Forget the word "Cyprus"

Russian money will now settle down in London, Liechtenstein, and maybe in Latvia and Montenegro

Russian money will now settle down in London, Liechtenstein, and maybe in Latvia and Montenegro. Cyprus as a banking center has lost its international significance for a long time, and perhaps forever.

The economic thriller titled Saving Cyprus from Default is far from over. Yes, after hard work last Sunday, the European Commission approved a number of anti-crisis measures, and most importantly, agreed to provide the island state with 10 billion euros in the near future. Probably, there will be certain restrictions on the use of bank deposits and cash withdrawals from ATMs on the island for a few more weeks, and then everything will gradually return to normal. Moreover, the mass investor from among the native Cypriots has nothing to worry about at all: deposits up to 100 thousand euros will not be touched by anyone and the European system of guaranteeing them will be fully preserved.

At the same time, it is clear that Cyprus, as a kind of banking and financial center, has lost its international significance for a long time, and perhaps forever. I think that it was impossible to prevent such an outcome of the current crisis situation. A good anti-crisis plan simply does not exist in nature - it is about choosing the best among the bad ones.

Whatever the responsible persons may say, it is obvious that large clients of Cypriot banks, including many Russian companies, will suffer significant losses. And the question here is not the specific percentage of capital that they will lose: 25, 30, or, as some predict, up to 40. But the fact that these companies will simply close Cyprus for themselves as a place where they can safely and on favorable terms accumulate their capital, store it, and then, if necessary, reinvest back in Russia.

It is no secret that in recent years Cyprus has ranked first among the countries where capital flowed from Russia, and the countries from which the largest investments came to us. It is clear that in this way the funds of our compatriots - businessmen moved back and forth. Now, both large Russian companies and banks, including those with state participation, such as VTB, may suffer. After all, for years they have been working out schemes for moving funds and making transactions, “sharpened” in Cyprus. Now they have to be abandoned. And I am sure that the management of the leading Russian companies and banks right now is concerned about finding a replacement for Cyprus as a "tax haven". I think that there will be options: Russian money will now settle down in London, Liechtenstein, and maybe in Latvia and Montenegro.

Of course, this can be treated philosophically: they say, through zones with preferential taxation, business is conducted all over the world. But in fact, the fact that the largest Russian business is almost entirely registered in Cyprus and owned by offshore companies there is a bad sign, especially in light of the massive outflow of capital from Russia, which has been going on for more than 4 years. And this cannot be explained by global trends alone. After all, entrepreneurs are not at all anti-patriots by nature, they withdraw their capital to where property is better protected, where an independent judicial system works normally, where there is a favorable business climate. Alas, this is not about today's Russia.

The question arises: wouldn’t it have been easier for Russia to take over the lending to Cyprus itself - after all, the 16 billion required for this is not prohibitively large by Russian standards: many of our oligarchs, according to Forbes, have a lot of capital. However, not everything is so simple: given the fact that after the crisis the Russian budget is struggling to make ends meet, industrial production is falling, and social obligations are growing, this is still a lot of money for the state treasury. In addition, before our eyes is the sad fate of the $2.5 billion loan that we issued to Cyprus in 2011: after receiving it, the economic situation of the island not only did not improve, but even worsened. Well, then our authorities clearly do not want to give an extra reason to "angry" citizens for protests: they say, with our money you save "fat cats" hiding their capital in Cyprus. Finally, from people close to the negotiation process with the Cypriot authorities, I know that they did not have any specific proposals for which our country could lend them money, but only calls: “Save, help!” The only “thrown” option is to allow Gazprom or Rosneft to develop hydrocarbon reserves recently discovered on the Cyprus shelf, but the parties did not agree on this either.

As far as the EU authorities are concerned, I believe that Cyprus itself, with its 22 billion (in dollars) economy, does not really bother them. Those tough measures that they have taken are a signal to investors: calm down, we are in control of the situation and will not allow any threats to the single European currency. Here it is important to pretend that “big Europe” has settled the problems of “little Cyprus” in order to prevent investors from panicking.

For European leaders, it would not be a problem to give all the required 16 billion dollars in full, because they have at their disposal the European Stabilization Fund of 750 billion euros. But this is their principled position: they force countries that have gone bankrupt or close to that to strain their resources so that an emergency rescue operation does not turn into a sweet life at someone else's expense.

The material was prepared by Dmitry Dokuchaev