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Posted on Sustainabilitank.info on March 24th, 2013
by Pincas Jawetz (pj@sustainabilitank.info)

 

Russian PM lectures Barroso on Cyprus.

Medvedev: ‘The euro crisis has strengthened ideas that Europe is in decline.’

21.03.13

By Andrew Rettman

 euobserver.com/economic/119525

BRUSSELS – Russian Prime Minister Dmitry Medvedev humbled European Commission chief Jose Manuel Barroso in public remarks on Thursday (21 March) over the EU’s handling of Cyprus.

Speaking alongside Barroso at a conference in Moscow, he called the EU’s original Cypriot bailout idea “to put it mildly, surprising … absurd … preposterous.”

“The situation is unpredictable and inconsistent. It [the bailout model] has been reviewed several times. I browsed the Internet this morning and I saw another Plan B, or a Plan C or whatever,” he noted.

He upbraided EU institutions for failing to give Moscow due notice of its decision.

“The system of early warning did not work very well … that means we need to work on it,” he said.

He also quoted unnamed Russian “eurosceptics” as saying: “The euro crisis has strengthened ideas that Europe is in decline in the 21st century … that the European project has turned out to be too cumbersome.”

Earlier the same say, he told Russian newswire Interfax that he is thinking of reducing Russia’s holding of euro-denominated currency reserves.

In a sign of broader Russian upset, Leonid Grigoriev, an academic and a former Russian deputy finance minister, told a separate news conference that Russian money is no longer safe anywhere in the EU.

“The Cyprus situation has created new uncertainty in the banking sector. People have started thinking whether the same can happen elsewhere, in Spain, Portugal, Ireland?” he said.

The EU’s Plan A for Cyprus was to lend it €10 billion, but to impose a 7-to-10 percent levy on all Cypriot savers, including Russian expats, who alone stood to lose €2 billion.

It has now been scrapped.

It is unclear what new model might be found.

But the Cypriot finance minister, Michael Sarris, also in Moscow on Thursday, said he is in talks to give Russia shares in Cypriot “banks, natural gas [reserves]” in return for Russian bailout money.

For his part, Barroso told Medvedev that the EU could not have warned Russia even if it wanted to.

“Regarding the conclusions of the last Eurogroup [euro finance ministers, who drew up Plan A], Russia was not informed because the governments of Europe were not informed – let’s be completely open and honest about that issue. There was not a pre-decision before the Eurogroup meeting. The Eurogroup meeting concluded, I think, in the very early hours of Saturday and the decision was the result of a compromise,” he said.

He added: “Don’t believe in this idea of the decline of Europe … The European Union is stronger than it is today fashionable to admit.”

Leaked documents on internal EU talks seen by the Reuters news agency give substance to Russia’s criticism, however.

The notes record remarks by finance officials from euro-using countries during a panicky conference call about Cyprus held on Wednesday.

According to Reuters, a French official said Cyprus’ decision not to take part in the phone-debate is “a big problem … We have never seen this.”

A German official said Cyprus might quit the euro and there is a need to “ring-fence” other countries from contagion.

A European Central Bank official said there is a “very difficult situation” because savers might pull money from the island if banks re-open next week.

Meanwhile, Thomas Wieser, an Austrian-origin EU official who chaired the phone-meeting, described the situation as “foggy.” He added: “The economy is going to tank in Cyprus no matter what.”

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To the above we add that Turkey, its holding onto North Cyprus, and its interest in the gas fields that stretch from Cyprus to Israel and Lebanon, having first development seen by Israel, are part of the larger scope of the Cyprus potential move away from the EU. But, In effect, these other aspects might make the EU stiffen up in a bailing out effort conditioned only on reorganizing some of the Cypriot Banks – letting Russian oligarchs foot part of the bill – without selling to Russia port holdings in the Mediterranean. Seeing a Syria solution that drives out Russia from its port facilities there, may be part of the American interest in the region as well. In short – Cyprus is not Iceland – this because it is geographically located in a very complicated region of the Outer EU. Is it so that an Obama trip could help by forcing a Cyprus-Turkey reconciliation first?

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We just found out that The New York Times is catching up:

Russian Ties Put Cyprus Banking Crisis on East-West Fault Line

By ANDREW HIGGINS, The New York Times, March 24, 2013

With Cyprus’s role as a provider of financial services for Russians, what began as another episode in a familiar narrative has escalated into a drama with geopolitical implications.

