Russia likely to contribute to Cyprus bailout

AP Interview: Cypriot finance minister says Russia will likely contribute to its bailout

Associated Press
Russia likely to contribute to Cyprus bailout
.

View photo

Cyprus' finance minister Vassos Shiarly speaks prior to an interview with The Associated Press at his office in the finance ministry in Nicosia, Cyprus, Tuesday, Jan. 29, 2013. Shiarly says Russia is likely to contribute money to a rescue package that the cash-strapped country is trying to finalize with eurozone partners. (AP Photo/Petros Karadjias)

NICOSIA, Cyprus (AP) -- Russia is likely to contribute money to a rescue package that Cyprus is trying to finalize with eurozone partners, the cash-strapped country's finance minister said Tuesday.

Vassos Shiarly said leaders from the other 16 EU countries that use the euro are in "high level" talks with Moscow about a contribution to the bailout and that a deal was "probable."

"I think it's only a question of time," he told The Associated Press in an interview.

The Kremlin confirmed that the two countries' presidents, Vladimir Putin and Dimitris Christofias, spoke by phone about the issue on Tuesday, but gave no details.

Cyprus has enough money to survive through April but hopes to sign a final rescue bailout deal in March, after general elections, Shiarly said.

The key concern is size. The bailout, most of which would go to help stabilize Cypriot banks, would likely be worth as much as the tiny country's entire yearly economic output of €17.5 billion ($23.51 billion). Many experts say that is too much for the country to be able to pay back. And if Cyprus can't handle its rescue loans, that defeats the purpose of a rescue program.

Shiarly insisted Cyprus would be able to cope with the bailout — which some estimate would push public debt to 140 percent of annual gross domestic product. The government could manage, if deemed necessary, by selling state-owned companies and its controlling stake in Laiki bank, the country's second largest lender, he said.

The so-called troika of the European Commission, the European Central Bank and the International Monetary Fund are meanwhile looking for ways to reduce Cyprus' debt load. There has been speculation that the troika might try to impose losses on the Cypriot banks' investors, such as bondholders and depositors, many of which are Russian.

That is one reason why Russia, a long-time ally of Cyprus, has been involved in the bailout talks.

Cyprus already received a low interest loan of €2.5 billion ($3.36 billion) from Russia two years ago to keep it afloat and has asked to extend its repayment from 2016 to 2021. The left-wing government tried last year to clinch an additional €5 billion loan from Moscow but those talks never yielded a deal.

Shiarly said Cyprus' eurozone partners are aware that the country's connection with Russia is a "very strong one."

"We have lots of Russian businesses operating from Cyprus, lots of Russian investment has gone through Cyprus in the past, the relationship is a very close one, not to mention the same religious Orthodox (Christian faith) that we maintain," he said.

The country has also faced allegations — mostly from Germany which is resisting granting a bailout — that it's a Russian money laundering hub, something that Cypriot officials strenuously deny.

"One only has to look at the international reports from organizations whose role is to report on matters such as money laundering and you will find that we rank very favorably compared to many other European member states," said Shiarly.

Shiarly said Cypriot authorities are briefing eurozone partner countries on the country's anti-money laundering efforts to dispel any misconceptions and to curb resistance to a bailout.

He pointed out that the many of the losses Cypriot banks took in Greece were due to a writedown on Greek sovereign debt that the eurozone had insisted on. When the other eurozone countries see that Cyprus problems' are largely due to the Greek writedown, "I think the attitude will change and we will receive the financial assistance we're seeking," said Shiarly.

"We're not asking for a gift, we're asking for a loan on the reasonable terms which have been offered to other member states," he said.

Eurozone states have already rescued the governments of Greece, Ireland, and Portugal as well as the Spanish banking sector.

Shiarly noted that Cyprus has already enacted a string of austerity measures, including deep public sector salary cuts and tax hikes as foreseen under a draft bailout agreement.

But Shiarly, whose job will be up next month when elections are held, dismissed any talk of a Greek-style 'haircut' for Cyprus under which private investors will be forced to take losses on their investments in Cypriot sovereign debt.

"It has been rejected by us, it has been rejected by the Commission, it has been rejected by the IMF and therefore I think it's not an issue."

The finance minister said recapitalizing Cypriot banks directly from the EU's rescue fund is one option that the country can pursue. But that is unlikely to happen before April next year at the earliest, when a single banking supervisory that will oversee the process is up and running.

Shiarly backed European Central Bank chief Mario Draghi's assessment that Cyprus needs eurozone support so as not to upset the currency bloc's slow and fragile recovery.

"I have read these statements how even small Cyprus can be a systemic risk to the euro and not only myself, but I believe many other European ministers of finance share this view."

___

Lynn Berry in Moscow contributed to this report.

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

    AdChoicesBellaLabs.comSponsored
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • 10 rock-solid stocks for conservative investors

    10 rock-solid stocks for conservative investors Shares with low volatility can beat their indexes with less risk Bloomberg News/Landov U.S. Bancorp is the cheapest S&P 500 stock

    MarketWatch
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Tired of Living Paycheck to Paycheck?

    New website reveals how to save $1,000's when you're living paycheck to paycheck. See exactly how.

    AdChoices Media ForceSponsored
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

    Credit.com