Thursday, March 21, 2013

Will Russia try to seize a foothold in the Med? Energy giant offers to restructure banks in exchange for gas exploration rights

  • Gazprom submitted plan to Cypriot President Nicos Anastasiades on Sunday
  • It is also rumoured that Kremlin is privately offering to help bail out Cyprus
  • It would be in 'return for use of a naval base in the Greek part of the island'
Russia could use the crisis in Cyprus to secure a military foothold and energy rights in the Mediterranean, it was claimed last night.
President Vladimir Putin called the decision to seize money from savers’ bank accounts as ‘unfair, unprofessional and dangerous’.
But in a move that has raised eyebrows, the Russian energy giant Gazprom offered Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas on the island.
Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening.
President Vladimir Putin called the decision to seize money from savers' bank accounts as 'unfair, unprofessional and dangerous'
President Vladimir Putin called the decision to seize money from savers' bank accounts as 'unfair, unprofessional and dangerous'. But a Russian energy giant has offered to restructure banks in exchange for gas exploration rights
It is also rumoured that the Kremlin is privately offering to help bail out Cyprus in exchange for the right to use a naval base in the Greek part of the island.
Moscow has already handed over £2billion to prop up the economy of Cyprus and is now in talks to restructure the assistance programme.
Russia currently has the use of only one foreign base at Tartus in Syria and docked warships in the Cypriot port of Limassol last year.
Up to £30billion of Russian money is stashed on the island, in what financial services insiders claim is a massive money-laundering operation for oligarchs and plutocrats attracted by its low tax rates.
 
Cyprus ranks as the largest source of foreign direct investment into Russia – money that is largely Russian in origin and passes through Cypriot banks before being sent back to Russia.
US commentator David Frum said: ‘The island of Cyprus is home to about 1.1million people.
‘This smallish jurisdiction is home to one of the world’s largest banking industries, holding deposits equal to eight times Cyprus’s GDP.
‘Where’d that money come from? Cyprus has chosen to allows its banks to act as global money launderers.’
Russians have reacted with anger to the tax raid. ‘While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous,’ said a Kremlin spokesman.
Russian Prime Minister Dmitry Medvedev said the eurozone decision seemed to be aimed at confiscating someone else’s property.
‘This practice, unfortunately, was well-known and familiar in the Soviet period,’ he said.
Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening.
Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening.
Cyprus’s finance minister Michael Sarris will visit Moscow tomorrow for meetings to try to pin down new loan terms, a Russian government source said.
Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus – the two biggest banks on the Mediterranean island.
British expats in Cyprus blamed the prevalence of dirty Russian money on the island for Germany’s decision to demand the tax raid in exchange for the bailout.
Efy Charalambous, 53, from North London moved to Cyprus ten years ago and runs a fruit and vegetable business with her husband Chris.
She said: ‘The only reason Germany is doing this is because they think rich Russians launder their money through the banks here in Cyprus.
‘But the Russians all carry cash, I know because they come here and buy fruit with 500 euro notes. The only people being hurt are expat Brits and ordinary Cypriot people.’
Russia’s Finance Minister Anton Siluanov also condemned the move and said the eurozone’s decision that Cyprus should introduce a levy on bank deposits was taken without consultations with Moscow.
EU officials now expect Russia to extend its £2bn loan to Cyprus by five years until 2021 and possibly refinance its terms.



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