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malaise in Cyprus, land of asylum for Russian oligarchs

By Marina Rafenberg

Posted today at 12:00 p.m., updated at 12:07 p.m.

On the hills overlooking Limassol, huge billboards advertise real estate investments on favorable terms. At the entrance to the seaside town of 100,000 inhabitants, empty skyscrapers rise up facing the sea. In the “little Moscow” district, there are many luxury cars, signs display promotions in Cyrillic characters , traders do not speak Greek. It is here, in the financial capital of Cyprus, where 17% of the population is Russian-speaking, that Russian fortunes have flowed since the fall of the USSR.

The island of Aphrodite then had considerable advantages, such as low tax rates and banking secrecy. Russian fortunes, due to historical and religious ties, were welcome, largely fueling the local economy, with the approval of the authorities. But since the start of the war against Ukraine on February 24, Cyprus has been forced to review its special relationship with Moscow, because of the sanctions imposed by the Western camp. The Russian oligarchs may have to draw a line under their paradise in the Mediterranean Sea.

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Of the thirty businessmen close to Vladimir Putin targeted by the sanctions of the European Union (EU), at least five have accounts in local banks and at least ten, residences and Cypriot passports. Among them, Roman Abramovich, the former owner of the Chelsea football club, has his company Lanebrook Limited, holding company of the steel company Evraz, registered since 2006 in the Cypriot register of companies. According to the investigative consortium Organized Crime and Corruption Reporting Project (OCCRP), he also owns the HF Trust fund, worth 893 million dollars (813 million euros), where his name does not appear officially.

The “golden passport” policy

Alicher Usmanov, owner of steel giant Metalloinvest and Russian business daily Kommersantalso has two offshore companies in Cyprus, Delesius Investments Ltd and Bacerius Investments Ltd, named as the owners of a 16th century mansionand century, Sutton Place, UK. Alexander Ponomarenko, whose fortune is estimated by Forbes at 3.3 billion dollars and who participated in the construction of a palace for the Russian president, also obtained Cypriot nationality in 2016, by buying a luxury property.

A Cypriot passport.

If Cyprus has been able to attract Russian oligarchs, it is because of its policy of “golden passports” launched in 2007, but above all developed from 2013, during the economic recession linked to the exposure of the Cypriot financial sector to the debt crisis in Greece. People who invested in real estate more than 2.5 million euros were offered Cypriot nationality and therefore a European passport.

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