The Russian billions in the West and a drop in the ocean in Cyprus

There is no one who denies that Cyprus has developed significant economic and business relations with Russia and that for a number of years now, the economic and business ties of the two countries have been particularly close.

This fact was of little or no concern to the international community, the various institutions and organisations inside and outside the EU, since the geopolitical orientation of Cyprus has always, or almost always, been demonstrably Western.

This changed with the Russian invasion of Ukraine and the sanctions that followed, when some put Cyprus in the eye of the storm, target it and charge it with a felony for its economic relations with Russia.

With characterisations attributed to it from time to time, such as, for example, "Moscow of the Mediterranean", "laundry of Russian oligarchs" and other related names, an image of the country was artificially created and projected. The image of a Cyprus serving Russian economic interests, circumventing sanctions, not complying with international compliance regulations, all for the sake of…our comrades.

The image of a Cyprus that is essentially a vehicle for Russia and the country's oligarchs to do their work unhindered, despite whatever restrictions they are subject to.

The tip of the iceberg of this entire effort to cultivate such a defamatory image for Cyprus was the recently published "Cyprus Confidential" survey, the content of which, however, as it turned out, was in no way such that to prove the negative impressions it aimed to create about our island and its behavior as a financial and professional service centre.

InBusinessNews recently developed and highlighted in a series of articles the reasons why the presented findings of "Cyprus Confidential" are far from reality, the reasons why we believe that the investigation in question resulted in nothing more than baseless allegations and unsubstantiated accusations.

About how it was, in the end, “reheated soup,” in which Cyprus as a point of reference, in no way justified the uproar that the initiators of the research wanted and tried to create around the name of the country.

So let's on below to see why, let's document with facts and figures, published on international websites and reports, whether or not Cyprus really is the "Moscow of the Mediterranean" as some like to claim, whether it really is or not, the "laundry room of the Russian oligarchs".

Dissemination in the West

In the great debate that is taking place regarding the dispersion of Russian capital and Russian wealth in the West, whether these concern the assets of the Russian Central Bank or Russian oligarchs, it is of particular interest to see where and what the position of Cyprus is in the whole equation.

It is therefore no secret, and not even from the competent authorities of our country, that Russian funds of several tens of millions were also deposited in the banking system of Cyprus, which of course were frozen with the imposition of sanctions.

What is the essense? The fact that compared to the billions in Russian funds that were in many other countries of the West, the few tens of millions in Cyprus seem like a negligible amount, in no way justifies the effort to push our island against the wall and the everything that has been attributed to it.

And let's be specific: The picture in relation to where - for example - the assets of the Russian Central Bank were, is clearly captured in the report of the Renew Democratic Initiative (RDI) entitled "The legal, practical, and moral case for transferring Russian sovereign assets to Ukraine"-dated 9/17/2023-, where based on data and figures from relevant reports of the Russian Central Bank itself, the precise dimension of things is given.

Specifically, a report released by the Russian Central Bank before the invasion of Ukraine indicated the whereabouts of the $585 billion it had then, until June 2021, in foreign currency and gold.

According to the said report of the Russian Central Bank, during that period, countries of the G7 and the EU had hundreds of billions of dollars of these assets. In particular, of these reserves, the Russian Central Bank had kept:

  • $127 billion in Russia (in gold),
  • 80 billion in China,
  • 71 billion in France,
  • 58 billion in Japan,
  • 55 billion in Germany,
  • 38 billion in the US,
  • 26 billion in the UK,
  • 17 billion in Austria,
  • 16 billion in Canada,
  • 29 billion in "international institutions",
  • 62 billion in other countries.

It is worth noting that subsequently, and by the time Russia invaded Ukraine, its Central Bank held more than 630 billion in international reserves, an increase of 45 billion since June 2021. While in its annual report on 2021, issued in April 2022, the bank provided an updated analysis of Russian assets held in foreign currency or gold.

What has emerged as a conclusion and follows on from the above is that the countries of the G7, the EU and others, collectively hold and have frozen more than 300 billion in assets of the Russian Central Bank.

This is an amount that the "Russian Elites, Proxies, and Oligarchs (REPO) Task Force", the action group - consisting of the USA, Australia, Canada, France, Germany, Italy, Japan, the United Kingdom and the European Commission - established in March 2022 with the mission and objective of identifying, freezing and confiscating the assets of sanctioned legal or natural persons, confirmed on 29 June, 2022, according to a publication by "Financial Crime News", dated 23 February, 2023.

