Moscow-sur-Méditerranée: this is the nickname of Cyprus, where coconut trees rub shoulders with Cyrillic signs, Russian shops, a church, and even a Russian radio… In the financial capital, nearly one in five inhabitants is from Russian origin. And everyone has their reasons for being there: “the weather is good, the sea is warm,” suggests a Russian retiree. For another, “thehe banking system is advantageous.“A Russian presence that could become embarrassing for this European Union state, at a time of war in Ukraine.
Limassol, the second city of Cyprus, is a permanent building site. Advertisements boast of future luxury residences under construction. Marat Khabiev, a Russian real estate agent who works for wealthy clients, shows us around a high-rise building that has just been built. “We start at 12,000 euros per square meter, and it goes up to 17,000 euros.” At this price, everything must be impeccable, right down to the tiling in the bathroom: “a type of stone even more expensive than marble!“
The majority of its customers are Russians, there would be several billionaires among them. And since the invasion of Ukraine, demand has exploded again. “Our customers obviously think that the situation in Russia will deteriorate,” says Marat Khabiev. “They want to protect their families, but also their wealth and assets. We receive up to four new requests every day, it’s unheard of!“
Marat Khabiev claims to carry out extensive checks to ensure that his clients are not targeted by European Union sanctions. But Cyprus has the reputation of having closed its eyes for a long time.
It is by far the country in which the Russians hold the most assets in the world: 190 billion euros. That is 70 times more than in France. Among these investors, rich oligarchs, persona non grata in Europe… Like Arkadi Rotenberg: a former judoka, very close to Vladimir Putin, who became a billionaire thanks to his relations with the master of the Kremlin. We owe him the bridge connecting Russia to Crimea, annexed by Moscow in 2014.
Arkadi Rotenberg is linked to a galaxy of Cypriot companies. Many of them surprisingly share the same address. The head office of all these companies leads us to a pretty house, in a Cypriot village of 2000 inhabitants. The old man who opens the door explains: “my daughter’s law firm uses my address for mail“.
A local law firm, which refused to answer us, would be mandated to manage a myriad of companies linked to the Russian oligarch: shell companies, a legal practice in Cyprus.
“It’s a way to hide fortunes, and to hide the identity of the beneficiaries. In fact, these people do not send their money to Cyprus to invest it in real companies that make something. They send their money in Cyprus to hide it.”
Makarios Drousiotis, investigative journalistto France 2
A way, perhaps, to try to escape the sanctions. As The New York Times revealed, Arkady Rotenberg was thus able to continue investing in some Cypriot companies even after he was blacklisted by the European Union in 2014.
Discreet financial services, but also a European nationality: this is what Cyprus has long held out to investors. Until recently, it was enough to buy an opulent villa to obtain a Cypriot passport. At least a thousand Russians, including nine oligarchs, would have benefited from these golden passports.
“By buying a property worth at least two million euros, even criminals were able to obtain Cypriot, and therefore European nationality,” summarizes activist and political analyst Andromachi Sophocleous. “An official commission of inquiry found that 53% of golden passports that were issued should never have been issued.“
Under pressure from Europe, the Cypriot government ended this golden passport program at the end of 2020. Cyprus is more than ever asked not to turn a blind eye to the origin of Russian investments.
Foreign direct investment, Central Bank of Russia, September 2021
“War in Ukraine: malaise in Cyprus, land of asylum for Russian oligarchs“, Le Monde, March 25, 2022
“Oligarchs Got Rich Despite Sanctions. Will This Time Be Different?“, New York Times, 16 March 2022 (in English)
“Cyprus is losing its Russians — and confronting existential questions about its economy“, Politico, 8 March 2022 (in English)
“Moscow on the Med: Cyprus and its Russians“, Financial Times, May 15, 2020
“The Cyprus Papers“, Al Jazeera Investigation, 2020 (in English)
Non-exhaustive list.