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Moscow hopes Cyprus won't need its help

Published time: March 25, 2013 13:25
Edited time: March 25, 2013 14:25
Bank workers shout slogans during a protest outside Cyprus presidential palace in Nicosia.(AFP Photo / Patrick Baz)

Bank workers shout slogans during a protest outside Cyprus presidential palace in Nicosia.(AFP Photo / Patrick Baz)

Russian Prime Minister Dmitry Medvedev said Moscow needs to study the consequences for the country of the Cyprus bailout deal agreed in Brussels. President Vladimir Putin has ordered the restructuring of the € 2.5 billion loaned to Cyprus in 2011.

Russia’s Prime Minister Dmitry Medvedev said Moscow needs to study the consequences of the Cyprus bailout deal agreed in Brussels, especially for Russia. Meanwhile Vladimir Putin ordered to restructure the € 2.5 billion Cyprus loan issued in 2011.

"We have to figure out what this story turns into in the long run, what the consequences for the international financial and monetary system will be - and thus, for our own interests as well," Medvedev said in Russia's first official reaction to the deal agreed over the weekend.

As the EU 10 billion bailout loan has been secured, First Deputy Prime Minister Igor Shuvalov, a close ally of President Vladimir Putin, said "the situation looks like no further help [for Cyprus] from the Russian government will be required."

He added that Moscow will reconsider extending the loan to Cyprus due to be repaid by 2016, after studying the full details of the Brussels package.

On Monday spokesperson Dmitry Peskov said President Putin instructed "the government and the Russian ministry of finance to work with their partners on the issue of restructuring the loan previously issued to Cyprus."

'Stealing what's already been stolen'

Analysts believe that Russian depositors whose savings in Cypriot banks total around €25 billion will suffer the most from the “haircut”. The Financial Times reports almost one third of all deposits in Cyprus belong to Russians, which is more that the country’s GDP.

Let’s speak about what’s going on in Cyprus. In my view they continue stealing what's already been stolen,” Dmitry Medvedev said.

According to Medvedev it’s very important that “actions of those, who withdrew money from the Russian economy, were assessed by the government.” In this case, those people “could be brought to justice and their money could return to Russia,” the Russian Prime Minister added.

Europe today is in a situation comparable to that of the French revolution or the Bolshevik revolution. By that I mean an entire class of people, in this case the so-called rich Russian oligarchs, who apparently have been laundering their money in Cyprus bank accounts, are going to be expropriated, not taxed, and treated as if they were criminals,” John Laughland, the director of studies at the Institute of Democracy and Cooperation in Paris, told RT.

It’s just as in the two revolutions I mentioned aristocrats were hung on the lampposts because it was decreed that their property had been criminally obtained. This is a very bad precedent, because it means that bank deposits, which are private property, are no longer safe in European banks.

Cyprus and the European creditors are yet to agree on the final details of the deposit “haircut” agreed within the 'Plan B' emergency legislation. The new rescue plan calls for a one-off fixed levy on large deposits.

Depositors in the Bank of Cyprus, the biggest bank on the island, will reportedly lose "around 30 percent" on their holdings above €100,000, the chairman of the Cypriot parliamentary finance committee said on Monday.

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