With the largest volume of them, as the Central Bank of Russia's own reports "reveal", and despite the resulting reluctance on the part of the REPO to identify exact locations and amounts, to be located as far as the West is concerned, in France, Germany, USA, UK, Austria, Canada and obviously not in Cyprus.

It is pointed out that at the beginning of 2023, the Swedish Presidency of the Council of the EU appointed a working group to discover the holding within the EU of large Russian assets. Last May, about 194 billion euros, or $200 billion, were found frozen in the European clearing system Euroclear, in Belgium.

The reasonable question for us that therefore arises is why should Cyprus be the "Moscow of the Mediterranean" and France, Germany, the United Kingdom, Austria not be the... "Moscow of Europe"?

The fortunes of Russian oligarchs

But there is more... Cyprus has been accused and is being accused of being connected to and providing services to the Russian oligarchs, whose properties are worth several billions, are not registered in Cyprus alone, are not located in Cyprus alone and are not related to Cyprus alone.

Luxurious houses, yachts, and airplanes belonging to oligarchs were confiscated in countries such as, not of course Cyprus, but the USA, Spain, Italy and Germany etc. In a report by Forbes dated 14 April, 2023, it was estimated that until last April, Western countries had frozen or confiscated at least 15 yachts belonging to billionaires, 11 jets and helicopters and 124 houses, with a total value of nine billion dollars.

Also according to Forbes, many yachts owned by Russian billionaires or members of their families, such as Roman Abramovic, Farkhad Akhmedov, Vagit Aelkperov, Andrei Guriev, Eduard Khudainatov, Andrei Kuzmichey, Igor Makarov, Andrey Melnichenko, Alexey Morashov, Dmitry Pumpyansky, Arkady Rotenberg, Gennady Timchenko, Eugene Shvidler, Alisher Usmanov and Viktor Vekselberg, were last spotted after the sanctions, not in Cyprus but in the US, the EU or the UK and their territories, including France, Germany, Gibraltar, Italy, the Netherlands, Puerto Rico and Spain.

Although Russians used the service sector in Cyprus, it is clear from the evidence that they did not hold any particular assets on our island, either in the form of cash in Cypriot banks or in movable and immovable property, up to the point of sanctions, with the result that no great benefits arise, neither for the state in terms of taxation, nor for sectors of the real economy that could undertake their management and maintenance.

The case of the oligarch Roman Abramovic, whose name has been associated with Cyprus, is an example in point. According to Forbes he owned a number of luxury yachts, the total value of which exceeds one billion dollars.

Not only is not one of them registered in Cyprus, not even one of them had our island as the last recorded location. Instead, four of the eight were anchored in Turkish ports.

In fact, not one of the dozens of Russian yachts found under the microscope after the sanctions is registered in Cyprus , nor were they anchored in a Cypriot port, which is why the Cypriot authorities did not make any confiscations in the context of the application of the sanctions, unlike the authorities of other countries.

The picture is similar when it comes to real estate. In a publication of Forbes 5 March 2022, updated on 14 September 2023, in which an attempt is made to record some of the luxurious mansions, apartments and houses owned by the oligarchs, it appears that while these assets are estimated to total in billions dollars, the only property found in Cyprus belongs to Oleg Deripaska and is a mansion with a swimming pool in Paphos.

On the contrary, much more popular countries for this type of investment were the United Kingdom, France, Italy, but also the USA. Among the preferences of Russian oligarchs were well-known expensive areas, as well as places that are considered tourist resorts for the global elite.

Although an extremely small percentage of these transactions were made through Cyprus according to the publication, it is clear that not even a crumb of these untold fortunes are located in the... "Moscow of the Mediterranean".

The enormous wealth accumulated by the Russian oligarchs is scattered in various parts of Europe, but also in the USA. It is located in London and Rome, not in Nicosia and Limassol...

Why shouldn't all these countries, in which the Russian oligarchs had and have assets of billions of dollars, be their "laundry" instead of Cyprus?

A small drop in the ocean…

So it doesn't take much more to see that in the entire history of the connection of the Russian oligarchs with the West, Cyprus did not play a leading role at all.

But also to realise that any attempt to maximise this role under the invocation of individual cases of connection through subsidiaries of the subsidiaries based on our island, rather resembles a malicious, bad taste joke, rather than a serious analysis.

And certainly, yes, Cyprus may have had close financial relations with Russia in the past, but in the face of the Russian billions that in one way or another were traded in the rest of the West, whether they concern assets of the Russian Central Bank or assets of Russian oligarchs, the involvement of our island was only like its position on the world geographical map…a small drop in the ocean…!

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