Friday

17th Sep 2021

Cyprus expects EU bailout deal in next 10 days

  • Cyprus ruins - will EU taxpayers' money be used to make sure Russian money-launderers do not lose their cash? (Photo: jnocca93)

With Greece (twice), Ireland , Portugal and Spain (its banks) already on the list, Cyprus expects to clinch an EU bailout of up to €15 billion next week.

Negotiations on details of the rescue start in Nicosia on Friday (9 November).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

A "troika" of international lenders - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), led by commission official Maarten Verway - landed in the Cypriot capital on Thursday.

A Nicosia-based Cypriot source told EUobserver talks are expected to wrap up by Monday at the earliest or by the end of next week at the latest.

He said the big question is whether or not to split the bailout - likely to be in the range of €8 billion to €13 billion, with an absolute maximum of €15 billion - into two parts.

He said the IMF wants the EU's Luxembourg-based bailout fund, the ESM, to directly recapitalise Cypriot banks. The rest of the money would be a loan to the Cypriot government, as with Ireland or Greece. But the ECB wants the Cypriot exchequer to carry the whole burden.

He added the troika wants Cyprus to slash government spending in order to get back in the black. But Cyprus wants to boost income tax instead.

"For the troika to come to Cyprus now it means they are ready for an agreement," the contact said.

"The talks are just starting. It's too early to comment on them," a commission spokeswoman noted.

Cyprus got into trouble over its banks' exposure to Greek debt and because an explosion last year - literally, at an ammunitions dump and nearby power station - blew a hole in its budget.

It got a cheap €2.5 billion loan from Russia, an important financial partner, to help tide things over.

But prospects of extra Russian money did not materialise.

To make matters worse, its Russian connection caused embarrassment this week when the German foreign intelligence service, the BND, leaked a report to German magazine Der Spiegel saying Russian oligarchs and crime bosses have stashed €20 billion in Cyprus' banks.

Zooming in on one case, Hermitage Capital, a UK-based firm, has filed a complaint with Cyprus' attorney general to seize €24 million worth of Russian money on the island.

The firm says it was embezzled from Russian taxpayers by tax officials and that when its lawyer, Sergei Magnitsky, exposed the scam, he was tortured to death in prison.

For their part, the EU commission and Cyprus say only that Cyprus is a signatory to international anti-money-laundering treaties.

"It's a non-issue and it won't come up in the troika talks," the Cypriot contact quoted above said.

But for his part, Magnitsky's former employer, Hermitage Capital chief Bill Browder, says it is not OK.

"Corrupt Russian officials working together with organized criminals used Cyprus to launder a significant part of the biggest tax refund fraud in Russian history. We are looking forward to a robust investigation in Cyprus and seizure of the dirty money regardless of who is providing bailout funds to the country," he told EUobserver.

Cyprus seeks €11.5 billion bailout

Cyprus is reportedly seeking a €11.5 billion credit line from member states using the euro to help bailout its troubled banks and close its budget gaps.

Cyprus could 'combine' Russian and EU loans

Cypriot President Demetris Christofias is waiting to see whether the EU or Russia offers the best deal for his troubled banks - and has not ruled out taking loans from both.

News in Brief

  1. Bulgaria's president appoints interim government
  2. Navalny poised to win EU human rights prize
  3. Poland will not leave EU, says Kaczyński
  4. Eurozone wages fall for first time in a decade
  5. Israel joins EU digital Covid-certificate programme
  6. Johnson reshuffles UK cabinet: new foreign minister
  7. Macron says French forces killed Islamic State leader in Sahara
  8. Finance minister tipped to become Sweden's first female PM

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  2. Nordic Council of MinistersCan you love whoever you want in care homes?
  3. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  4. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  5. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  6. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed

Latest News

  1. Von der Leyen issues rallying cry for more EU sovereignty
  2. Von der Leyen doubles up on vaccine-donation pledge
  3. Why won't EU forces fight together, von der Leyen asks?
  4. EU pitches infrastructure investment plan to rival China
  5. EU diplomats oppose common forest-monitoring rules
  6. EU 'stands by Afghans' but wants most kept away
  7. Russia's biggest enemy? Its own economy
  8. Textbook hypocrisy: EU's new low point on Palestine

Join EUobserver

Support quality EU news

Join us