Economy

The Hidden Truth In Russia's Opposition To Cyprus Bailout Deal

Medvedev on a 2008 visit to Cyprus
Medvedev on a 2008 visit to Cyprus
http://www.kommersant.ru/doc/2150254

NICOSIA - The Cyprus Parliament's initial rejection of the terms of the European Union bailout plan is bad news for Russia.

The opposition to the required taxes on bank deposits means the risk is rising of a long-term freezing of corporate assets in Cyprus. Meanwhile new proposals for taxes on depositors in the island could erase major portions of existing deposits.

This mess seems to be a direct consequence of the failure of unofficial talks between the EU, Russia and Cyprus in 2012. Cypriot banks have been used as a financial haven and launderer for Russian companies, and Russian deposits make up nearly 40 percent of the money in Cypriot banks.

The Russian government is clearly very concerned about the Cyprus crisis, but did not support the recommendations of the EU, which included taxes on bank deposits, small and large. President Vladimir Putin called the EU plan, “unfair, unprofessional and dangerous,” while Prime Minister Dimitry Medvedev dubbed the required taxes: "confiscation."

In spite of the harsh words about the bailout’s tax conditions, for many Russian businesses the proposed 9.9% tax on deposits over 100,000 euros might not be the worst-case scenario. In fact, the prospect of serious banking problems in Cyprus that could last for weeks is a much more serious threat for many businesses.

Finance Undersecretary Sergei Shatlov seemed to be the only person in Moscow willing to comprehend the EU’s logic, and he has spent the past week trying to explain to Russian business people that the taxes were both unavoidable and ultimately fair -- at least if one were to levy taxes on interest earned on deposits, rather than the full deposit amount.

Also of concern is the fact that if such proposed taxes are enacted, Russian companies will be making significant contributions to the Cypriot economy. Most of the small deposits in Cypriot banks -- which under the latest, rejected proposal would have been exempt from the tax -- are held by citizens of Cyprus, Greece or Great Britain.

"Gray" money

There is more British-owned money in Cypriot banks than Russian money, but most of that money is held by private citizens in small accounts. Russian deposits, on the other hand, are in large sums and would be more vulnerable to taxation. Russian stocks have fallen in the face of the Cypriot crisis, while British stocks have not.

The Cypriot Finance Minister visited Moscow this week, but his requests for a 5 billion euro loan - which had already been sought once in 2012- were again denied.

Out of the approximately 68 billion euros in Cypriot banks, some 27 billion euros are held by Russian citizens and businesses. The reaction to the Cyprus bailout proposal has been by far the strongest in Russia, with strong words coming not only from Putin but from other politicians as well, some comparing Germany’s financial terms to the confiscation of Jewish-held bank accounts in Nazi Germany.

German politicians, for their part, have said that German taxpayers should not be supporting illegal Russian bank accounts in Cypriot banks.

But at the end of the day, it’s not clear who will really suffer in Cyprus, either from taxes or from accounts being frozen. Vladimir Gidirim, from the Moscow office of Ernst & Young, says that clients are usually interested in incorporating companies or holding structures in Cyprus, not in warehousing their money there. Indeed, Cypriot banks are mostly used as a transfer-point for money.

A consultant familiar with Russian corporations’ financial dealings in Cyprus explains that “Companies don’t keep money in Cyprus. But most of the money is, at best, ‘gray’ money. So if bank accounts are frozen, it is an open question whether those companies will be able to protect those deposits, because they will need to prove where the money came from.”

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Society

What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel

-Essay-

BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.


Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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