Wednesday, March 20, 2013

Russia Kills Plan B; Emergency Meeting of Parliament Tonight to Reconsider Levy

20th March 2012

Following the Cypriot parliament’s rejection of the levy, Cyprus considered Plan B, a new plan to raise the 5.8 billion euros beyond what Troika is willing to lend Cyprus. The details of Plan B have not been made public, however it is widely believed that it was dependent on Russia providing some financial assistance for at least a portion of the 5.8 billion that is beyond what Troika believes is a loan Cyprus could sustain. Cypriot Finance Minister Michalis Sarris is in Moscow and has met with his Russian counterpart. Sarris is quoted as having stated "We will be here until some kind of agreement is reached," (1) It has been hoped that Russia will agree to ease the terms of its current loan to Cyprus in addition to further financial assistance.

Tonight the Cypriot government has announced that Russia has stated that it will not provide further financial assistance. It is not clear yet whether Russia will ease the terms of the current loan. The large number of Russian investors in Cyprus have long been a point of contention between the two governments. Putin has repeatedly requested that Cyprus provide the names of its Russian investors. Under Cyprus law the ultimate beneficial owners of companies are confidential, thus Cyprus has declined to name the investors. Putin wants Russian money to return to Russia.

Anastasiades called an emergency parliament meeting tonight wherein Cyprus is considering its options and now taking a second look at a bank levy, so called Plan A-. A mass exodus of Russian funds out of Cyprus is expected. Putin has stated that this is a lesson to Cyprus. It seems that Troika and Russia both want Cyprus to learn lessons.

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