Moscow’s Mysterious Move on Cyprus

Russian deposits may account for about one third of Cypriot bank accounts worth more than €100,000, which could be frozen and taxed by up to 25 percent as part of a EU bailout deal. Russian President Vladmir Putin has denounced such methods for rescuing the Cypriot economy and “many non-Russian commentators agree with Putin that raiding private savings risks undermining confidence in Europe’s banking system as a whole,” reports Matt Owens for the Daily Beast. Yet, Owens notes that Putin voicing support for Russian tax evaders is odd: “Cyprus’s loosely regulated banks, the ease of incorporating companies and a favorable double-taxation treaty with Russia have made the tiny Mediterranean island a lynchpin of Russia’s shadow economy since the early 1990s.” Some investment schemes are legal, some are not. In recent months, the Russian government and media have discouraged offshore investments. Despite harsh rhetoric, German and Russian officials essentially agree that offshore accounts held by tax evaders deserve no special rescue for uninsured investments gone sour. – YaleGlobal