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Russia, Cyprus in Second Day of Gas for Cash Talks

© RIA Novosti . Alexei Kudenko / Go to the photo bankCyprus’ Finance Minister Michalis Sarris
Cyprus’ Finance Minister Michalis Sarris - Sputnik International
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Russia and Cyprus are set to launch a second day of talks in Moscow on Thursday over a multibillion-dollar loan to help the island nation avoid a financial collapse.

MOSCOW, March 21 (RIA Novosti) – Russia and Cyprus are set to launch a second day of talks in Moscow on Thursday over a multibillion-dollar loan to help the island nation avoid a financial collapse.

Cyprus’ Finance Minister Michalis Sarris told reporters ahead of a new round of talks on Thursday that the Cypriot delegation was negotiating the terms of financial aid from Russia in return for stakes in the Mediterranean nation’s banks and gas projects.

“We are, of course, seeking assistance but in a way that would make economic sense for Russia,” Sarris said. “A large number of conditions are emerging during the discussion, related to banks, natural gas and other assets, on which we could base cooperation with Russia.”

Cypriot gas projects to explore and produce natural gas in deep-water zones off the island’s coasts are likely to be a hard sell to Russia, in light of possible opposition from Turkey, which has never recognized the Republic of Cyprus or its maritime borders after the island was split into two parts in 1974.

Both teams of negotiators comprising officials and bankers from Cyprus and Russia are working intensively on the terms of a deal, Sarris said.

In an interview with Reuters news agency, Sarris said that Cyprus was not seeking a fresh loan from Russia, but was in talks with Moscow on investments in its banks and energy resources to reduce its debt burden.

"The banks are the ultimate objective in any support we get, so it'll either be a direct support to the banks or the support that we get through other sectors will be channeled to the banks, because this is our biggest challenge to recapitalize the banks," Sarris told Reuters.

Sarris also told the news agency that Cyprus was seeking a five-year extension of an existing 2.5-billion euro loan from Russia, and a reduction in the interest rate on it to 2.5 percent from 4.5 percent.

The urgency for a multibillion-dollar loan from Russia emerged after the Cypriot parliament rejected on Tuesday a levy on bank accounts that international creditors, including the European Union and the International Monetary Fund, had set as a condition for providing a 10-billion euro ($13-billion) bailout for Cyprus.

The international creditors said on Saturday that their rescue package for debt-laden Cyprus was contingent on a one-off deposit levy to yield an additional 5.8 billion euros ($7.5 billion) in revenues for the cash-strapped Cypriot budget.

Overall, Cyprus needs about 17 billion euros in aid to shore up its budget and recapitalize its banks, which were forced to write down billions of euros in “voluntary” Greek debt restructuring.

Updated with Sarris' comments to Reuters.

 

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