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Borscht and vareniki are on the menu at Taras Bulba, a restaurant named after Nicolai Gogol’s Ukrainian folk hero. It’s one of many Russian-owned businesses in Limassol, Cyprus.
Approximately 30,000 Russians live in this city — about a quarter of the population. There are Russian hair salons, supermarkets, schools and even a radio station.
Limassol’s mayor, Andreas Christou, studied mechanical engineering in Moscow and speaks Russian fluently. He says Russians came to the city in droves after the collapse of the Soviet Union in 1991.
“They came here because Cyprus had a reputation as a serious and reliable business center,” Christou says. “This reputation was well-known.”
Cyprus offered a low corporate tax rate, stable banks and rule of law. Today, Russians hold about one-quarter of all deposits in Cypriot banks — approximately 24 billion euros — roughly $30 billion.
But Michalis Papapetrou, a Cypriot lawyer with many Russian clients, says the wealthiest Russians don’t live in Cyprus and do not deposit most of their money here.
“Russians and other foreigners, they form Cyprus companies and through this vehicle, they carry back their money to their countries for investment,” Papapetrou says.
Many of those who do have their money here, Papapetrou says, did not expect the eurozone to make the surprise decision to use bank savings to subsidize the bailout.
“I have a client here from Russia that has a deposit in the Bank of Cyprus of 100 million,” he says.
The bank is the country’s largest lender and just announced that depositors with more than 100,000 euros could lose 60 percent of their deposits as part of the bailout deal. With such a hit to their wealth, Papapetrou expects some clients to flee.
“It’s just natural that when they have the opportunity, they’ll move their money out,” he says. “Let’s hope they do it in a slow manner, so they don’t create an additional crisis.”
Germany, which provides most eurozone loans, demanded the haircut on deposits. German lawmakers accused Cyprus of being an offshore tax haven and a money laundering center for Russian oligarchs.
But the Limassol mayor, Andreas Christou, says that’s a smear campaign to drive business out of Cyprus.
“Somebody wanted to kill the international business in Cyprus, to expel Russians from Cyprus, to invite them at their financial centers,” Christou says.
Most of 55,000 Russians living in Cyprus are not billionaires. They’re like Anna Pliss Konstantinou, a working mother of two who owns a Russian supermarket in Limassol.
Some of her customers, she says, “are like me, married to Cypriots. Some of them are here with a fully Russian families, Russian husbands, wives, kids that go here to schools.”
Many work for offshore companies or in financial services, like Natalia Skobleniuk, 36, who works for an online trading firm.
“I’m just a regular person working a regular job,” she says. “I’ve never met an oligarch from my country. But now, because of them, people all over the world know where Cyprus is on a map.”
She’s having a drink at The Lighthouse, a popular hangout in Limassol for Russians. Joining her is her friend Maxim Kyzrodev, 39, who moved from the Ural Mountains 10 years ago. He directs a financial services company that deals with real estate.
“We [invest] in the stock market, but not in Cyprus. There is no economy here. It’s very risky,” he says, adding that he has about 27,000 Euros in the Bank of Cyprus. “I hope [the deposits haircut] will not touch my pocket,” he adds.
The banking crisis has hurt some businesses frequented by Russians, like the Mediterranean restaurant where Lili Cepraga, an immigrant from Moldova, works.
“Business is very down. Two weeks we don’t have even one guest,” she says. “We don’t have salary. We don’t have nothing. Actually, in this moment, I don’t have even one cent in my pocket.”
Even so, big-money deals are still being sealed at the garden patio of the city’s five-star Four Seasons hotel. Two young Russian men smoking Cuban cigars on the patio won’t let NPR record them, but one, who says his name is Sergei, is a hedge fund manager.
Sergei lives in Limassol and calls it paradise. And while he says he won’t move, he does say he will keep his millions in banks overseas.