 

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Also, we know that Oligarch Abramowich is overexposed in Cyprus banks, is this also the case of Mr. Berezowski who just committed suicide at his home near London? Were there politics involved and this was a Russian in-fight? The coincidence of the timing will create rumors – we say.

Russian Oligarch and Critic of Putin Dead in Britain.

Stefan Wermuth/Reuters

Boris Berezovsky in London in last year. He is said to have committed suicide on Saturday.

By
Published: March 23, 2013

MOSCOW — Boris A. Berezovsky, once the richest and most powerful of the so-called oligarchs who dominated post-Soviet Russia, and a close ally of Boris N. Yeltsin who helped install Vladimir V. Putin as president but later exiled himself to London after a bitter falling out with the Kremlin, died Saturday.

He was 67 and lived near London, where last year he lost one of the largest private lawsuits in history — an epic tug-of-war over more than $5 billion with another Russian oligarch, Roman A. Abramovich, in which legal and other costs were estimated to be about $250 million.

Mr. Berezovsky’s death was first reported in a post on Facebook by his son-in-law Egor Schuppe and was confirmed by Alexander Dobrovinsky, a lawyer who had represented him.

Mr. Dobrovinsky wrote in Russian on his Facebook page: “Just got a call from London. Boris Berezovsky has committed suicide. The man was complex. An act of desperation? Impossible to live poor? A series of blows? I am afraid that no one will know the truth.”

The Thames Valley police in Berkshire, an hour from London, said Saturday that they were investigating the “unexplained” death of a 67-year-old man, apparently Mr. Berezovsky, in Ascot.

The police statement did not name Mr. Berezovsky, but British news reports said an investigation was under way at his home. “Specially trained officers are currently at the scene, including C.B.R.N.-trained officers, who are conducting a number of searches as a precaution,” said a spokeswoman for the Thames Valley police, referring to the force’s chemical, biological, radiological and nuclear team. “This is to enable officers to carry out an investigation into the man’s death. The body of the man is still in the property at this time.”

In London, Mr. Berezovsky had adopted much the same style as an oligarch in Russia, with chauffeurs and bodyguards. But recent news reports said Mr. Berezovsky had begun to sell personal assets, including a yacht and a painting by Andy Warhol, “Red Lenin,” to pay debts related to the lawsuit.

The lawsuit, in which Mr. Berezovsky brought a claim against Mr. Abramovich in a dispute over the sale of shares in Sibneft, an oil company, and other assets, ended in a spectacular defeat.

In her ruling, the judge in the case, Elizabeth Gloster, called Mr. Berezovsky an “unimpressive and inherently unreliable witness” and at times a dishonest one. By contrast, the judge said Mr. Abramovich had been “a truthful, and on the whole reliable, witness.”

Mr. Berezovsky’s legal troubles worsened recently with a claim by his former girlfriend, Elena Gorbunova, that he owed her about $8 million from the sale of a house they owned in Surrey, England. The judge also ordered him to pay more than $53 million of Mr. Abramovich’s fees.

A friend of the tycoon, who spoke on the condition of anonymity because he was not authorized to speak to the press, said Mr. Berezovsky said he had been “extremely depressed” for at least six months since losing his case. “He was a great believer in British justice, and he felt it let him down,” the friend said.

A spokesman for Mr. Putin said Mr. Berezovsky had recently sent a letter asking President Putin for forgiveness and permission to return to Russia. “Some time ago, maybe a couple of months, Berezovsky sent Vladimir Putin a letter, written by himself, in which he admitted that he had made a lot of mistakes,” the spokesman, Dmitri S. Peskov, said on the Russia 24 television channel. “He asked Putin for forgiveness for the errors to be able to return home.”

Mr. Peskov said that he did not know Mr. Putin’s reaction, but that “news of anyone’s death, no matter what kind of person they were, cannot arouse any positive emotions.”

Mr. Berezovsky was a Soviet mathematician who after the fall of Communism went into business and figured out how to skim profits off what was then Russian’s largest state-owned carmaker. Along with spectacular wealth, he accumulated enormous political influence, becoming a close ally of Mr. Yeltsin’s.

With Mr. Yeltsin’s political career fading, Mr. Berezovsky helped engineer the rise of Mr. Putin, an obscure former K.G.B. agent and onetime aide to the mayor of St. Petersburg who became president of Russia in 2000 and last May returned to the presidency for a third term.

