Political aspects of Cyprus crisis

Author: us-russia
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Political aspects of Cyprus crisis
Published 27-03-2013, 06:42
Cyprus has apparently managed to escape default. But many questions remain, one of them concerning the roots of what has proven to be an unprecedented crisis for Europe.

According to the Moody’s rating agency, Russian bank deposits in Cyprus total $31 billion: $12 billion deposited by Russian banks and $19 billion by companies and individuals. Part of that money will now be lost. Though this may not be a crushing blow to the Russian economy, the impact of the Cypriot expropriation will doubtless take its toll on Russia’s GDP. So might it all have been deliberately plotted by certain hostile forces?

Europeans have claimed that part of the Russian deposits in Cyprus were of dubious origin. But even assuming that it may be so, Europe just seized the opportunity to swindle billions of Russian money on a biased premise that all Russians are thieves.

Most experts, however, are not inclined to dramatize the situation and are skeptical about the alleged anti-Russian conspiracy. Rather, Europeans are trying to clean their own Augean Stables, and to them, the fact that the Russian money just happened to be involved is nothing more than a side effect, says Vladimir Slatinov, an expert with the Institute of Humanitarian-Political Studies in Moscow:

"Being an offshore zone, Cyprus has naturally drawn a considerable part of dubious capital. So quite obviously, the purpose is to clean the European financial system. Any crisis always fuels internal competition even in the most integrated society. Such a strong desire to diminish Cyprus’s role indicates that it has competitors inside the EU, who are vying for control over a significant portion of the financial transactions and bank deposit market."

Cyprus’s attempt to get financial aid from Russia imparted a scandalous touch to the affair and irritated Germany. Alexander Tevdoy-Burmuli, an assistant professor of the European Integration Faculty at the Moscow State Institute of International Relations (MGIMO), points out that as the Cyprus crisis owes to systemic flaws during the formation of the Eurozone, the best solution would therefore be the one that relies on the eurozone’s internal resources, otherwise the European monetary union may pretty soon become a thing of the past:

"The reason why Germany is so keen on forcing Cyprus to obey the EU terms is not so much about Russian money - for Germany has fairly good relations with Russia – as about demonstrating that discipline is there for everyone to obey. By letting Cyprus obtain Russian loans and thus slipping away into disobedience, Germany would risk losing face before the rest of the EU."

So it does look like the Cyprus crisis may indeed be about politics, internal EU politics, rather than finances. Cyprus may never be able to regain its former reputation as a safe haven for investors, but then Europeans don’t think that it needs to.

 

As for Russia, whatever its financial losses, its reputation has increased. First Vice Premier Igor Shuvalov believes that what has happened is a good sign for those who are ready to move their capital under Russia’s jurisdiction. The Russian banking system has actually proven to be more trustworthy than the European one.

 

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