Guess who’s not happy with the fact that the EU has imposed a hefty tax on wealthy depositors in Cyprus?
The FT is on it :
Mr Putin, at a meeting with economic advisers on Monday, was among several Russian leaders to criticise the bailout, which came without consultation with Moscow and could cost Russian depositors up to €2bn, according to Nicosia bankers.
“While assessing the proposed additional levy on bank accounts in Cyprus, Mr Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous,” the president’s spokesman said following the meeting.
Russia’s well-connected kleptocrats have the most to lose here, and it’s not surprising that they called their friends in the Kremlin at the first sound of this story breaking. It’s just not going to help them much in this case: Putin and his cohorts can wail and gnash their teeth all day long, but unless the Russian government is willing to pony up and pay to bail the depositors, the Kremlin has precious little leverage over this decision.
There’s also a chance that the tax will be revised further in ways Russia will hate even more. The Cypriot central bank governor is arguing that small savers should be exempted from the tax in accordance with EU-wide deposit insurance rules, which guarantee accounts under €100,000. That would likely mean an even bigger tax on the big fish. If this were to happen, expect more outrage from Moscow—again probably to no effect.
The troubles of Cyprus and Greece offered Russia a once in a generation opportunity to build its influence in the EU. These two countries are close to Russia in culture and religion, and Russia is broadly popular in both. Like Russia, they are worried about Turkey. Like Russia, they are deeply suspicious of the liberal West. A close alliance with these countries would give Moscow much greater leverage over the EU, and many in the EU would be prepared to accept that role—if Russia would bear the brunt of Greek and Cypriot debt problems.
Russia has made very little use of this opportunity, and the reason appears to be Russia’s economic weakness. Despite its oil and gas wealth, Russia does not feel rich enough to bail out even these relatively small economies on its own terms. The failure to build a healthy modern economy on the ruins of the Soviet state remains the chief reason why Russian foreign policy so frequently falls short of its grandiose goals in the short term; that same factor plus Russia’s seemingly inexorable demographic crisis limits Russia’s options over the long term.
This is not a rising power.
[Photo of Putin courtesy Getty Images]