Kremlin seeks to protect Cyprus amid ‘dirty money’ claims

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Russian Prime Minister Dmitry Medvedev, who is meeting Commission President José Manuel Barroso in Moscow today (21 March), slammed the EU for behaving "like a bull in a china shop" on the proposed Cyprus bailout. Meanwhile, a prominent Russian opposition leader said the Kremlin was conducting an operation to save its “dirty money” in Cyprus.


A delegation of EU Commissioners was scheduled to meet with their Russian counterparts in Moscow today (21 March) ahead of a plenary discussion with Russian ministers and Medvedev the following day.

A meeting between Barroso and President Vladimir Putin is also on the agenda.

Cypriot Finance Minister Michael Sarris was also in Moscow, where Russian officials said he asked for a further €5 billion on top of a five-year extension and lower interest on an existing €2.5-billion loan from Moscow.

The heat is on

Medvedev is expected to put pressure on its EU guests and raise the issue of a possible review of the share of euros Moscow holds in its central bank reserves.

"I would like to answer in an optimistic way but I have to say that this is a reason to think about it," Medvedev said, as quoted by Reuters, when asked whether the situation in Cyprus was a reason to reduce the euro share of Russia's reserves.

In a vote on Tuesday, the Cypriot Parliament rejected a proposed tax on bank deposits in exchange for a €10-billion bailout from the EU.

The European Central Bank kept up the pressure, warning that it would have to pull the plug on Cyprus unless the country, one of the smallest of the 17 members of the eurozone, took a bailout quickly. Banks in Cyprus are to remain closed until 26 March.

With Cypriot Energy Minister George Lakkotrypis also in Moscow, officially for a tourism exhibition, speculation was rife that access to untapped offshore gas reserves could be on the table as part of a deal for Russian aid.

Sarris said talks with his Russian counterpart, Anton Siluanov, would continue, but there had not yet been any offers, "nothing concrete."

Vladimir Ryzhkov, co-leader of the opposition Republican Party of Russia – People’s Freedom Party (RPR-PARNAS), told EURACTIV in an interview that a multi-billion-euro Russian assistance is being offered to Cyprus at  the expense of the Russian taxpayers.

Ryzhkov, who is one of the most prominent figures of the Russian opposition, met with representatives of the European Parliament major political groups and held talks in the Commission.

Bank buying?

“Today Putin says 'we are ready to buy your banks'. An operation is ongoing to save this corruption money,” Ryzhkov said.

There have been press reports that there was a possibility that a Russian bank would buy Cyprus’ biggest troubled lender, Popular Bank, in a deal that could reduce the amount of the €10 billion bailout sought by Cyprus.

Ryzhkov also said that €700 billion of Russian money was channeled over the last 20 years into the EU. He said that the 2014 Sochi Winter Olympics had cost $50 billion so far, claiming that $20 billion was “stolen” and “already in EU banks”.

He said "I would like to know why does Russia offer this assistance and what benefits it would obtain in exchange.

"No explanations are provided today, which confirms the suspicion that some concrete money of concrete people is being saved. Maybe Russia can help, but transparency is needed, arguments are needed. Why do you help those people and not someone else? No answer is provided and this fuels suspicions that this is again a corruption scheme and a defence of private interests, not of the interests of Russia."

Russian "dirty money" is influencing the European Union and corrupting its elite, Ryzhkov insisted.

“There is no existing mechanism for control, for disclosure of information, for transparency, for arrest of the culprits, for the return of the money to the country of origin,” he said.

An EU ‘Magnitski Act’?

Ryzkov said the EU should adopt a law similar to the American ‘Magnitski Act’ that was signed into law by President Barack Obama on 14 December 2012. The law is designed to sanction Russian officials believed to be involved in the death of Sergei Magnitsky, a Russian lawyer working for a British firm, who had been accused of tax evasion and tax fraud.

He died in police custody in 2009 under suspicious circumstances but Russian investigation concluded he had committed suicide.

Ryzhkov insisted that the EU needed an instrument capable of punishing those responsible for human rights violations. He insisted hat human rights become a constant agenda item in all EU-Russia summits and meetings.

The entire island of Cyprus is officially EU territory, but the country is divided. Turkey, an EU candidate, doesn’t recognise the Republic of Cyprus and has occupied the northern part of the island since 1974.

Cyprus is heavily exposed to the Greek crisis and needs to salvage its banking system, which in recent years has become a haven for rich Russians.

Eight months of inconclusive talks on a bailout package have turned tiny Cyprus into a big headache for the eurozone, triggering fears of a financial collapse that reignites the bloc's debt crisis.

Nicos Anastasiades, who won a resounding victory in the February elections, promised to “restore the credibility of Cyprus”.

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