Fate of Europe’s common currency linked to murder

The Vancouver Sun

EU faces a dilemma — prop up Cyprus despite it role as a money-laundering tax haven for Russian robber barons or risk collapse of the euro

In an extraordinary twist in the story of the European Union’s troubled common currency, the fate of the euro is now linked to the murder of a Moscow lawyer and the laundering of billions of dollars in ill-gotten money by Russian oligarchs through their favourite tax haven, the Mediterranean island of Cyprus.

For months, the Communist president member Cyprus, Demetris Christofias, has been appealing for the equivalent of $22.7 billion to bail out his island’s troubled economy, which like 16 other members of the 27-member European Union uses the euro as its currency.

But there is mounting resistance among EU governments to coming to the aid of the Cyprus government because of the island’s role as a tax haven and money laundering route for Russian billionaire oligarchs.

European governments are also outraged by the story that a Russian lawyer, Sergei Magnitsky, was tortured to death in a Russian prison in 2009 after revealing that Russian tax authorities bilked a British investment fund of $230 million and laundered some of the money through Cyprus.

In response, the United States has imposed travel bans on 60 Russian officials linked to the killing. Moscow has complained loudly to Washington about the bans.

In November, the story took another deadly twist. A young Russian businessman, Alexander Perepelichny, who had given Swiss authorities details of how the Russian officials stashed abroad tens of millions of dollars looted from the British hedge fund, Hermitage Capital Management, died in suspicious circumstances.

Perepelichny, 33, was out jogging near his luxury home south of the British capital London when he died of what is being described as a heart attack or stroke.

Given the fate of Magnitsky, who was jailed on false tax fraud charges before being killed, and Perepelichny’s evidence, which let Swiss courts freeze Russian accounts, that verdict is not widely accepted.

British police have ordered a toxicology report to determine whether they are dealing with a murder or not.

Germany, whose still-vibrant economy is essential for supporting countries like Greece, Portugal and Spain where debt crises brought the euro to the brink of collapse, is against a bail out for Cyprus because of the island’s links to Russian oligarchs and robber barons.

A recent report by Germany’s Federal Intelligence Service said that if the European Central Bank gives Cyprus the $22.7 billion it wants, it will amount to German taxpayers protecting the illegal assets of Russian oligarchs and “mafiosi.”

The issue is so charged for the Germans that two weeks ago Chancellor Angela Merkel flew to Cyprus to campaign on behalf of the conservative presidential candidate in February 17 elections, Nikos Anastasiades.

Indeed, European finance ministers have agreed to put off deciding on the bailout for Cyprus until after the elections next month in the hope that Anastasiades wins and he moves to end the island’s role as a Tortuga-style haven for Russian pirates.

While the majority of EU governments are not prepared to dole out money to Cyprus that would mostly benefit Russian oligarchs, they face a dilemma. Neither do they want Cyprus to go bankrupt because the knock-on effect within the eurozone is unpredictable.

That potential problem was taken up by the head of the European Central Bank, Mario Draghi, last week when he lashed out at Germany’s Finance Minister Wolfgang Schauble for saying the fate of the Cypriot economy was not “systemically relevant.”

Draghi insists that Cyprus cannot be allowed to collapse just as the economies in other countries in the eurozone whose debt crises put the future of the currency in doubt, are beginning to improve.

He pointed out that the risk premium on Italian and Spanish sovereign bonds have fallen significantly and that several central banks have made large cuts to their liabilities.

These advances could be quickly reversed, said Draghi, if Cypriot banks are allowed to default.

Two of the biggest Cypriot banks, he pointed out, have networks of branches in Greece, still the most troubled economy in the eurozone. From those branches uncertainty could quickly spread to the Greek banks and re-ignite the euro crisis.

But unless there is a change of administration in Cyprus, EU governments will have to swallow hard to keep down their revulsion at the stench of criminality that hangs over the island.

Dozens of Russia’s richest men have residency on Cyprus, which gives them free access to the entire European Union, and many register their main corporate holdings on the island, where the corporate tax rate is only 10 per cent.

By some estimates more than a quarter of all bank deposits and about a third of foreign investment in Cyprus comes from Russia.

Last year, about $60 billion in assets left Russia and most of it either moved through or was parked in Cyprus. hairy woman онлайн займы https://zp-pdl.com/apply-for-payday-loan-online.php www.zp-pdl.com payday loan

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