek debt has left Cyprus on the verge of bankruptcy. The Mediterranean island has long been an attractive place for foreign investors, in particular Russians -- and as Henry Ridgwell reports, that has sparked a heated argument in Europe.
Cyprus Poses Fresh Euro Crisis as EU Questions Russian Investment
Henry Ridgwell
Political leaders in Cyprus appear to have abandoned plans for a one-off levy on bank deposits in return for a financial bailout from the European Union.  The Mediterranean island has long been an attractive place for foreign investors, in particular Russians - and that has sparked a heated discussion in Europe.

In Cyprus the banks may still be closed, but lines at cash machines are still growing.  Alongside the Cypriots withdrawing their savings are many foreign nationals.

With a corporate tax rate of 10 percent, Cyprus has long attracted foreign investors.  But this Mediterranean island has other attractions, says International Finance Professor Kate Phylaktis, of London's Cass Business School, a former consultant to the Cypriot government.

"It is not just because of tax," said Phylaktis. "We speak English, I mean the English language is very well spoken in Cyprus.  Our legal system is based on the English legal system so our institutions are very good and well understood by everyone so that is very attractive to foreign investors."

The ratings agency Moody's estimates there is $31 billion of Russian money in Cypriot bank accounts.  Phylaktis says close links between the two countries go back to the break-up of the Soviet Union.

"We have had very long links and close relationship with the Russians," she said. "There are about 20,000 Russian families living in Cyprus, so obviously these Russians have property, have deposits, have businesses, which bring a lot of money to Cyprus, there is no doubt."

In recent weeks German media have published leaked intelligence reports that allege Cyprus is used by corrupt Russians to launder money.

Kate Phylaktis says that suspicion is driving the European Union to insist on tough measures in return for a bailout.

"With the German elections coming up very soon, I mean they have not got a lot of leeway, they have to convince the taxpayers in Germany that they are not going to fund the Russian oligarchs," she said.

But the accusations leveled at Cyprus are exaggerated, says one-time Cypriot resident James Ker-Lindsay, who is an expert on southeast Europe at the London School of Economics.

"There is no doubt that there has been dirty Russian money that has gone through Cyprus," said Ker-Lindsay. "But we know that dirty Russian money has gone through a lot of places."

Ker-Lindsay says many foreign nationals have seen Cyprus as a safe haven.

"Throughout the Middle East for example, North Africa, Eastern Europe, plus also there is a very large British population that lives in Cyprus," he said. "Cyprus was a safe haven at the height of the Lebanese civil war, so you had a lot of people who were coming over and setting up new lives in Cyprus.  A number of them have stayed.  From southeast Europe, from the Balkans during the wars in the 1990s."

Britain, which has military bases on Cyprus, has sent a plane carrying a million euros to the island in case servicemen and women have any problems with their banks.  Analysts say it is a measure of how seriously Cyprus's European partners view the crisis.

You May Like

Changing Under Pressure, IS ‘Potent’ as Ever

US intel officials describe Ramadi's fall as concerning, but say it isn't emblematic of larger effort to degrade IS capabilities More

Nigeria Fuel Shortage Shows Fragility of Africa’s Oil Giant

Although it is the largest oil producer in Africa, country has nearly ran out of fuel it needs to power its generators, cars and airplanes over the past week More

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer More

This forum has been closed.
Comment Sorting
Comments
     
by: Babeouf from: Ireland
March 21, 2013 5:31 PM
Well a sudden unexpected(by the Russian government at least) attack on the activities of Russian multi national investment led by the German government . What could go wrong with that?

by: Anthony Alfidi from: San Francisco, CA
March 21, 2013 4:26 PM
Cyprus could easily pledge its natural gas discovery as collateral for a bailout without tapping bank depositors:

http://alfidicapitalblog.blogspot.com/2013/03/cyprus-bank-deposit-levy-and-natural.html

Perhaps Cyprus could discuss terms with Russia and Israel about funding a pipeline and other infrastructure to market its gas.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
3D Printer Makes Replica of Iconic Sports Cari
|| 0:00:00
...    
🔇
X
George Putic
May 27, 2015 9:31 PM
Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs