Cyprus Offers Russia Natural Gas, Banking Assets for Rescue

Cyprus is offering Russia “opportunities,” including in banking and natural gas, in return for help bailing out the island nation, Finance Minister Michael Sarris said.

“We are asking for help clearly but something that would make also economic sense for Russia,” Sarris told reporters in Moscow today before a second day of talks between Russian and Cypriot officials.

The euro region’s third-smallest economy is seeking to overcome a deadlock after Cypriot lawmakers rejected an unprecedented 5.8 billion-euro ($7.5 billion) levy on bank deposits imposed by the European Union as a condition for a 10 billion-euro rescue. The European Central Bank said today it will cut emergency funds to banks on the Mediterranean island on March 25 unless a bailout program with the EU and International Monetary Fund is in place.

The proposed EU bailout of Cyprus is “absurd” and “surprising in its unpredictability and lack of consistency,” Prime Minister Dmitry Medvedev said at a conference today in Moscow.

Even so, Russia will not strike a separate deal with Cyprus or one that that is seen as spiting the EU, Vladimir Chizhov, Russia’s ambassador to the bloc, said in an interview.

Cyprus is asking Russia, which granted it a 2.5 billion-euro loan in December 2011, to extend repayment by about five years until 2021 and grant a new facility of 5 billion euros, Vedomosti newspaper said, without citing anyone.

‘Good Investment’

Cyprus needs between 6 billion euros and 10 billion euros to recapitalize its financial industry, central bank Governor Panicos Demetriades reiterated in an interview with Vedomosti published today. A new loan from Russia “will be a good investment,” Demetriades said, according to the newspaper.

Russian Finance Minister Anton Siluanov declined to comment on what a second day of talks will bring.

Russia has been offered certain Cypriot assets, including offshore gas resources, “but we didn’t hear anything particularly new,” Medvedev said in an interview with European media outlets yesterday and published on the government website. The gas fields are “a difficult issue” as their value is hard to estimate and because of territorial disputes with Turkey, he said.

“But of course we are willing to listen to any ideas from the Cypriots and we will try to understand where they are coming from,” the Russian prime minister said.

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