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'Old friend' Russia ready to help Cyprus: president

30 January 2013, 13:45 CET
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'Old friend' Russia ready to help Cyprus: president

Demetris Christofias - Photo EU Council

(NICOSIA) - Russia is ready to contribute with other international lenders in bailout package to rescue the island's Greek-exposed economy, Cyprus President Demetris Christofias told reporters Wednesday.

Christofias said he had a 'friendly' telephone conversation with Russian president Vladimir Putin on Tuesday evening about Cyprus' financial plight and the possible participation of Moscow in a rescue package.

"President Putin assured me that the Russian Federation is ready to contribute along with the European Union in loan deal for Cyprus," said Christofias, whose remarks at a press conference during an official visit to Belgrade on Wednesday, were obtained by AFP from his office in Nicosia.

He said that as an "old friend" Russia wanted to help Cyprus, through cooperation with the EU, to offer financial support.

"I would like to warmly thank Vladimir Putin for his readiness to give a helping hand towards Cyprus thus honouring a traditional and close friendship," said the island's Russian educated communist leader.

Christofias said he hoped Russia's participation in a bailout deal would "end positively".

Finance Minister Vassos Shiarly said on Tuesday that Eurogroup finance ministers are studying the possibility of involving Russia in a bailout package for Cyprus.

Shiarly told state radio that the European Union was trying to ascertain whether Russia was able to participate with international lenders in a financial aid package for Cyprus and how much it could contribute.

Officially Nicosia has only requested that a 2.5 billion euro loan payment -- received in 2011 from Moscow and scheduled to be paid back in 2016 -- be extended by five more years, he said.

Eurogroup finance ministers made no decision on a rescue package for Cyprus at a meeting in Brussels last week because negotiations on bank recapitalisation are continuing.

The total amount is expected to reach 17.5 billion euros, but disagreements over conditions attached to the aid have prompted the EU to postpone a deal until after Cyprus' presidential election next month.

Germany has also cast doubt over the bailout, criticising Cypriot banks as being havens for tax evaders and money launderers for Russian oligarchs.

The island is host to a healthy Russian business community while around 23 percent of investment in Russia comes from Cyprus.

A bailout decision is expected in March but Cyprus would need to wait longer for its first tranche of money as any deal must go through the various European parliaments.

Cyprus says it is able to cover its financing needs until April without needing additional loans.

Cyprus has been seeking a bailout from the European Union and International Monetary Fund since June when its two largest banks sought assistance after exposure to toxic Greek debt.

Despite its small 17.5 billion euro recession-hit economy, there are fears that if Cyprus is allowed to default then it could trigger another crisis in the euro zone and risk the spread of contagion.

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