“Suspicion arises -- and it’s plain to see -- because Russian investment in Cyprus is so high and at the same time Cypriot investment in Russia is high,” Schaeuble said today on Germany’s ARD television 2+Leif program. “You may ask why Cyprus is the second-largest foreign investor in Russia and we need clear answers to that.”
Comments today by Schaeuble and Luxembourg Prime Minister Jean-Claude Juncker underline calls for Cyprus to take action on money laundering as a condition for potential aid. A German secret service report on Cyprus that was sent in November to federal lawmakers said Russians deposited 26 billion euros ($34.6 billion) -- more than the size of Cyprus’s economy -- in Cypriot banks over an unspecified timeframe, according to Priska Hinz, a Green party lawmaker, who read the secret report.
While a report on the financial health of Cyprus by the so- called troika -- the European Commission, the European Central Bank and the International Monetary Fund -- and a February election in the country are set to delay decisions on aid, Germany is already outlining caveats it views as necessary conditions, including bank transparency and the primacy of first-stop help from Cypriot banks’ creditors and the government over aid from euro-area funds.
Cyprus needs to “play by the rules we have on money laundering in Europe, sign the same rule book,” said Michael Meister, the ruling Christian Democrats’ finance spokesman in parliament, in an interview today. “Only if bank creditors and the Cypriot state are unable to help can the euro area step in.”
Schaeuble said Russia needs to tighten its financial market rules that have fostered money laundering, saying that he had asked Russian Finance Minister Anton Siluanov to consult with President Vladimir Putin over such a move.
Russia may be asked to contribute to a Cypriot bailout plan, Schaeuble told German lawmakers on Jan. 15. Cyprus may need as much as 17.5 billion euros to pay its bills and recapitalize its banks, Finance Minister Vassos Shiarly said in November. The government says it has enough cash to last through March.
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