Moscow has been eerily silent since the Troika (International Monetary Fund, European Commission, and European Central Bank) announced its revised plan to suture Cyprus last Monday. No talk of unprofessionalism. No references to Bolsheviks, expropriations, or confiscations. No histrionics. In an about face, Russia is cooperating with the new deal by “backstopping” the Troika plan with a promise to restructure its $3.2 billion loan to Cyprus.
Why the sudden change of heart? What made the Troika’s second deal more palatable to Moscow than the first? In a blog post last week, I argued that the crisis in Cyprus put Putin in a bind. He could step in and save Russian elites from massive losses, i.e. act in their class interests. Or keeping with his nationalist de-offshorization agenda, he could teach those elites a lesson for stashing their money abroad by letting them drown. Interestingly, the Troika’s new deal allowed Putin to have his cake and eat it too. Namely, the deal saved Russian state companies and some very rich Russians from losing lots of cash at the same time it gave Putin the satisfaction of watching some mid-level Russian businesses and individuals to get flushed down the toilet. The big Russian assets are saved, the weak are punished, and Cyprus gets neutralized as an offshore port and tax haven for Russian capital.
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