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article imageRussia: Cyprus deal is theft, Kremlin may freeze German assets

By Katerina Nikolas     Mar 25, 2013 in Business
Russian Prime Minister Dmitry Medvedev has reacted to the Cypriot bailout deal by labelling it as theft. The Kremlin is considering freezing German assets in Russia in retaliation for Russian losses in Cyprus banks.
"The stealing of what has already been stolen continues," is how Medvedev described the Cyprus bailout deal which imposes a sweeping haircut of around 30 percent on bank deposits in excess of €100,000 in two major banks. Nevertheless Russian President Vladimir Putin is willing to support efforts aimed at overcoming the Cypriot crisis.
According to the Telegraph the Kremlin is considering freezing German assets in Russia as payback for the bailout deal.
Germany has put pressure on Nicosia throughout the last week, insisting on terms which will effectively end the importance of the Cyprus banking sector.
Open Europe provided this analysis of the Cyprus deal: "This is a bad deal for Cyprus and the Cypriot population. Cypriot GDP is likely to collapse in the wake of the deal with the possible capital controls hampering the functioning of the economy. The large loan from the eurozone will push debt up to unsustainable levels while the austerity accompanying it (along with the bank restructuring plan) will increase unemployment and cause social tension. There is a strong chance Cyprus could become a zombie economy – reliant on eurozone and central bank funding, with little hope of economic growth."
Cyprus President Nicos Anastasiades fought against the terms insisted upon by the EU, ECB and IMF, according to the Guardian's Ian Traynor who tweeted: "EU sources say Anastasiades fought tooth and nail on bank closure, restructuring, downsizing. #Barroso says Ana fully supported it." Angela Merkel is pleased with the outcome, as is Wolfgang Schäuble. The deal could benefit German banks as deposits are likely to leave Cyprus as soon as capital controls are eased.
More about Cyprus bail out, Dmitry medvedev, Kremlin, Vladimir putin, Nicos Anastasiades
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