Rus­sia par­lia­men­tary group shows dis­dain at Cyprus

Financial Mirror (Cyprus) - - FRONT PAGE -

A fresh row is ex­pected to erupt be­tween Cyprus and Rus­sia, sparked by the dis­trust pre­vail­ing among par­lia­men­tar­i­ans in Moscow over what seems to be ef­forts to de­pose Rus­sian in­vestors from the Bank of Cyprus, as well as the way the Cen­tral Bank took con­trol of the FBME Bank.

The Fed­er­a­tion Coun­cil (up­per house) mem­bers have pro­posed to sus­pend ac­tiv­i­ties in the EU coun­tries, in­clud­ing Cyprus, that have the most ag­gres­sive at­ti­tude to Moscow and Rus­sians.

Igor Moro­zov, a lead­ing mem­ber of the Fed­eral Coun­cil con­sid­ers the FBME takeover and now the di­lu­tion of Rus­sian share­hold­ers in Bank of Cyprus as “unfriendly ac­tions against Rus­sian in­ter­est” and wants to sus­pend talks with work­ing group with the Cyprus Par­lia­ment.

In fact, a re­sponse is re­port­edly be­ing drafted within the Rus­sian par­lia­ment to the “hos­tile takeover” of FBME and sim­i­lar raids against Rus­sian share­hold­ers in the Bank of Cyprus and the now de­funct Laiki Bank.

A for­mer diplo­mat told the Fi­nan­cial Mir­ror that “Rus­sia started get­ting ready when Dmitry Medvedev vis­ited Cyprus – to re­vise the Treaty on avoid­ing dou­ble tax­a­tion. Rus­sian amend­ments (and later uni­lat­eral ac­tions taken by the Min­istry of Fi­nance and the Cen­tral Bank) have to­tally annihilated the ad­van­tages and ben­e­fits of hav­ing Cyprus company.”

“What­ever your En­ergy Min­is­ter (Yior­gos) Lakkotrypis is do­ing to find buy­ers is ir­rel­e­vant – one should watch Vladimir Putin and Gazprom’s chair­man Alexei Miller. Putin was the first whom Ab­del Fat­teh el-Sisi of Egypt went to see prior to the pres­i­den­tial elec­tions, and th­ese days he is meet­ing the King of Jor­dan,” the for­mer diplo­mat-turned­an­a­lyst said.

On the other hand, even the present Am­bas­sador to Cyprus, Stanislav Osad­chiy, re­cently threat­ened to with­draw Rus­sian busi­nesses from Cyprus.

“As for the EU, there are no wor­ries in Rus­sia, sanc­tions or no sanc­tions – it’s start­ing to get cold on the con­ti­nent.”

The In­ter­na­tional Af­fairs Com­mit­tee of the Rus­sian Fed­er­a­tion Coun­cil (FC) has re­fused to at­tend a meet­ing of the US-Rus­sia Business Coun­cil due to the sanc­tions the West im­posed on Rus­sia and its cit­i­zens, the Izves­tia daily re­ported.

The Fed­er­a­tion Coun­cil mem­bers have also pro­posed to sus­pend ac­tive work in the EU coun­tries that have the most ag­gres­sive at­ti­tude to Moscow and Rus­sians, the news­pa­per writes with ref­er­ence to act­ing head of the In­ter­na­tional Af­fairs Com­mit­tee Vladimir Dzhabarov.

“We have never had great in­ter-par­lia­men­tary re­la­tions with the United States, and the cur­rent at­tempts to wel­come the Americans at the first op­por­tu­nity seem not right after our for­mer col­league — se­na­tor and cur­rently the head of state (US Pres­i­dent Barack Obama), called the Ebola virus the first global threat, and Rus­sia — the sec­ond,” deputy head of the In­ter­na­tional Af­fairs Com­mit­tee An­drey Klimov told Izves­tia.

The Fed­er­a­tion Coun­cil mem­bers also pro­posed not to cre­ate the work­ing group on par­lia­men­tary co­op­er­a­tion with the par­lia­ment of Cyprus.

