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Cyprus bailout crisis: hopes fade of deal with Russia | Cyprus bailout crisis: hopes fade of deal with Russia |
(4 months later) | |
The chances of Cyprus rescuing its banking system with funds from Russia lay in tatters on Friday as both sides said no solution had been found. | The chances of Cyprus rescuing its banking system with funds from Russia lay in tatters on Friday as both sides said no solution had been found. |
The Kremlin is unwilling to extend a new credit line to Nicosia, and no Russian companies are interested in taking stakes in Cypriot offshore gas reserves or its banking system. "The discussions have ended," said Russia's finance minister, Anton Siluanov. | The Kremlin is unwilling to extend a new credit line to Nicosia, and no Russian companies are interested in taking stakes in Cypriot offshore gas reserves or its banking system. "The discussions have ended," said Russia's finance minister, Anton Siluanov. |
His Cypriot counterpart, Michalis Sarris, who arrived in Moscow on Tuesday vowing he would not leave without a deal, will now return to Cyprus. | His Cypriot counterpart, Michalis Sarris, who arrived in Moscow on Tuesday vowing he would not leave without a deal, will now return to Cyprus. |
Sarris proposed the creation of a Cypriot state company with control of gas reserves into which Russian companies could invest, and offered stakes in Cypriot banks that would be rescued by the investment fund currently under discussion. But Siluanov said neither offer aroused the interest of any Russian companies, the Interfax news agency reported. | Sarris proposed the creation of a Cypriot state company with control of gas reserves into which Russian companies could invest, and offered stakes in Cypriot banks that would be rescued by the investment fund currently under discussion. But Siluanov said neither offer aroused the interest of any Russian companies, the Interfax news agency reported. |
Sarris said Russia was willing to ease the conditions of a previous €2.5bn loan, but declined to help Cyprus with any of the fresh funds it needs to activate a European Union bailout. | Sarris said Russia was willing to ease the conditions of a previous €2.5bn loan, but declined to help Cyprus with any of the fresh funds it needs to activate a European Union bailout. |
"The question about the provision of state credit was not looked at because the European side established a debt ceiling," said Siluanov. | "The question about the provision of state credit was not looked at because the European side established a debt ceiling," said Siluanov. |
The end of the current talks does not mean Russia will not participate in a final deal over Cyprus in the coming days, said Ivan Tchakarov, the chief Russia economist at the Moscow-based investment bank Renaissance Capital. "This is a high stakes game between Russia and the European Union … Both sides are trying to see who will blink first," he said. | The end of the current talks does not mean Russia will not participate in a final deal over Cyprus in the coming days, said Ivan Tchakarov, the chief Russia economist at the Moscow-based investment bank Renaissance Capital. "This is a high stakes game between Russia and the European Union … Both sides are trying to see who will blink first," he said. |
"We are not able to get the support that we wanted to get," Sarris said as he checked out of his Moscow hotel, Bloomberg reported. "But we must go back home because things are getting serious." | "We are not able to get the support that we wanted to get," Sarris said as he checked out of his Moscow hotel, Bloomberg reported. "But we must go back home because things are getting serious." |
Cyprus's parliament will vote on new legislation on Friday morning that will radically restructure its biggest banks. The decision is expected to protect smaller depositors at Laiki, its second biggest bank, but those with over €100,000 (£85,250) face the possibility of large losses. | Cyprus's parliament will vote on new legislation on Friday morning that will radically restructure its biggest banks. The decision is expected to protect smaller depositors at Laiki, its second biggest bank, but those with over €100,000 (£85,250) face the possibility of large losses. |
The move comes after the European Central Bank set Cyprus a deadline of next Monday to find €6bn to qualify for its bailout package. Failure to do so could result in the ECB withdrawing its emergency liquidity support. | The move comes after the European Central Bank set Cyprus a deadline of next Monday to find €6bn to qualify for its bailout package. Failure to do so could result in the ECB withdrawing its emergency liquidity support. |
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