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Wed Oct 24, 2012, 05:39 AM

 

Cash-strapped Cyprus plots Russian exit from austerity: "a backdoor to the EU" for russia & china

The government insists that it's about to embark on talks to secure a bailout before a summit of eurozone finance ministers in mid-November. There is an expectation, perhaps unduly optimisitic, that it will be able to whistle up 10bn from the so-called troika the International Monetary Fund, the European Commission and the European Central Bank to rescue Cyprus's banking system, the floorboards of which collapsed when Greece went bust...

The number of Russians visiting Cyprus has tripled in three years to more than 400,000 and many do not intend to go back. The official estimate of Russian residents here is about 50,000 but double that seems nearer the mark. Aside from the appeal of an agreeable climate and a low tax rate, the Russians' penchant for cash transactions prompts widespread suspicion that the island is becoming a giant laundromat for red-hot rubles. Cypriot authorities deny this...

Cyprus's financial predicament is dire. Its public-sector wage bill is, proportionately, the eurozone's highest. There is, according to EC representatives, a "huge gap' between income and expenditure. Pensions and benefits have run out of control. Yet, as it passes round the hat, Nicosia is desperate to find an alternative to the kind of troika-designed austerity that's being imposed on Athens but who can afford to help?

Step forward, Mr Putin. The Russians are offering cheap loans...

The Russians, quite correctly, view Cyprus as a convenient backdoor to the European Union and they are not alone. The Chinese have also started arriving, encouraged by what they regard as an incredibly low bar to immigration. Forget all those tricky visa forms, for anyone prepared to spend 300,000 on a property in Cyprus there is the bonus of eligibility for permanent residency. Once this is achieved, the owner is entitled to move anywhere within the EU. For the price of a shoebox in Shanghai, Cyprus is offering a gold-card travel pass and much more besides.

http://www.telegraph.co.uk/finance/comment/jeffrandall/9625571/Cash-strapped-Cyprus-plots-Russian-exit-from-austerity.html

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