Tuesday came out to be an odd day in Europe. The Parliament met and convened to vote over the EU offer of cash to settle up the bank crisis. This would have involved taxing every single bank account in the country. The vote of the Parliament? Well....thirty-six votes against the offer, no votes for it, and nineteen absentee members.
The next action? The finance minister of Cyprus is in Moscow having talks. There is a deal on the table where Russia would float an enormous loan to Cyprus, with the hook being that they'd get all natural gas and oil rights around the island. Something of value? If values hold up and fracking continues on.....it might actually be worth the deal.
In the business sector....the term "trojan donkey" has been brought up. The relationship here is that Cyprus was this odd cousin of Europe and the Russians found a weak system to walk in and utilize to move money around. In a sense, Cyprus has developed itself over the last decade as a Russian billionaire holding tank. No one talks much over taxes or how money arrives....nor do they discuss how it leaves the island.
I was sitting there today and reading commentary that one Russian bank (Alfa).....simply guessed that around seventy billion dollars might actually be sitting in Cyprus currently via the Russians....which is way over the generally accepted number of thirty billion dollars.
Wednesday events? I'm guessing another round of deposit tax will be discussed. The finance minister will likely fly back by late Wednesday and offer up advice on what came out of the Russian talks. The Thursday opening of Cyprus banks? I wouldn't bet on it....there's likely to be at least one more day tossed onto the closed period.
You have to imagine this....you've got this goose who lays golden eggs sitting on your doorstep the last ten to twenty years. I doubt if any of the Parliament members can imagine the Russians all picking up and leaving the country entirely. They've gotten use to the whole Russians-in-your-backyard thing. Some have grown up and regularly dine with their business partners from the north. None of them had ever imagined that the EU would just dump them there with no escape from a serious mess.
Presently, my humble bet is on the Russians sensing more to gain with oil and natural gas rights.....and the Cyprus government simply giving up on any ownership forever. It's the only answer that makes the bulk of Cyprus residents happy.
Oh, and those Turks living on the north side of the island and unaffected by all of this? They haven't really said much. And I doubt that they'd readily accept the Russians anywhere near their oil or natural gas deposits. It's best not to bring up future problems.
As for the German and EU business markets? Tuesday was a mixed day...mostly on the negative but not terribly bad. The best description is people sitting on the sidelines and waiting for the smoke to clear. The Euro is simply stalled and waiting.
The best we can all say? The soap opera simply continues on. As bad off as Greece looked....Cyprus looks twice that bad, but might actually pull off some kind of solution that has nothing to do with the EU.