Russia stands to benefit from the plan to tax bank deposits in Cyprus, which makes other economies look good by comparison, First Deputy Prime Minister Igor Shuvalov said.
“I take what’s happening now as a clear signal that there’s something to compare against when we’re being criticized for a bad investment climate,” Shuvalov said to reporters today in Kazan, about 800 kilometers (500 miles) east of Moscow. “We have something to point to. When things were bad for us, we never dared to do anything like this.”
Russia, which defaulted on $40 billion of domestic debt in 1998, discussed with the European Union and Cyprus the possibility of easing the terms of a 2.5 billion-euro ($3.2 billion) loan it made to the Mediterranean island nation. Cyprus Finance Minister Michael Sarris is flying to Moscow tonight to save those talks after after President Vladimir Putin called a plan to “bail in” depositors “unfair.”
“It’s bad that someone’s going to lose something, but from the point of view of what Russia stands to gain, Russia is more likely gaining than losing,” Shuvalov said. The country may also see some inflows of capital as investors leave Cyprus.
Cypriot lawmakers may shoot down the unprecedented levy on bank deposits, risking the island’s membership in the euro.
The “feeling I’m having is that the house is going to reject it because they feel and think it isn’t just and that it’s against the interest of Cyprus,” Cypriot President Nicos Anastasiades told Sweden’s TV4 channel in an interview today. State-run RIK TV showed the debate beginning in Nicosia.
European countries including Germany have demanded that Russia be part of any new rescue package to Cyprus. German Finance Minister Wolfgang Schaeuble in January demanded an investigation into whether Russia is using the island as a destination for money laundering. Cypriot officials deny the country is a haven for illegal money.
Russia may reconsider its role in the Cyprus bailout because it wasn’t consulted over the deposit tax plan, state news service RIA Novosti cited Finance Minister Anton Siluanov as saying yesterday.
Siluanov is scheduled to meet Sarris in Moscow tomorrow morning, his said today.