20 Μαρτίου 2013

Help, Not Kill Cyprus

Posted by Dimitry Afanasiev (Author) on March 19th, 2013

Before World War II the German Nazis have nationalized Jewish bank deposits claiming various grounds including that the Jews were involved in «dirty dealings».

On December 21, 2012 Mr Schneider of SDP announced that the money of German taxpayers will not secure illegal bank deposits of Russians in Cyprus. On March 16, 2013 German Chancellor Angela Merkel said that those responsible (for the Cyprus insolvency) will have to pay, not just European tax payers.


Why are Russian bank depositors being singled out and held responsible for Euro zone problems? Cyprus banks lost money not because of the Russians but because of the terms on which Euro zone officials decided to restructure Greek debt to protect European investment inGreece. This has nothing to do with the Russians. To the contrary, thanks to Russian money, in the last ten years Cyprus has developed into a modern European country and joined the Euro zone from which it is now receiving problems.

On what legal basis do German officials call all Russian bank deposits in Cyprus illegal?

The answer to all these questions is clear. German government officials are pushing an illegal scheme aimed at discrimination against Russian bank depositors for the simple reason that Russiahas no voice in Europe because it is not a EU member. And neither does Cyprus, evidently, although it is a EU member, because it is small.

Germanyis pushing Cyprus to confiscate Russian bank deposits (many of them Jewish, by the way) and to make this look better some German officials are claiming publicly that Russian money in Cyprusis illegal. I guess, being a Russian or Ukrainian makes it illegal according to some Germans.

The Minister of Finance of Germany, aided by the minister of finance of the Netherlands and Finland, have developed an illegal scheme and black mailed Cyprus government with an ultimatum: rob the Russians or be killed.

Cyprus is stuck between the old friend (Russia) and the new EU partners (who are not so friendly now) who are willing to give Cyprus some money if Cyprus forgets the old friend. This is nothing but a Cold War thinking which incidentally puts Europe on the brink of recession again because from now on everybody knows: not one bank deposit in Europe is safe while this German government is calling the shots in the EU.

EU is willing to sustain stability of the banks and give as much money as needed to the banks in order to cover any amount that will flow out of the banks and maintain liquidity the day the banks will open which will naturally be HIGHER than 6 Billion which ECB is not willing to give now. The matter is not financial but rather political against Russia and Cyprus.

First, EU has to wake up and stop this nonsense of expropriating bank deposits through confiscatory taxation. EU cannot hold together if, at the crucial moment, its decisions are made from a national (German) rather than all-European point of view.

Second,Russia has to stand up to Germany and fight back. International law provides good basis for holding governments and individual officials liable for inducing expropriation.

Third, Russia should help Cyprus financially. Cyprus needs 16 Billion Euros. Europe is willing to give 10 Billion Euros. Russia should loan the other 6 Billion Euros and secure this loan with rights to offshore gas reserves which have been discovered in Cyprus recently. Cyprus could also collateralize the loan with land and real estate and bank stocks.

Confiscation of bank deposits will kill Cyprus economy. If the «levy» on deposits is imposed this week, on the first banking day after everyone will transfer what is left of their money out of Cyprus. Nobody will ever start a bank account in this country again. Cypriots will have to go back to the hills as farmers. A beautiful European nation will be thrown back to the Middle Ages.

A proper solution for Cyprus should instead involve all interested parties including Russia. Such solution should promote further development of Cyprus so that the country can pay back its debts rather than stiffle business opportunity and kill the banking system. A loan should be made to Cyprus secured by its mineral resources, land, real estate and banking stocks. These interests should then be securitized and privatized. Private interests will then drive the further economic development of Cyprus which will make the creditors happy and make Cypriot people a wealthy nation again.

Dimitry Afanasiev
Chairman
Egorov Puginsky Afanasiev and Partners, the largest law firm in Russia,Ukraine and Belarus

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