by Vestnik Kavkaza
The Cypriot president has approved resignation of the finances minister and ordered a judicial board to investigate the financial recession. He approved economic measures to receive the package of financial aid worth 10 billion euro. According to BBC, the IMF provided a tenth of the sum and will demand great efforts of the population. Cypriot authorities expect people to be prepared to demonstrate their efforts.
Cypriot Ambassador to Moscow Petros Kestoras said that “Cyprus passed many complicated moments in history and can overcome this problem. Cypriot people are together in such difficult situations. The latest example is Turkish intervention in 1974, when part of the Cypriot population became refugees in one night. 90% of business activity was lost, especially in the field of tourism. All tourism facilities, hotels, 70% of the agricultural industry were left on the occupied part of the Cyprus. Nonetheless, Cypriot people recovered. People all over the world started talking about the economic miracle that happened in Cyprus after the war. We have an optimistic outlook to the future”.
The ambassador reminded that “according to the first program for salvation of Cypriot economy, the tax for deposits was implied for all commercial banks in Cyprus. According to the second program, the tax was only adopted for Laiki Bank and the Bank of Cyprus. We predict that it will cause an outflow of capital. It is confirmed by the fact that Cyprus depositors we calm about the problem and simply retrieved their money allowed according to adopted measures. Attitude of the Cypriot people to the issue when the banks opened was a surprise for the whole world. No one expected the Cypriots to be to tranquil about the issue”.
Going deeper into the history of the Cypriot crisis, Igor Lavrovsky, head of the Committee for Financial and Credit Policy of Delovaya Rossiya, a Russian public organization, reminded that “formation of international financial centers on Cyprus was not started by Russian companies. It was done by English banks quite a while ago. What made Cypriot banks attractive was the fact that they were following the British rules and continue doing so. At the same time, Cyprus has advantageous location, suitable for servicing regional trade. Cyprus has 45 agreements on prevention of double-taxation with various states. This means that companies of 45 countries were presented in Cyprus and running business. They include the largest international concerns, many respectable companies, very many large international banks. When Russian companies were granted the right for private export in the 1990s, many opened accounts in Cyprus. They are absolutely legal accounts. In the 2000s, there was no point in talking about Cyprus as an offshore zone. Preparing to join the EU, Cyprus adopted a tax it never had before and made numerous changes in its legislature, making it the same state as other EU members. Cyprus had repercussions caused by the EU policy. Not only did the foreign banks with offices in Cyprus suffer, but Cypriot banks servicing intraregional trade with Greece as well. Then the EU forced Cyprus to hit its own banks. I consider it a hit on the Mediterranean and Russian trade. It is hard to consider it as anything other than a weapon of competition or a means of clearing the market of competitors.
Vadim Kumin, deputy head of the Russian parliamentary committee for financial market wonders: “Who paid for the crisis? Cypriot people would not afford it because they have deposits worth under 100,000 euro protected by insurance mechanisms of the EU. The crisis was not a loss for many people in Cyprus. The crisis was paid by Russian companies, Russian individuals and European companies with business in Cyprus. For example, about 60 largest shipping companies of the world used the Cypriot jurisdiction. 43-45 of them are German ship-owners. It appears that Cyprus was inside the EU, but with the help of its taxation, avoidance of double taxation, Germany, France and England lost a lot and decided to forbid their companies to use the jurisdiction. A handy solution was developed, but the main victims are Russian companies. In this context, the hit from the EU was purposeful, mainly against us and own companies exploiting the jurisdiction. It is a great impact for Cyprus and Cypriot people. We should continue development of contacts and search for solutions to minimize losses of Cyprus and Russia.
