Cyprus Asks Russia For Help
Updated: 9:32am UK, Thursday 21 March 2013
The vote rejecting the EU offer had hardly been cast before Cyprus's finance minster was in the air.
Michael Sarris dashed to Moscow in a desperate search for another bailout plan to save his country.
The flight route was no surprise - Moscow is heavily invested in Cyprus. Another name for Limassol could be Moscow-On-Sea.
The Mediterranean island offers the safety of Europe, favourable business conditions including low taxes and not too many probing questions about the source of the income.
That explains why an estimated 20bn euros of Russian money is parked here.
It also explains why Moscow and Cyprus have a shared interest in saving the island's economy.
After attending the first round of talks with his Russian counterparts Mr Sarris said: "There were no offers, nothing concrete.
"We are continuing discussions. We are happy with a good beginning and we are looking forward to continuing these discussions over the next few hours. Thank you very much."
Cyprus is desperate for the cash.
Banks have been shut since the weekend and may stay closed until next week.
Russia will try and extract as much as it can from the desperate Cypriots, which could include a share in Cyprus's energy rich future.
Some experts believe Cyprus could be sitting on natural gas reserves worth up to 300bn euros.
It would also give Russia great political satisfaction to have one of its companies operating inside Europe, according to Russian economist Alexander Orlov.
"Currently Europe cant't fulfil its need for natural gas. Libya and Algeria are too politically unstable," he said.
"Cyprus would be ideal as it's close to mainland Europe and it can be delivered by pipeline."
Cyprus already owes Russia money, but is looking for another 5bn euros - that is the amount it needs in addition to the 10bn bailout offer from Europe.
But taking on more debt will not please Europe. That is why it came up with the controversial plan to tax Cypriot savings.
It still wants Cyprus to fund a so called bail-in, but it is suggesting a more targeted approach.
German Chancellor Angela Merkel has proposed a potentially more palatable proposal: "The members of the Eurogroup would appreciate that investors below 100,000 euro are not included.
"However, investors over 100,000 euro should support the banking industry so that the banking industry will be sustainable."
But this again would mean Russian investments being taxed by Brussels, which will certainly factor in to any further negotiations.
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