While the supposedly-coercive decision to hand over most of the nation's gold to the European Union was surprising to some, the latest policy decision from Cyprus' President Anastasiades looks set to dilute the nation's sovereignty also. Foreign depositors who lost at least EUR3 million will be given EU passports (and Cypriot citizenship), "in an effort to 'mitigate' to some extent the damage the Russian business community has suffered." As France24 reports [3], these measures are expected to be enacted Monday "in a fast-track manner," as Anastasiades readies himself for a 'begging' trip to meet Putin in Russia. Coincidentally, Cyprus issued the 8th decree on capital controls today (for seven more days) increasing the monthly transfer cap (for companies) to EUR50,000 and raising transfer caps outside the Republic to a huge EUR2,000. We suspect the 'been there, got the passport' messaging will do little to stave off the Russian retaliation.
Just a week or two back, Putin enacted his 'amnesty' that wealthy tax-evading Russians bring their money back from overseas within three months (or else) and we wonder if this move by Cyprus, however well intentioned from the outside, has a 'catch' in that if citizenship is applied for, are the applicants legally obligated to disclose all tax accounts. Yet another attempt at trapping wealth?
Via France24 [3],
President Nicos Anastasiades said Sunday that foreigners with bank deposits in Cyprus who lost at least 3 million euros ($3.9 million) under an EU bailout for the island would be given passports.
"Non-resident investors who held deposits prior" to the bailout and lost "at least 3 million euros will be eligible to apply for Cypriot citizenship," he told a Russian business conference in the coastal resort of Limassol.
"We believe that a number of measures to be adopted could on the one hand mitigate to some extent the damage the Russian business community has endured," Anastasiades said.
He said the measures, primarily affecting Russians, would be approved at a two-day cabinet meeting starting on Monday.
"These decisions will be deployed in a fast-track manner and other measures, currently under consideration," said the president, whose country sealed an EU bailout last month to rescue it from bankruptcy.
Most of the money being raised by Cyprus to qualify for the bailout is to come from a hit of as much as 60 percent on more on deposits above 100,000 euros at the Mediterranean country's two largest banks.
Russians have billions of euros in deposits parked in Cyprus, with estimates ranging from 5-31 billion euros. Moscow was angered when it emerged they would lose part of their money under "haircuts" demanded in return for an EU bailout.
The government is also "examining various scenarios which could permit the compensation of part of the losses which shareholders of banks, holders of debt securities and depositors have suffered," Anastasiades said.