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Cyprus pleads for Russian help
March 20, 2013, 9:32 am


Cyprus’ Parliament have rejected the controversial bill [AP]

Cyprus has asked for Russian support after the island rejected the terms of the European bailout imposing a levy on bank deposits.

“We had a very honest discussion, we’ve underscored how difficult the situation is,” Michael Sarris, Cyprus’s finance minister told reporters in Moscow after talks with his Russian counterpart Anton Siluanov.

“We’ll now continue our discussion to find the solution by which we hope we will be getting some support” said Sarris.

Parliament in Cyprus on Tuesday rejected a government bill that envisioned a levy of 6.75 per cent on deposits of less than 100,000 euros ($128,950) and 9.9 per cent on larger deposits aimed at securing a European Union bailout loan.

Late on Tuesday Russian President Vladimir Putin and Cypriot President Nicos Anastasiades discussed the economic situation in Cyprus, said a Kremlin spokesman.

“During a telephone conversation, the heads of state analysed the economic situation in Cyprus in light of the Eurogroup’s bailout proposals,” Dmitry Peskov, a Kremlin spokesman, adding that the talks were initiated by the Cypriot president who informed Putin about the parliament’s decision.

Putin reiterated his concern about “any measures that could harm the interests of Russian businesses or individuals [in Cyprus].”

Russian banks are heavily exposed to Cyprus risk as they had around $12 billion on deposit with Cypriot banks at the end of last year, with Russian corporate deposits accounting for another $19 billion, according to estimates by Moody’s international rating agency.

“Putin reaffirmed Russia’s position on the settlement of the Cyprus crisis,” Peskov said.

The Russian president said on Monday that the decision to impose a one-off levy on all bank deposits in Cyprus, if made, “would be unfair, unprofessional and dangerous.”

Cyprus’s finance minister and other Cypriot high-ranking officials were expected to discuss the extension of a 2.5 billion euro loan that Moscow extended to Nicosia in 2011 at a rate of 4.5 per cent.

Meanwhile, Eurogroup chairman Jeroen Dijsselbloem said on Tuesday that the European bailout proposal was still on the discussion table but the Cypriots would have to find a way to raise about 6 billion euros to unlock a 10 billion euro package from the EU and IMF.

Ria Novosti