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Proposed solution to Cyprus debt problem can trigger new crises – Dmitry Medvedev

March 20, 2013, 21:45 UTC+3

Medvedev stressed that if the ban on bank operations, including with Russian participation, is not lifted, “this will be fraught with very serious losses.”

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GORKI, March 20 (Itar-Tass) – Prime Minister Dmitry Medvedev warned that the financial situation in Cyprus can trigger a series of new crises, can inflict heavy losses on many banks and can lead to termination of the Russian-Cypriot agreement on the avoidance of double taxation.

“There is no doubt that this situation [regarding the Cyprus debt crisis] worries everyone in the European Union and can trigger a new series of local financial crises,” he said in an interview with European media on Wednesday, March 20.

In his opinion, the Cyprus crisis can have many consequences. One may affect the Russian-Cypriot agreement on the avoidance of double taxation. “I do not know whether we need such an agreement in this situation. Its termination can become an issue to consider,” he said.

“We support efforts aimed at bringing order to the financial sector, revitalising banks and opening up information on account holders and beneficiaries. All these are normal things to do, but they should not cause the banking system to collapse,” the prime minister said.

In his opinion, the Cypriot banking system “is in a very difficult situation. It has basically been brought to a halt, let alone the fact that the financial situation in this EU member country is on the verge of default,” he said.

“We believe that they should have discussed such negotiations and decisions with different interested parties rather than hide behind phrases that it is inappropriate for Cyprus to discuss this with someone else,” Medvedev said. “Then let them make all decisions only within the EU. But I am not sure that this is so good,” he added.

He compared proposals to seize a part of bank deposits with the seizure of property by Soviet power. “The proposed measure is obviously expropriating and confiscating, and absolutely unprecedented in nature,” Medvedev said. “I cannot compare it with anything else but the decisions that were made at some point by Soviet power which handled people’s savings quite unceremoniously.”

“We live in the 21st century in a global economy and insist that the right of ownership and all key provisions regarding bank regulations should be complied with,” he said.

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