Cyprus passports offered to big foreign losers in EU bailout

President Nicos Anastasiades said yesterday 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,” which brings with it an EU passport, Anastasiades said.

“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,” he told a Russian business conference in the coastal resort of Limassol.

He said the measures, primarily affecting Russians, would be approved at a two-day cabinet meeting starting today.

“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.

“I wholly acknowledge and share their understandable bitterness and apprehension caused by the coercive manner with which the Eurogroup agreement was imposed on my government,” Anastasiades said of the Russian business community.

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,” he said, without elaborating.

Russians at the conference pointed to the obvious advantages of having a European Union passport, but some were left unconvinced.

“It’s true that for a Russian national having a Cyprus passport is a good thing because Cyprus is part of Europe,” Vasily Novikov, a Cyprus-based Russian entrepreneur in his 50s, said.

“But a passport doesn’t solve the problem of businesses which fear a repeat (of a haircut on bank deposits), and it’s now difficult to operate in Cyprus.”

Turning to the hydrocarbon reserves discovered off southern Cyprus, Anastasiades invited Russian energy firms to take part in development of the fields on which his country is pinning its economic recovery hopes.

“My government is determined to swiftly proceed and implement all the necessary steps in order to realise the significant potential for Cyprus to become the eastern Mediterranean’s energy hub,” he said.

“I therefore urge more companies from the Russia Federation involved in the oil and gas industry to demonstrate interest in getting involved and exploiting the great prospects of Cyprus’s energy sector.”

He voiced confidence that Russian-Cypriot business links would remain strong.

“Cyprus will remain a reliable partner to all those entrepreneurs and investors interested in international expansion and will retain its position as a significant international investment hub for Russian and Cypriot business,” Anastasiades said.

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