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Russian mob money ‘bolsters Cyprus’

Sunday Times

YOU can buy a mink coat or rent a Ferrari at the click of a finger. Many of the street signs are in Russian and so are some of the radio stations. Welcome to “Limassolgrad”, as the locals have taken to calling their town on the Mediterranean island of Cyprus.

It may be the southernmost town in the EU, but Limassol’s popularity among Russians puts it high on the agenda for finance ministers meeting in Brussels tomorrow to work out how to prop up Cyprus’s rickety banking system with the latest eurozone bailout.

With only 1m inhabitants, tiny Cyprus poses a giant dilemma for the overlords of the EU: Russian mobsters are believed to have deposited so much money in its banks that suspected money launderers might become big beneficiaries of the bailout.

Yet asking depositors to carry some of the burden, an idea being promoted by the Germans and Finns, could trigger a run on the banks and rekindle the sovereign debt crisis by undermining trust in the euro.

Underwriting a suspected money-laundering hub could prove just as disastrous for Angela Merkel, the German chancellor. The last thing she needs is accusations of rescuing the Russian mob as she prepares her campaign for re-election later this year.