Russia hints at laxer Cyprus debt rules

(MOSCOW) - Russia said on Friday it was ready to loosen the terms under which debt-ridden Cyprus had to repay loans which Russia had made to its close trading partner.

Finance Minister Anton Siluanov said he was referring specifically to a loan of 2.5 billion euros ($3.32 billion) which the island nation received from Russia in 2011.

He also made no reference to discussions of any potential future loans.

But Siluanov said that he and EU leaders were beginning negotiations on easing a public debt burden in Cyprus that accounts for nearly 90 percent of the country's gross domestic product.

"We will work with the European countries on steps that can be taken towards a more gradual repayment of the debt incurred by Cyprus," Siluanov was quoted as saying by the Prime news agency.

Siluanov did not spell out the details or exact stage of the negotiations.

Cyprus, with its banking sector on the verge of collapse, appealed last year to Russia for a five-billion-euro loan after unsuccessfully putting in a request to the European Union.

President Vladimir Putin said last week that Russia had the cash for Cyprus but was looking for more coordinated action with the Europeans designed to get the island's economy back on track.

Some analysts believe that Moscow has an especially keen interest in helping Cyprus because the island has tight links to big Russian business.

Cyprus perennially tops the list of Russia's biggest investors because of its status as a tax haven for fortunes built up by Siberian and Moscow billionaires.

A German intelligence agency report quoted by the Der Spiegel weekly estimated that about 20 billion euros ($26.5 billion) were deposited in Cyprus in 2011 by Russian oligarchs.