After his election, Mr. Putin began a campaign of tax claims against a group of rich and powerful Russians, including Mr. Berezovsky and Mikhail B. Khodorkovsky, an oil tycoon, who remains jailed in Russia.

Mr. Berezovsky fled to London, where he eventually won political asylum and at one point raised tensions by calling for a coup against Mr. Putin.

David E. Hoffman, the author of “The Oligarchs: Wealth and Power in the New Russia,” an exploration of the role of such magnates in the era after the breakup of the Soviet Union, said Mr. Berezovsky stood out for seeking not only wealth but political clout.

“Boris Berezovsky was among that wave of oligarchs who realized that great fortunes were to be made in the massive sell-off of assets in the new Russia,” Mr. Hoffman said by e-mail on Saturday. “While many of his peers also saw the opportunity, Berezovsky was more focused than most on the role that politics would play. He realized the need to co-opt those in power in order to make deals. He did it from the early days with automobiles and later with oil.”

Mr. Berezovsky had an outsize, if hardly always benevolent, role in post-Soviet Russia.

George Soros, a financier and a critic of the Russian oligarchs, had likened them to 19th-century American robber barons. But if that was an apt metaphor, the power and influence of these new tycoons was amplified by the legal and political vacuum left by the collapse of the Soviet Union.

Mr. Berezovsky amassed his fortune at first in automobiles, including a business he formed in 1993 with Aleksandr Voloshin, who would later become Mr. Yeltsin’s chief of staff. But like other oligarchs, Mr. Berezovsky’s interests spread across many sectors of the post-Soviet Russian economy, to oil; media; and Aeroflot, the Russian airline.

He survived an assassination attempt in 1994, a car bombing in which his driver was killed.  

The assassination attempt connected him to a K.G.B. officer, Alexander V. Litvinenko, who was poisoned by the radioactive isotope polonium 210 in London in November 2006.

Mr. Litvinenko, then working for the F.S.B., the domestic successor to the K.G.B., was assigned to investigate the blast, and Mr. Berezovsky became his mentor and later his employer.

Mr. Berezovsky helped Mr. Litvinenko flee Russia in 2000 before he, too, left the country to seek asylum in London.

On the day he was poisoned, Nov. 1, 2006, Mr. Litvinenko went from a meeting with several Russians at a hotel in central London to Mr. Berezovsky’s nearby office. There he met with a Chechen exile, Akhmed Zakayev, another Berezovsky protégé, and the two drove together to adjacent homes financed by Mr. Berezovsky, in North London.

After Mr. Litvinenko’s death, and with his wealth dwindling during his time in London, Mr. Berezovsky slowly withdrew his financial support for Mr. Litvinenko’s widow as she pressed for an inquest into the death, now scheduled to begin in May.

Boris Abramovich Berezovsky was born in Moscow on Jan. 23, 1946, to Abram Berezovsky, a civil engineer who worked in construction, and Anna Gelman, at a time when the Soviet Union was recovering from World War II.

He studied forestry and mathematics at the Moscow Forestry Engineering Institute. He worked as an engineer and researcher until the late 1980s.

In the mid-1990s, Mr. Berezovsky served on Russia’s security council, only to be dismissed from that post by Mr. Yeltsin in 1997.

Mr. Berezovsky and Mr. Putin had been close, and Mr. Berezovsky aided Mr. Putin’s rise to the presidency. But signs came quickly that Mr. Berezovsky had fallen out of favor. In October 2000, just 10 months after Mr. Yeltsin’s resignation, Mr. Berezovsky was ordered to vacate a spacious government country house and to return the government plates on his limousine. He left Russia for Britain that year.

In March 2003, the British authorities arrested Mr. Berezovsky and said they were beginning a process that could lead to his extradition. But he was granted political asylum later that year apparently after the British determined that Russia sought him solely on political grounds.

In 2007, he was convicted of fraud charges by a Russian court in absentia and sentenced to six years in prison, and had potentially faced prosecution in at least 10 other cases.

The sharpest blow to his wealth came from the failed lawsuit against Mr. Abramovich.

On the day last August when the court ruled against him, Mr. Berezovsky attempted an air of nonchalance. “Life is life,” he said, flanked by bodyguards, before driving off in a Mercedes.

Andrew E. Kramer contributed reporting from Moscow, Alan Cowell from Venice, and Ravi Somaiya from New York.

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