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Home News Cyprus sees ‘nothing wrong’ in two bailouts: Russia, EU

Cyprus sees ‘nothing wrong’ in two bailouts: Russia, EU

Published on 05/07/2012

Troubled Cyprus sees "nothing wrong" in taking two bailouts to shore up its banks, one from Russia and one likely to come with tougher EU and IMF terms, Cypriot President Demetris Christofias said on Thursday.

“Yes, we’ve asked Russia and the EU at the same time,” said the European Union’s sole Communist leader, who this week took on the prestigious six-month EU rotating presidency just as the tiny island state embarrassingly sought financial rescue.

“I don’t understand why that’s wrong for a country that has a good and traditional relationship with a third country that is not a member of the EU,” he added. “Russia is not the Soviet Union of yesterday.”

Cyprus is “still awaiting” Russia’s answer, he said, adding: “We expect a positive reply”.

He also reiterated that a loan from Moscow was likely to come with far more favourable conditions than rescues agreed by the EU and the International Monetary Fund for others, which come assorted with demands for economic reform.

“Perhaps the EU terms will be harsher than the Russian republic,” Christofias told a news conference in the Cypriot capital.

But he denied reports that his government might eventually decide to reject an EU-IMF bailout should the terms be too harsh and Moscow be ready to help.

There’s “no such issue”, he said. “We can combine both because we need money to invest in development; we need money to recapitalise our banks.”

“Both can be combined,” he added.

Cyprus has not said how much it needs, in particular to shore up banks badly exposed to bad debts from neighbouring Greece. Local media speculate it could need around 10 billion euros ($12.5 billion).

Much-feared troika experts from the European Commission, the European Central Bank and the IMF arrived in Cyprus on Tuesday for a mission ending Friday to assess the country’s needs.

Known to many as “the men in black” after imposing tough reforms on Greece, Ireland and Portugal in exchange for bailouts, they will return next week, a diplomatic source said.

On June 25, after Spain too called for help for its distressed banks last month, Cyprus became the fifth of the 17 countries sharing the euro to seek a rescue.

Christofias, a Soviet-educated Russian-speaking leader who describes himself as a longtime friend of Moscow, last year secured a low-interest 2.5-billion-euro loan to cover refinancing needs for 2012.

Many Russian banks and businessmen keep funds in Cypriot banks and tens of thousands of Russians have set up home on the sun-drenched island.

He denied “as fairy-tales” questions about whether Russian arms traffickers were transiting weapons through Cyprus.

“The Russians as good friends take care of Cyprus,” he said. But there was “no trace of truth that Russians are transferring weapons through Cyprus.”