Russia wants Cyprus loan deal and swift reactivation of healthy banks

Mild reaction may calm fears in Brussels

Russian prime minister Dmitry Medvedev  chairing a meeting with his deputies at the Gorki state residence outside Moscow yesterday. Photograph: Ekaterina Shtukina/Reuters

Russian prime minister Dmitry Medvedev chairing a meeting with his deputies at the Gorki state residence outside Moscow yesterday. Photograph: Ekaterina Shtukina/Reuters

Tue, Mar 26, 2013, 06:09


Moscow has agreed to consider easing the terms of a €2.5 billion loan to struggling Cyprus, while also demanding the swift return to full activity of healthy banks on the island that are flush with Russian cash.

“Considering the decisions taken by the eurogroup, President Vladimir Putin deems it possible to back efforts by the Cypriot president, as well as the European Commission, aimed at overcoming the crisis in the island nation’s economy and system of finance and banking,” said Kremlin spokesman Dmitry Peskov.

Mr Putin called the original EU bailout plan for Cyprus, and the tax on depositors in Cypriot banks that it entailed, “unfair, unprofessional and dangerous”.

Cypriot finance minister Michael Sarris visited Moscow hoping to secure support for a banking system that contains tens of billions of euro in Russian money, but left empty handed, prompting fears that Moscow would react badly to the bailout plan agreed late on Sunday night.


Mild initial response
The mild initial public response of Mr Putin and other top officials will to some extent have calmed those fears in Brussels and Nicosia.

“We are watching how the situation develops. We are not indifferent to the decisions that are taken,” said Russian finance minister Anton Siluanov.

He said Cyprus wanted Russia to extend the repayment period of the €2.5 billion loan and to reduce its interest rate, changes equivalent to “a 10 per cent reduction” in the cost of the loan.

“That’s not bad support for the Cypriot side,” Mr Siluanov said. “I think that once the Cypriot parliament has voted [on the EU bailout package], talks between Russia and Cyprus can resume.”

Russian prime minister Dmitry Medvedev was once more scathing about the bailout plan, saying of the EU that “they are continuing to plunder the loot” in Cyprus.


Russian banks
Russian deputy prime minister Igor Shuvalov said the Cypriot crisis should make people realise that Russia’s banks were relatively safe and help them attract more depositors.

He also urged the EU and Cyprus to allow healthy banks on the island to resume normal operations as quickly as possible.