"We know we will be slaughtered anyway.”

Limassol fears for life after Russians

By Courtney Weaver 
For more than a decade, the Cypriot city of Limassol has marketed itself as a haven not just for Russian money but for Russians. Fur shops line the palm-fringed streets and an entire expat community has sprung up catering to Russian tourists and residents with special beauty salons, tour agencies and restaurants.

Yet during the past week the Mediterranean island’s beachfront party resort of some 100,000 residents has had the feel of a ghost town.

While a collective sigh of relief echoed across Cyprus on Thursday as calm prevailed when the banks reopened after being closed for almost two weeks as the island’s bailout was finalised, for Limassol the future is less certain than ever.

The beachfront hotels favoured by Russians saw an influx of guests last week but restaurants and shops in the city centre were largely deserted, a rare sight even for the off-season, residents say.

With four weeks to go until tourists typically begin descending on the city en masse, locals are starting to wonder if Russians will continue to view Limassol as a second home or holiday destination if they have given up on it as a financial centre.

At the post office across the street from Limassol’s Four Seasons hotel, Mikhalis Gavrialidis was jovial with the few customers who came in, jokingly charging foreigners a bailout worth €5.8bn in exchange for the price of postage. However, when pressed on the future of Limassol, he turned grave.

“Limassol will possibly be affected the worst in Cyprus – because of the Russians,” he said. “It’s not just the billionaires who are based in Limassol, there are normal businessmen. I wouldn’t be surprised if they took their money and disappeared. Wouldn’t you do the same?”

Limassol has not seen protests like the ones that broke out briefly in Nicosia, because the people are resigned to their fate, Mr Gavrialidis added.

“Things are calm because we are civilised. It’s not in our hands. We know we will be slaughtered anyway.”

While some Russians initially worried that locals would turn on them and question why the island’s foreign billionaires or the Kremlin had not paid a larger share of the bailout, most locals’ anger has been directed towards the EU and Germany for refusing to pay the full €15.8bn-bailout bill, when they had happily thrown billions of dollars at Greece, and for the manner of the rescue itself.

In a poll this month, one Cypriot television station asked viewers whether the country should become further integrated into the EU or lean towards Russia instead. Over two-thirds of respondents chose the latter.

“People hate [Angela] Merkel,” said Paris Antoniou, who was tending an empty bar in Limassol’s old town one recent evening, referring to the German chancellor. Few blamed the country’s big foreign depositors, he said.

“The Russians have the right to react the way they have. You can’t have your millions invested in a bank and then simply taken away from you,” said Mr Antoniou. “It doesn’t matter how they made their money, money laundering or whatever. It is the Russians who are keeping our economy going.”

In Moscow, Kremlin anger at the proposed haircuts has simmered since Sunday when the EU and Cyprus reached a new agreement that places the burden of the bailout on the biggest depositors of just two lenders, Laiki Bank and Bank of Cyprus, instead of all Cypriot depositors.

Under the new deal, Russian state lenders Sberbank and VTB say they now expect losses to be minimal. However, in Limassol, bankers warn there will be big losses for the Russian business community, a huge swath of which banked at Laiki’s Russian-speaking flagship Limassol branch.

On the beach of the five-star Le Meridien hotel, Yuri Shapiro, a Russian businessman dressed in paisley swimming briefs and Dolce & Gabbana flip flops, said he had gone to Laiki Bank on Thursday only to learn that his seven-figure deposit had been reduced to €94,000.

The missing amount has been taken to recapitalise Bank of Cyprus, which absorbed Laiki last week, and could be cut by up to 80 per cent, with no guarantee that the depositor will ever see the remainder.

The businessman said that while his own financial stability would be preserved, he had less hope for that of Limassol or Cyprus.

Currently the owner of both a publication house and Russian karaoke bar in Limassol, Mr Shapiro said he had now cancelled plans to open a second restaurant.

“The financial sector has been destroyed completely,” Mr Shapiro said, noting this would ripple across the rest of the island’s economy. Until now, financial services have accounted for 50 per cent of Cyprus’s gross domestic product.