Yesterday, head of the SaS party Richard Sulik wrote a blog entry on sme.sk looking at the reality behind the European bailout mechanisms and what it means in reality in the case of Cyprus. Here TheDaily.SK provides you with a translation of the article.
Will we rescue the money of the Russian mafia?
by Richard Sulik, 17.2.2013
What at first sight might appear to be an absurd question becomes very topical in terms of rescuing another eurozone country, namely Cyprus. At the same time, the rescue will apply to the Cypriot banks and their clients, who to a large extent come from Russia.
A few days ago, a study came to light entitled “Russia: illicit financial flows and the underground economy“, which analyses cashflow from Russia for the period from 1994 to 2011. One of the conclusions (on page 40) is that hundreds of billions of dollars made their way from Russia to Cyprus illegally, and were then laundered with the help of the Cypriot banks, meaning they were legalised. Various Russian entities (intermediaries, traders of this and that and so on) therefore own accounts in Cypriot banks where they hold what is now legal money, which partly makes its way back to Russia as direct foreign investments. It is no accident that Cyprus is the largest foreign investor in Russia (and conversely Russia in Cyprus) with a volume in excess of 100 billion dollars a year. With an annual GDP of Cyprus reaching 23 billion dollars it becomes clear that these investments do not come from the country itself, but that instead Cyprus serves merely as a kind of transit station, or more appropriately, a washing machine.
So what would happen if the illegal money from Russia does not return to Russia as direct foreign investment, but instead remained in the account of a Cyprus bank (for instance, as a deposit or bond) and that this Cypriot bank then goes bust, because they used the money to buy Greek or Cypriot bonds? Well, they will be saved of course, thanks to some fancy sounding programme.
Naturally, we can say also that originally illegal money can be deposited also in a rescued Spanish bank, for example. Regardless of the fact that rescuing Spanish banks in itself is completely preposterous and screams of injustice, especially against Slovakia, the measures against money laundering in Spain are pretty strict.
Cyprus, on the other hand, is known as a tax haven and also for how the banks tend to turn a blind eye, where money is concerned. The outcome of this, according to available data, is that the rescue of Cypriot banks means to a large extent also the rescue of illegal Russian money. I am already curious to see how Robert Fico will explain this to the Slovak taxpayers, who he is ripping off at home every step of the way.
Of course, Robert Fico should say that Slovak taxpayers money will not go towards this, but for that he would need a pinch of courage, which he does not have. What’s more, he even received a “silencer” in the form of higher euro funds. So we can look forward to yet another round of senseless rescuing ahead of us.
Blimmy I hope no one takes your advice D.C …all my wad is stored there …
We were considering moving there but it looks like it will go the same way as Greece.
mmmm so did I . QED. 260 days of sun, most people there speak English and Greek is also much easier to learn rather than this Slowvak Klingon …
Happy race of people, nice sea, beaches, as I said warm and sunny and stiil quite cheap cost of livin cheap. … Chose to buy in Italy instead ….Hobson`s choice these day country to country.
I hope you are taking notes here Smug ? …I would hate to be accused of being part of your own damp dreams.
Sulik talking some sense for a change. Cypriot banking is so full of holes it has become the top destination for criminals worldwide, not just the Russian bad boys. The Serious and Organised Crime unit of the Met know of at least 30 top UK criminals who are lording it in Cyprus along with their ill gotten gains. Sulik is right, no EU money should be used to bail out Cyprus.
Interesting to note Benta’s head office is in Cyprus – wonder why?