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Russia watching bailout plans for Cyprus
Posted By F. Michael Maloof On 02/01/2013 @ 8:52 pm In Front Page,World | No Comments
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WASHINGTON – While the European Union debates whether to help Cyprus with a bailout, the Russians are waiting in the wings as Nicosia is willing to make concessions, but Brussels is demanding more reforms before any commitment, according to report from Joseph Farah’s G2 Bulletin.
Cyprus is a haven for Russian illegal bank accounts, according to sources, so the E.U. reluctance to help Cyprus is working into the Russian hands.
For the Russians, Cyprus is considering offering bases for its warships in the Mediterranean Sea. Cyprus is only 75 miles from Lebanon and Syria and offers a potential alternative for Moscow to park its warships while giving it ready access to the Mediterranean.
Because Moscow is backing the more dominant Greek-backed government in Cyprus, it could be some strain on its relations with Turkey, which occupies the northern part of the island.
Cyprus seeks some $23 billion in bailout money. While Cyprus is a small island in the Med, it is nonetheless strategically placed. But the debate over whether to provide the money also has prompted divisions among E.U. members, with the Germans being the most hesitant, due to internal German politics.
German Chancellor Angela Merkel wants to go ahead, but the center-left Social Democratic Party and the Green Party oppose the idea.
The concern is that the money isn’t available for it, and that the German government would have to bear the cost, which Merkel’s political opponents contend.
There also are concerns that the bailout money would aid Russian oligarchs who have deposited billions in Cypriot banks, according to a report from Germany’s foreign intelligence service, the BND, or Bundesnachrichtendienst.
According to sources, release of the money by the E.U. more than likely would mean that German taxpayer money would be used to protect the illegal assets of the Russian business mafia.
Cypriot officials have sought to convince the E.U. that it is no tax haven for tax dodgers or money laundering, but no one believes it.
As a show of sincerity, Germany wants the Cypriots to change the government, hoping that the current president, Dmitris Christofias, will lose in the February elections.
Russians oligarchs, meantime, have moved some $60 billion in assets out of Russia, much of it through Cyprus, according to regional analysts.
There apparently are several dozen oligarchs that have created companies in Cyprus to protect their assets.
The oligarchs who are investing their holdings in Cyprus are some of the richest in Russia.
Being the stage for massive money laundering, Cyprus has raised questions as to where any E.U. loan money would go. Euro zone finance ministers say that many foreign ministers disguise their identities to Cypriot authorities. The concern is that Cyprus is attracting investors with very low tax rates. According to officials, the corporate tax rate is only 10 percent.
E.U. officials want greater transparency in the financial sector, an increase in corporate tax rates and to fight money laundering as conditions for increased E.U. loans.
Without this transparency, there probably will be no E.U. loans, which makes the opportunity ripe for Moscow to take full advantage and extend loan money to Cyprus, with strings attached.
But those conditions appear to be acceptable to Cypriot authorities.
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