What’s happening in Cyprus?
The processes taking place in Cyprus cannot be compared to the developments taking place in continent Europe. At the beginning of the global crisis the most vulnerable states were Greece, Portugal and Spain and partly even Italy. Separate solutions have been found and are still searched for the European Union countries.
The only similarity with Cyprus was the start of the Greek crisis when the leaders of Germany offered Greece to sell a few islands. After the second World only the borders of Germany and Czechoslovakia were changed without blood. The ghost of communism was leaving Europe. When it left it caused a lot of blood in Yugoslavia. And so suddenly decades after that Germany offers a bloodless yet financial solution to Greece by selling its territories. In Greece and the other European states the negative public attitude made the Germans quickly forget about their strict standpoint.
What happened to Cyprus is not comparable to the crush of the banking system in Iceland. It should be viewed in light of de-offshoring of the world economy. It has been noticeable long ago that the offshore economy of Cyprus doesn’t live its best days now. In 2011 Russia has even allotted 2,5 billion loan to Cyprus to overcome its banking crisis and it didn’t work.
Back in December in the annual message addressed to the federal council the businessmen were urged to refuse saving their funds abroad. But the Russian businessmen perhaps trust the offshores more than their own government. With the pressure of Europe this week the parliament of Cyprus made an unprecedented decision. It is hard to remember a precedent when the parliament session of a country would be broadcast live on a TV station of a different country. The session of the parliament of Cyprus was broadcast on RBK-TV channel. The reason is that according to approximate calculations there are 40 billion USD of the Russian capital in the Cypriot banks.
The prime minister of Russia Dmitri Medvedev reiterated that even the funds of state structures of Russia are invested in the offshore banks of Cyprus. Then the processes started to develop at the speed of a lightning bolt. The president of Russia V. Putin even convened a special session with the security council of Russia.
The Russian authorities have been proud the past several years that the negative ratio between the funds exported from Russia and foreign investments has reduced. But it was evident for everyone that the Russian businessmen would export their funds abroad in order to be cautious from their own authorities. The Russian businessmen would avoid paying taxes by registering their businesses abroad. Besides that they would think that their funds would be much secure abroad.
Therefore, according to the data of the International Monetary Fund the Russian businessmen would invest 1/3 of their funds in Cyprus. And so suddenly we witnessed what had happened only once during the tenure of the Bolsheviks during the past 100 years. Now the Russian financial authorities speaks about creating offshore zones outside of Russia. But this will hardly take place. Back in the day their plans of creating offshore zones in Ingushetia and Kalmyk failed. The Russian oligarchs and economic tycoons wouldn’t agree to save their money in the territories of their control.
They do exactly like our businessmen. Many Armenian businessmen have registered their businesses offshore and specifically in Cyprus. And now they are experiencing the same turmoil by witnessing how the government of Cyprus is eliminating their funds. These are funds which they have partly gained themselves but most of these funds have been stolen from the people. Either way, they preferred to save these funds abroad. Does anybody remember why Armenian singer would sing his song titled “do you see what happened?”
By Ara Galoyan
