ECONOMICS > Frustrated Russia shows Greek Cyprus EU’s doors

MOSCOW/NICOSIA - Agence France Presse

Earning support of the European Union and the IMF has remained as the sole option for Greek Cyprus to avoid financial meltdown, as Russia has laid down the EU support as a condition also

Russia said March 22 it would wait for Greek Cyprus and the European Union to strike a deal before pitching in to any possible bailout for the debt-ridden island.

The announcement from Prime Minister Dmitry Medvedev came after Greek Cypriot Finance Minister Michalis Sarris ended a fruitless two-day visit intended to win an urgent financial lifeline from Russia.
Analysts said the mission failed because Russia calculated that Greek Cyprus, with its survival in the eurozone in jeopardy, was too great a risk.

“Russia is effectively being asked to throw more good money after bad and double up on the commitments it has already made,” JPMorgan Chase analyst Alex White said.

EU support required

But Medvedev said Moscow “has not closed the door” on possible future assistance to Greek Cyprus where Russians hold $31 billion in private and corporate accounts.

“But this will only come after there is a final plan of support for Greek Cyprus from the European countries,” he said following talks with European Commission president Jose Manuel Barroso.
Medvedev said that Russia was taking this approach “for very obvious economic reasons” that he did not spell out.

The European Union has given Nicosia until March 25 to raise 5.8 billion euros ($7.47 billion) to unlock loans worth 10 billion euros or face being choked from European Central Bank emergency funding in a move that would bankrupt the island.

EU sources have said the bloc is ready to eject Greek Cyprus from the eurozone to prevent contagion of other debt-hit members such as Greece, Spain and Italy.

MPs were to meet in emergency session - when Hurriyet Daily News went to print - to race through a raft of bills aimed at raising the funds and heading down a growing sense of anger and panic among Greek Cypriots fearful that their life savings will disappear in the rubble of a banking collapse.

One bill gives effect to a key plank of the rescue plan - the so-called Plan B - setting up an investment fund and the nationalisation of pension funds, with bonds issued against future natural gas revenues.A second bill imposes “temporary restrictive measures on the movement of capital.”

March/23/2013