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Russians and Cyprus: How They Change the Tiny Island
May 18, 2020 09:13


As tensions between the Kremlin and Europe were growing, Cyprus became the focus of Western concerns about the Russian threat,   the Financial Times writes. The publication describes how wealthy people from the former Soviet Union influenced the tiny island and why it makes Brussels worried.

How many Russians are in Cyprus? According to the 2011 census, the community of Russian immigrants in Cyprus totaled more than 10,000 people with the whole island population of just over a million. Limassol has traditionally been the center of the Russian-speaking community in Cyprus, FT notes. The streets of this city are strewn with signs of law firms that help Russians and other foreigners to emigrate, do business and keep money on the island. One of these companies, for example, is called "Limassolgrad", and the name is written in Russian.

How do Russians change the island? The publication talks about the experience of the Cypriot jeweler Michalis Konstantinou. He says that he received one of the first lessons in business about 20 years ago from a rich client from Russia. That time he opened his first store in Limassol, and a Russian woman was searching for an Omega waterproof watch for swimming. “I said: Don't you think that a gold watch for € 20,000 is too expensive for the sea?” She replied: “No, no, no, they are cheap, I left Patek Philippe  for € 150,000 at home. I just forgot to bring them with me to Cyprus,” recalls the jeweler. Such clients helped Konstantinou grow his business. Now he has a chain of stores. Konstantinou calls himself Russophile, he listens to Russian music in the car and emphasizes that it is “impossible” to separate Cyprus from the Russian community.

Clubs and restaurants were built for Russians in Cyprus, Victoria Maltabar from Limassol says. She has been helping Russians run their business or immigrate to Cyprus for over 20 years. “There has always been a lot of Russians and money, and they spent like crazy,” she says.

How Russians influenced the financial system of Cyprus. Like other small countries with limited economic opportunities, the financial sector of Cyprus aims to attract foreign money. Low taxes, simple regulation "helped to turn it into a paradise for Russian investors after the collapse of the USSR." According to Moody's, by the end of 2012, Russian banks and companies had stored $ 31 billion in Cyprus - more than the island’s annual GDP. In 2013, “everything changed in one day,” Maltabar says. She recalls how she was unable to pay at the gas station with a card, as her bank suspended operations. This was the beginning of the financial crisis that put Cyprus on the brink of default. In response to EU assistance of € 10 billion, authorities agreed to cut bank deposits. Wealthy Russians and Russian companies in Cyprus have been hit harder by these measures, FT emphasizes. “They still talk about it,” Maltabar notes. Another condition for providing assistance was the “purification” of the financial system of Cyprus. As a result, tens of thousands of bank accounts associated with the Russians were closed, and the boards of directors of the companies were changed.

How Russians invested in Cyprus after the crisis. Nicos Anastasiadis, who became the president of Cyprus at the height of the crisis, needed to revive the economy, and he launched the Citizens in Exchange for Investment program. Foreigners could get a so-called golden passport by investing in Cyprus at least € 2 million. This program brought Cyprus more than € 6 billion from the sale of real estate and thousands of new citizens. Almost half of the 3,153 “golden passports” issued between 2013 and February 2018 were received by Russian investors and their families. The boom of “golden passports” was not prevented even by the introduction of EU sanctions against Russia in 2014, FT notes. Critics of the program warned that its conditions were too simple and the applicants' citizenship checks were insufficient.

Relations of the leadership of Cyprus with Russia. During his seven years in power, Anastasiadis regained ties with Russia after the financial crisis. After the majority of Western leaders announced a boycott of Russia over the Crimea, Anastasiadis was the only EU head of state to come to Moscow on May 9 in 2015. Cyprus is of growing strategic interest to Russia, which is expanding its Mediterranean influence, especially in Syria and Libya, FT writes. In   2015, the island, which has had two large British military bases since colonial times, signed an agreement allowing Russian warships to call into its ports.

Anastasiadis, in a conversation with the FT, stressed that the assumptions of some EU diplomats about his government’s too close proximity to the Kremlin are incorrect. According to him, Cyprus has established relations with many foreign countries as part of a "multi-level" policy aimed at coping with the threat from Turkey. In 1974, Turkey invaded northern Cyprus, stating the need to protect ethnic Turks. In 1983, Northern Cyprus proclaimed itself an independent state, but was not recognized by the United Nations.  When asked what he would do if Vladimir Putin called him tomorrow and asked him to veto the extension of anti-Russian sanctions, the President of Cyprus replied that he had always been loyal to EU policies. At the same time, Anastasiadis noted that he supports countries like France,  advocating a deeper dialogue with the Kremlin.

Author: Anna Dorozhkina

Tags: Russia International Russian oligarchs    

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