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Cyprus Update

I have been warning readers to avoid the Middle East for the best part of a decade. I have added that I consider Cyprus to be in that bloc. Even if it isn't politically speaking, it does sit right on the edge. The same is true of Turkey. So far the situation in Turkey has been fine, proving me wrong. However, I still have not changed my mind on the country. I have always said that if you consider investing there, look first and foremost at Istambul.

I still dont like the coastal zone of Turkey. It is an area close to petrol and natural gas deposits, and they are shared with Israel. This area will continue to be a disputed zone, and I dont want to invest next door to a fighting zone.

I also wrote an article on Cyprus as a home for Russian hot money. That was written five or six years ago after a visit to Romania, and a peek at how financial deals are done in that part of the world.

I updated my views on Cyprus at the beginning of this year. For the record here is part of what I said.

"I have been involved in several East European property deals. They have all been brokered from Cyprus. Note that Greece is financially up the creek. Most Greek financial deals are brokered in Cyprus. The country has become a haven for laundered money, and it is a haven for Russian hot money. Factor all that into the equation.

Since the country has become so useful to Russian oligarchs the economy is resting on a Russian based mafia. Factor that into the equation.

Cyprus is yet another of those countries that was allowed in to the European club for political reasons, not economic ones, or any sound reasons at all. Factor that into the equation.

The financial system is shaky in the extreme. I would avoid the country like the plague."

Once again, those of you who read the Unique Property Blogs are given fair warning of what to expect. The current mess was there for all to see. It has been building for the best part of a decade, maybe longer.

The EC is keen to support EC systems, but Cyprus rests upon Russian financial deals, and Russian deposits, and a whole lot of shaky deals. There would be uproar in Germany and the Northern regions if EC taxpayers were asked to support Russian mafia funds, hence the demand that half the bailout needed is financed from those funds.

The trouble is, if the Cypriot financial system is allowed to collapse then the country as a financial centre is finished, and the country faces ruin. A taxing of deposits in excess of €100,000 would no doubt be the preferred option, putting the country's image as a safe financial centre in grave doubt, but it would at least leave room for survival as opposed to wipe-out. Small investors will be protected, the larger ones will get a haircut. Prepare for another fudge to be announced on monday, and we can all give a sigh of relief until the next cataclysm. I dont think that will be long in coming.

Or will Russia get a nice little political foothold in the Med? Wouldn't that be fun?

Have a good week


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