20th Oct 2016

Russian PM lectures Barroso on Cyprus

  • Medvedev: 'The euro crisis has strengthened ideas that Europe is in decline' (Photo:

Russian Prime Minister Dmitry Medvedev humbled European Commission chief Jose Manuel Barroso in public remarks on Thursday (21 March) on the EU's handling of Cyprus.

Speaking alongside Barroso at a seminar in Moscow, he called the EU's original Cypriot bailout idea "to put it mildly, surprising … preposterous."

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"The situation is unpredictable and inconsistent. It [the bailout model] has been reviewed several times. I browsed the Internet this morning and I saw another Plan B, or a Plan C or whatever," he noted.

He upbraided EU institutions for failing to give Moscow due notice of its decision.

"The system of early warning did not work very well ... that means we need to work on it," he said.

He also quoted unnamed Russian "eurosceptics" as saying: "The euro crisis has strengthened ideas that Europe is in decline in the 21st century … that the European project has turned out to be too cumbersome."

Earlier the same day, he told Russian newswire Interfax that he is thinking of reducing Russia's holding of euro-denominated currency reserves.

In a sign of broader Russian upset, Leonid Grigoriev, an academic and a former Russian deputy finance minister, told a separate news conference that Russian money is no longer safe anywhere in the EU.

"The Cyprus situation has created new uncertainty in the banking sector. People have started thinking whether the same can happen elsewhere, in Spain, Portugal, Ireland?" he said.

The EU's Plan A for Cyprus was to lend it €10 billion, but to impose a 7-to-10 percent levy on all Cypriot savers, including Russian expats, who alone stood to lose €2 billion.

It has now been scrapped.

It is unclear what new model might be found.

But the Cypriot finance minister, Michael Sarris, also in Moscow on Thursday, said he is in talks to give Russia shares in Cypriot "banks, natural gas [reserves]" in return for Russian bailout money.

For his part, Barroso told Medvedev that he could not have warned Russia even if he wanted to.

"Regarding the conclusions of the last Eurogroup [euro finance ministers, who drew up Plan A], Russia was not informed because the governments of Europe were not informed - let's be completely open and honest about that issue. There was not a pre-decision before the Eurogroup meeting. The Eurogroup meeting concluded, I think, in the very early hours of Saturday and the decision was the result of a compromise," he said.

He added: "Don't believe in this idea of the decline of Europe … The European Union is stronger than it is today fashionable to admit."

Leaked documents on internal EU talks seen by the Reuters news agency give substance to Russia's criticism, however.

The notes record remarks by finance officials from euro-using countries during a panicky conference call about Cyprus held on Wednesday.

According to Reuters, a French official said Cyprus' decision not to take part in the phone-debate is "a big problem … We have never seen this."

A German official said Cyprus might quit the euro and there is a need to "ring-fence" other countries from knock-on effects.

A European Central Bank official said there is a "very difficult situation" because savers might pull money from the island if banks re-open next week.

Meanwhile, Thomas Wieser, an Austrian-origin EU official who chaired the phone-meeting, described the situation as "foggy." He added: "The economy is going to tank in Cyprus no matter what."


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

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