Russia to contribute to Cypriot bailout
Russia yesterday indicated it may contribute to a financial bailout of Cyprus, amid mounting disagreement between EU member states about how to handle the Mediterranean country’s debt pile.
Russian prime minister Dmitry Medvedev said that Russia could provide support under certain conditions, most likely in the form of an extension to a five-year €2.5 billion loan Moscow granted to Cyprus in 2011.
Any Russian involvement would require Europe to contribute a larger proportion, Moscow indicated.
Irish Government sources played down the possible impact the situation in Cyprus could have on Ireland, noting that Ireland’s bond yields had not been affected by any developments there.
Cyprus requested a bailout from the European Union and the IMF last June, after its banks were hit by write-downs on its holdings of Greek debt. But the disbursement of funds has been delayed amid differing views from the IMF and the European Union about relief for Cyprus’ debt. Germany has also raised concerns about money-laundering in the island which has close political ties to Russia. Earlier this month euro zone finance ministers delayed any decision on a bailout programme for Cyprus until the second half of March after general elections take place, amid growing frustrations with the current Cypriot government’s willingness to implement changes.
These include demands from Europe that Cyprus embarks on a privatisation programme which is being resisted by Demetris Christofias, Cyprus’s communist president.
There are also differing views about how far Europe should support a Cypriot bailout. Unlike the situation in Greece, some member states believe that Cyprus does not pose a systematic threat to the euro zone.
Yesterday the German finance ministry said that Cyprus could only access international aid if it threatens the euro area’s stability.
This is in contrast to comments from , in contrast to comments from European Central Bank board member Jörg Asmussen at the weekend who said that “disorderly developments” in Cyprus could harm the progress made in Europe last year.