“The Cen­tral Bank of Cyprus un­der the Amer­i­can pres­sure has made an emis­sion of 1 bln euros on the ex­tremely un­favourable terms for Rus­sian busi­ness­men that switched to it from the col­lapsed Laiki Bank: in­stead of 84%, they got 18%. All the steps are unfriendly. A week ago, Rus­sian busi­ness­men met with the coun­try’s for­mer pres­i­dent (Demetris Christofias) who ex­plained the ac­tions of of­fi­cial au­thor­i­ties by the US pres­sure,” Izves­tia quoted FC mem­ber Igor Moro­zov as say­ing.

Iron­i­cally, one of the two funds pooled by buy­out in­vestor Wil­bur Ross to pump 400 mln euros into Bank of Cyprus, is based in Rus­sia, sug­gest­ing the bank is swap­ping one group of Rus­sians for another.

“I think Cyprus is in a dif­fi­cult sit­u­a­tion. The way in which both the FBME is­sue and the Bank of Cyprus re­cap­i­tal­i­sa­tion was han­dled could be an in­di­ca­tion that it is be­ing pres­surised by the money it owes to the EU and the “strate­gic part­ner­ship” it got from the US into re­duc­ing ties with Rus­sia,” a lead­ing economist told the Fi­nan­cial Mir­ror.

“In prin­ci­ple this is not such a bad thing. There has been too much de­pen­dence on Rus­sian funds and now there is too much de­pen­dence on Rus­sian tourists. But this is a shift that needs to hap­pen grad­u­ally. The econ­omy is still frag­ile. Cyprus just missed a bailout pay­ment and it still owes EUR 2.5 bln to Rus­sia, so we need more of the gen­tle art of diplo­macy.”

How­ever, some com­men­ta­tors sug­gest that per­haps it is Cyprus that should be up­set with the Rus­sian gov­ern­ment which, to­gether with the de­val­u­a­tion of the rou­ble, which is cur­rently worth 20c com­pared with 21.8c in June, has con­trib­uted to the bank­ruptcy of two Rus­sian tour op­er­a­tors.

“The Rus­sians want to have their cake and eat it. They want to be re­spectable and re­spected in the neo-lib­eral cap­i­tal­ist world as so­phis­ti­cated grownups who have shaken off the old com­mu­nist non­sense – but when the very world they as­pire to be part of seeks to im­pose or­der, how­ever im­per­fectly, on over­seas fi­nan­cial in­sti­tu­tions where they have in­ter­ests, they are sud­denly throw­ing their toys out of the pram,” wrote one an­a­lyst.

Mean­while, the Rus­sian par­lia­ment’s up­per house said it is sus­pend­ing con­tacts with coun­tries sup­port­ing the EU and US sanc­tions.

“It doesn’t mean a com­plete break in re­la­tions. We are just can­celling at the mo­ment our planned par­lia­men­tary trips to the United States and Greece,” Vladimir Dzhabarov, first deputy chair­man of the Fed­er­a­tion Coun­cil’s In­ter­na­tional Af­fairs Com­mit­tee, said on Tues­day said.

“We are not en­gaged in par­lia­men­tary tourism,” he added. “We want our con­tacts to bear fruit.”

The United States and the Euro­pean Union have im­posed sev­eral rounds of sanc­tions against Moscow since March over its stance on the con­flict in Ukraine.

By the be­gin­ning of Septem­ber, some 420 Rus­sian in­di­vid­u­als and 143 com­pa­nies have been put on the sanc­tions lists of the Euro­pean Union, the U.S., Canada, Aus­tralia, Ja­pan, Switzer­land and Norway.

Re­tal­i­at­ing for Western penal­ties, Moscow in­tro­duced a one-year ban on im­ports of se­lected foods from sanc­tion­ing coun­tries. The ban, an­nounced at the start of Au­gust, bars im­ports of meat, fish, dairy, fruit and vegetables from the U.S., the 28-na­tion EU, Canada, Aus­tralia and Norway.

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