Thursday

23rd Mar 2017

Cyprus to get 'no strings attached' Russian bail-out

Eurozone member Cyprus is set to join Greece, Ireland and Portugal by seeking external aid to prop up its finances. But unlike the EU and IMF bail-out packages, its loan is to come from Russia with "no strings attached".

Russian finance minister Alexei Kudrin in a telephone conference with press on Wednesday (14 September) confirmed that Moscow is at an advanced stage in negotiating the rescue package with Nicosia.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"Italy has not approached us. Eurozone countries have not approached us in general ... At the moment, we are holding talks only with Cyprus. We have good progress [in the] talks. They will conclude within one month," he said.

Cypriot newspaper Phileleftheros earlier reported that Russia will bung Cyprus a €2.5 billion loan at an annual interest rate of just 4.5 percent, 10 percent below the market rate. A €1 billion tranche is to be paid in December and two other payments are to be made by March 2012.

Speaking in the Financial Times on Wednesday, Cyprus finance minister Kikis Kazamias said the money will be used to plug the country's budget deficit and to help re-finance maturing debt, €1 billion of which is up for repayment in early 2012.

He added that the deal is "a friendly agreement with no strings attached", in contrast to the onerous austerity and financial sector reform measures demanded by the EU and IMF from Cyprus' fellow eurozone bail-out states.

One possible motive for Russia's generosity is the prospect of an EU and IMF-led overhaul of the country's offshore banking sector, said by analysts to be a haven for money laundering.

"US and European intelligence and law enforcement officials say Cyprus remains a haven for shadowy enterprises ranging from Islamic terrorists to narco-gangsters, as well as for Russian and other citizens of the former Soviet Union seeking the perfect destination to park, clean and re-export billions in stolen cash," Czech investigative journalist Jiri Kominek wrote in a 2009 report published by the Jamestown Foundation, a US think-tank.

For their part, financial analysts have said the quick-fix Russian loan will not help put the country back on a sound financial footing.

"If the government does not take the necessary measures as promised, this lending will lead to greater problems in the medium term as the government deficit is structural and rating agencies will continue to downgrade the country", the Piraeus Bank's Cyprus-based fund manager Marios Demetriades told Bloomberg.

Cyprus government resigns amid economic woes

Cypriot President Demetris Christofias on Thursday dissolved his cabinet amid growing public anger over the handling of Iran-bound ammunition that exploded earlier this month and wiped out the country's main energy plant, triggering market fears that the island nation may be the next in line for a eurozone bailout.

Cyprus-Turkey gas dispute escalates

Turkish vessel the Piri Reis has set sail to drill for gas in waters claimed by EU member Cyprus amid talk of a potential new military confrontation after 35 years of peace.

Cyprus bail-out 'not excluded'

Cypriot officials have said their country may be the fourth eurozone state in line for a bail-out due to exposure to Greece.

Stolen Russian billions ended up in EU states

Illicit money flowing out of Russia ended up in almost every single EU state, an investigation has found, posing questions on the integrity of Europe’s banking systems.

News in Brief

  1. British police make first arrests in London terror probe
  2. EU commission has received Facebook reply on WhatsApp
  3. Rome expects thousands of protesters at summit
  4. Dijsselbloem says his comments had 'Dutch directness'
  5. Ukraine spy agency bars Russian Eurovision singer
  6. Turkish president Erdogan threatens Europeans
  7. Russia invites EU diplomats to occupied Crimea
  8. UK parliament in lockdown after reported attack

Stakeholders' Highlights

  1. EJCExpresses Concern That Extremists Still Have the Ability and Motivation to Murder in Europe
  2. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  3. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  4. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  5. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  6. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  7. Party of European SocialistsWe Must Renew Europe for All Europeans
  8. MEP Tomáš ZdechovskýThe European Commission Has Failed in Its Fight Against Food Waste
  9. ILGA-EuropeEP Recognises Discrimination Faced by Trans & Intersex People
  10. Nordic Council of Ministers25 Nordic Bioeconomy Cases for Sustainable Change
  11. Malta EU 2017Consumer Protection Laws to Be Strengthened by EU-Wide Cooperation
  12. European Free AllianceSupporting Artur Mas: Democracy and Freedom Cannot Be Convicted

Latest News

  1. Ending the migrant deal with Turkey may save the EU
  2. Poland unlikely to face EU discipline on rule of law
  3. Rutte courted Wilders' voters, now he must deliver
  4. Barnier to UK: trade talks will come after settling accounts
  5. EU declaration to voice unity in troubled times
  6. Terror attack shuts down UK parliament
  7. Catalonia and Scotland at core of Europe's geopolitical conundrum
  8. La présidentielle française sous cyber-alerte maximale