Rich Russians Hurt By Cyprus Bank Bailout

Cyprus has reached a bailout with the European Union. One of the hardest hit groups in this deal is super wealthy Russians. David Greene talks to professor Alena Ledeneva of University College London about the culture of the ultra rich in Russia, and the role they played in Cyprus' economy.

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DAVID GREENE, HOST:

Banks in Cyprus are still closed and will be until Thursday, that is despite a $13 billion deal with the European Union to bailout the banking system on the island. There is worry about a run on the banks by Cypriots who are still feeling pretty nervous. Now, the events in Cyprus have opened a window on the world of Russia's elite. Many Russians parked money in Cyprus and spent time there.

In today's business bottom line, we learn about the lavish lifestyle many wealthy Russians lead in Cyprus and elsewhere. We reached out to Alena Ledeneva, she's a professor at the University College, London who specializes in informal power and corruption in Russia. As I understand it, I mean, a lot of wealthy Russians are in big cities, like London where you live, New York City has a lot of Russians. I mean, it seems to be a, sort of, unique lifestyle. I mean, what is this world of the rich Russians like?

ALENA LEDENEVA: You could think of it as a kind of way for compensation for the deprivations of the Soviet era. You have the 70 years of the cold war, the Iron Curtain, as they called it, you know, made Russians so isolated that now they are overcompensating by being wealthy, by being better integrated in the outside world. And it's something that will, you know, eventually get normalized, but we are seeing a lot of it because it's like, if you are in power you have to have your own jet and your own yacht. And it's just the residue of the privileges that the Communist Party enjoyed in the Soviet Union.

GREENE: What might strike us as some crazy, over the top parties and spending of money, to many Russians it's a feeling of, you know, after years of not being able to do this, I made some money in business and I have a right to have a little fun.

LEDENEVA: Exactly.

GREENE: You know, you are an academic and unless you make a lot more money than the academics I know, you're not in this class of uber-wealthy Russians. But I wonder, you know, in London, do you rub shoulders with some of these people - and what are the parties like?

LEDENEVA: Well, the parties are great. It's a fascinating world, you know, which could be, probably best described as boys and their toys and girls and their shoes.

GREENE: Fancy clothes and maybe a lot of good parties and good cocktails.

LEDENEVA: Well, absolutely. And, you know, I have to say that Russians are exceptionally sophisticated people. But I also have to say one thing, though, in relation to Cyprus, that this financial crisis, it's really not much on the Russian scale, because if you just look at the Russian recent experiences since the 1990s, for example, in '91, all Soviet deposits in the bank were devalued.

In 1993, the ruble was devalued. In 1994, 1996, all but 200 banks just disappeared. In the financial crisis '98, 1,000 and a half banks were left insolvent.

GREENE: Wow. So the situation in Cyprus does not seem bad by comparison.

LEDENEVA: Well, exactly. If you think about it, you know, this is a kind of troubles that Russians have endured. And when you say rich Russians, wealthy Russians, they're not really someone who didn't work and just landed with this fortune, they - they're all survivors.

GREENE: We've been speaking to Alena Ledeneva. She's a professor of politics and society at University College London. Professor, thanks so much for joining us.

LEDENEVA: Thank you very much.

GREENE: Her latest book is called "Can Russia Modernize: Systema Power Networks and Informal Governance."

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