Today I heard Mark Steyn state that Cyprus is to Russia as the Caymans are to Mitt Romney.
a) Is that true?
b) If Cyprus is a tax haven for Russia what is the effect of the haircut and the economic situation in general on EU-Russia relations?
Not exactly a debate yet but it may get there.
They’re certainly a tax haven for Russians. On paper, Cyprus is the third largest foreign direct investor in Russia, with total invested something like two-thirds of Cyprus GDP. That much money obviously isn’t coming from actual Cypriots, its Russians moving their money out to Cyprus, and then moving it back in as “foreign” investments.
Russians with money in Cyprus are obvoiusly pissed about the haircut, and since said businessmen have a lot of pull with the gov’t, the gov’t is making angry noises as well. But I think this factor is somewhat overstated: gov’ts generally don’t like tax-havens, since by definition they cost gov’ts money. Putin has been trying to stop “offshorization” of Russian capital, and so its hard to believe he’s really super upset that places like Cyprus have ended up being shown to be unsafe.
And the German " pipers that call the tune" are very anti hedge funds, offshore banking etc. Apparently a lot of Cypriot opinion is that they have been used as an example to scare Italy and Spain. Which sounds reasonable.
True or not? I read that it was the “stupid” Russians that got hurt. The criminals were stashing their loot there and quickly laundering it and putting it in other “safer” countries.
This was in response to the question, “Who cares if a bunch of Russian criminals lost money,” that was asked in the newspaper.
What other countries - most of the bigger ones track large transfers to detect money laundering. And if Cyprus were only being used as a way station, where does the vast amounts of money in their banks come from?
As to the Russian government’s reaction, it probably depends on the amount of influence the criminals and other money launderers have. Which is a lot. And how many government officials have money parked there.