The Russians and their money
Did Putin Sink Cyprus?
By BEN JUDAH, NYT
ISTANBUL
THE blue-glass skyscrapers of Moscow City — fragments of Russia’s boom-time dream — are visible from the Kremlin walls, within which there was once hope that those towers could supplant the West’s financial centers. When the sun sets behind them, you can see that many of the offices lie empty.
In fact, the real hubs for Russian banking are in other countries. Moscow’s billionaires squirrel their fortunes abroad, and many businessmen register their companies as British, Dutch, Swiss or Cypriot — anything but Russian. Whistle-blowers would have us believe that even President Vladimir V. Putin stashes his money offshore.
Simply put, Russian money is frightened of Russia. This is because after Boris N. Yeltsin made the transition to crude capitalism in the 1990s, Mr. Putin never delivered secure property rights. That makes Russian money paranoid; since 2008 alone more than $350 billion in capital has fled the country.
These billions craved secrecy and security, and financial islands inside the European Union welcomed them. A love affair started, especially, between Cypriot banks and Russia’s cash. Only weeks ago, the Cypriot capital, Nicosia, was Russia’s most important offshore accountant. But today this financial paradise lies in economic ruin, its bloated banking sector wrecked by a gigantic exposure to Greek bonds. To save Cyprus from bankruptcy, a decree from the European Union, the International Monetary Fund and the European Central Bank (known as “the troika”) is now confronting depositors in Cypriot banks with the loss of as much as 60 percent of deposits greater than $100,000, alongside tough new capital controls.
(More here.)
By BEN JUDAH, NYT
ISTANBUL
THE blue-glass skyscrapers of Moscow City — fragments of Russia’s boom-time dream — are visible from the Kremlin walls, within which there was once hope that those towers could supplant the West’s financial centers. When the sun sets behind them, you can see that many of the offices lie empty.
In fact, the real hubs for Russian banking are in other countries. Moscow’s billionaires squirrel their fortunes abroad, and many businessmen register their companies as British, Dutch, Swiss or Cypriot — anything but Russian. Whistle-blowers would have us believe that even President Vladimir V. Putin stashes his money offshore.
Simply put, Russian money is frightened of Russia. This is because after Boris N. Yeltsin made the transition to crude capitalism in the 1990s, Mr. Putin never delivered secure property rights. That makes Russian money paranoid; since 2008 alone more than $350 billion in capital has fled the country.
These billions craved secrecy and security, and financial islands inside the European Union welcomed them. A love affair started, especially, between Cypriot banks and Russia’s cash. Only weeks ago, the Cypriot capital, Nicosia, was Russia’s most important offshore accountant. But today this financial paradise lies in economic ruin, its bloated banking sector wrecked by a gigantic exposure to Greek bonds. To save Cyprus from bankruptcy, a decree from the European Union, the International Monetary Fund and the European Central Bank (known as “the troika”) is now confronting depositors in Cypriot banks with the loss of as much as 60 percent of deposits greater than $100,000, alongside tough new capital controls.
(More here.)
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