The evolution of Russian holiday mobility

Recently Ms Loftus has seen more requests like the last one – clients with, as she puts it, “jurisdictional issues”. For a small but growing number of elite Russians, travel opportunities are increasingly limited. The trend was epitomised by the US Magnitsky act, which late last year imposed a US visa blacklist and asset freezes on roughly 60 Russians suspected of human rights violations. Its open-ended wording leaves open the possibility that the list of names will lengthen. The EU looks set to eventually pass similar legislation.

Meanwhile, the uncertain fate of Cyprus, once the favourite playground of Russia’s wealthy for its unbeatable combination of sea, sand and flexible approach to financial services regulation, may yet strike another holiday destination off the list.

In Soviet times, only the elite could travel. Today, it is the reverse: almost anyone in Russia can afford a week or two in Turkey or Egypt, but in some cases the foreign holiday dreams of the rich and powerful have been clipped, leaving them with few options.


Then, there was the mysterious caller who asked for “a holiday in a non-Interpol country” on behalf of his boss, who he would not name.

I wonder how good a trip that could be?  (I very much enjoyed Taiwan, but have never visited Kiribati.)  The full FT story is here.


I notice that travel is becoming more restricted even for the masses--in SE Asian countries you must register every X months and then leave the country for a brief spell every Y years, even if married to a local woman. Also moving money is being hampered, even for small amounts, by money-laundering laws. The pushback to globalization and the recession IMO. Still, it's more fun IMO living outside the USA.

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Well, not really exactly Russian money on holiday, but it looks like this is what will happen in Cyprus to Laiki -

'Der überlebensfähige Teil inklusive der Guthaben unter 100.000 Euro wird auf den Marktführer, die Bank von Zypern, übertragen. Der Rest wird in eine Bad Bank ausgelagert. Alle Gläubiger, Anteilseigner und Großkunden von Laiki verlieren ihre Forderungen ersatzlos - insgesamt geschätzte 4,2 Milliarden Euro.'

'The parts {of Laiki] that can be rescued, including deposits under 100,000 euro, will be transferred to the largest bank, the Bank of Cyprus. The rest will be put into a bad bank. All creditors [depositors is probably more descriptive in this specific case], owners, and large customers of Laiki lose their claims [well, 'lose their money' is better, but 'Forderungen' has multiple meanings, and using 'deposits/property' is simply stretching the term just a bit too far] without any chance of recovery - an estimated total of 4.2 billion euros.'

Obviously, in the eyes of the EU, Cyprus was not too big to fail - and a very public show was made of the process, before 4.2 billion euros of partially laundered money disappears.

On German radio news, at least, the voices of German politicians promising that they can approve of this deal are quite up front about shutting down Cyprus as a banking center offering certain services.

After all, 4.2 billion in losses is just peanuts.

I really need to read calculated risk before doing something lightweight like commenting here.

So, from the Euro Group Statement, the details found in the annex (it is in English, but some translation is required for understanding - for example, the 'resolved' and 'full contribution' essentially mean 'utterly wiped out') -

'Following the presentation by the Cyprus authorities of their policy plans, which were broadly welcomed by the Eurogroup, the following was agreed:

1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.

2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.

3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework, after having heard the Boards of Directors of BoC and Laiki. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.

4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.

5. BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.

6. The conversion will be such that a capital ratio of 9 % is secured by the end of the programme.

7. All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.

8. The programme money (up to 10bn Euros) will not be used to recapitalise Laiki and Bank of Cyprus.

The Eurogroup is convinced that this solution is the best way forward for ensuring the overall viability and stability of the Cyprus financial system and its capability to finance the Cyprus economy.'

And in the statement itself, do note this paragraph -

'The Eurogroup welcomes the Terms of Reference for an independent evaluation of the implementation of the anti-money laundering framework in Cypriot financial institutions, involving Moneyval alongside a private international audit firm, and is reassured that the launch of the audit is imminent. In the event of problems in the implementation of the framework, problems will be corrected as part of the programme conditionality.'

In other words, the EU wants to dismantle those special Cypriot banking services, and continues to hold a club over Nicosia's head until they are dismantled to the EU's satisfaction.

Does anyone else thoroughly enjoy the thought of some arm of the EU approving of audits? Ah the irony!

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Non-Interpol countries? I'd have sent him to North Korea.

Seriously. Plenty of Chinese tourists go these days just for the nostalgia. I can see a Russian with a long enough memory getting a kick out of the experience---along with just possibly a chance to network, if he's important enough.

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Steal enough and you'll be welcome:

Boris Berezovsky -- England
Robert Maxwell -- England
Marc Rich -- Switzerland, then America
Armand Hammer -- America

Maxwell was welcomed in Britain before he stole much. He came as a refugee from Nazi Germany with a good enough record of service in the Armed Forces. The only other people to welcome him were the Israelis who gave him a state funeral when they knew he was a thief.

Armand Hammer was born in the US wasn't he? What is more, he didn't steal. Lenin gave him stuff in return for being his man in America. Seems fair.

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A worrying trend, to be sure. Unfortunately it shows little sign of abating.

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Actually, Nan Madol in the Federated States of Micronesia is on my bucket list. And I'm sure a Russian plutocrat could purchase a Yapese Rai stone as a souvenir.

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