ROBERT SIEGEL, HOST:
People with a lot of money in Cypriot banks got more bad news today. They face losses of up to 60 percent after a tough eurozone bailout. Wealthy Russians hold about a quarter of all deposits in Cyprus. And Germany, which provides most of the eurozone's bailout loans, has accused them of money laundering.
Joanna Kakissis reports, that kind of talk isn't going over well with Russians in Cyprus. She sent this story from Limassol, a seaside city known locally as Little Russia.
JOANNA KAKISSIS, BYLINE: Borscht and vareniki are on the menu at Taras Bulba, named after Nicolai Gogol's Ukrainian folk hero. It's a restaurant in Limassol, where more than 30,000 Russians live. That's about a quarter of this city's population. There are also Russian hair salons, supermarkets, schools, even a radio station - Russian Wave 105.6 FM.
Limassol's mayor, Andreas Christou, studied mechanical engineering in Moscow and jokes that his English is rusty.
MAYOR ANDREAS CHRISTOU: My Russian is better.
KAKISSIS: Christou says the Russians came in droves to Limassol after the collapse of the Soviet Union in 1991.
CHRISTOU: They came here because Cyprus had a reputation as a serious and reliable business center. This reputation was well-known.
KAKISSIS: Cyprus offered a low corporate tax rate, stable banks and rule of law. Russians now have deposits about 24 billion euros. That's roughly $30 billion in Cypriot banks.
But the wealthiest Russians don't live in Cyprus and do not deposit most of their money here, says Michalis Papapetrou. He's a Cypriot lawyer with many Russian clients.
MICHALIS PAPAPETROU: Russians and other foreigners, they form Cyprus companies. And through this vehicle, they carry back their money to their countries for investment.
KAKISSIS: Papapetrou says many of those who do have their money here did not expect the eurozone to make the surprise decision to use bank savings to subsidize the bailout.
PAPAPETROU: I have a client here from Russia that has deposit in Bank of Cyprus of 100 million.
KAKISSIS: The Bank of Cyprus has just announced that depositors with more than 100,000 euros could lose 60 percent of their deposits as part of the bailout deal. With such a hit, Papapetrou expects some clients to flee.
PAPAPETROU: Just natural that when they have the opportunity they'll move their money out. Let's hope they do it in a slow manner so that they don't create an additional crisis.
KAKISSIS: The haircut on deposits was demanded by Germany, which provides most eurozone loans. German lawmakers also accused Cyprus of being an offshore tax haven and money laundering center for Russian oligarchs.
But Christou, the Limassol mayor, says that's a smear campaign to drive business out of Cyprus.
CHRISTOU: Somebody wanted to kill the international business in Cyprus, to expel Russians from Cyprus, to invite them at their financial centers.
KAKISSIS: Most of 55,000 Russians living in Cyprus are not billionaires. They're like Anna Pliss, a working mother of two who owns a Russian supermarket in Limassol. She describes her customers.
ANNA PLISS: Some of them are like me, married to Cypriots. Some of them are here with fully Russian families, you know; Russian wives and husbands, kids that go here to schools.
KAKISSIS: Many also work for offshore companies or in financial services, like Maxim Kyzrodev who moved to Cyprus from the Ural Mountains 10 years ago. He's having a drink at The Lighthouse, a beach bar that's a popular hangout for Russians. He directs a financial services company that deals with real estate.
MAXIM KYZRODEV: We investment in stock market but not in Cyprus because there is no economy here. It's very risky.
KAKISSIS: Did you lose anything with what just happened?
KYZRODEV: Me? Not. I had, for that moment 27,000 just in the bank of Cyprus, so I hope it will not touch my pocket.
KAKISSIS: But deals are still being sealed at the garden patio of the five-star Four Seasons hotel in Limassol.
KAKISSIS: Two young Russian men smoke Cuban cigars in the salty ocean breeze. They don't let NPR record them, but one says his name is Sergei. He's a hedge fund manager. He lives in Limassol and calls it paradise. He says he won't move but that he will keep his millions in banks overseas.
For NPR News, I'm Joanna Kakissis in Nicosia, Cyprus.