Cyprus Bailout Crisis: No Deal Yet With Russia
Cyprus has failed to reach a deal with Russia to save it from a financial crisis that could have disastrous consequences for the rest of Europe.
The Cypriot finance minister Michael Sarris cancelled a planned press conference because of the lack of results.
But he promised that talks would continue until a deal was reached.
Earlier this week the Cypriot parliament rejected a plan to impose a levy on bank deposits in order to raise ?5.8bn toward a ?10bn bailout offered by the EU.
Cyprus went to Russia for a lifeline, asking for a five-year extension on a ?2.5bn loan granted in December 2011 that is due to mature in 2016.
The Mediterranean island has also asked Moscow to refinance the loan and lend an additional ?5bn.
"We had a very honest discussion, we've underscored how difficult the situation is," Mr Sarris told reporters after talks with Russian counterpart Anton Siluanov.
"We'll now continue our discussion to find the solution by which we hope we will be getting some support. There were no offers, nothing concrete," he added.
Moscow has its own interests in ensuring the survival of Cypriot banks, which have served as an offshore financial haven for Russian businesses and individuals.
The European Central Bank's chief negotiator on Cyprus, Joerg Asmussen, said the ECB would have to pull the plug on Cypriot banks unless the country took a bailout quickly.
Austrian Chancellor Werner Faymann said he could not rule out Cyprus leaving the euro zone, although he hoped its leaders would find a solution for it to stay.
Not a single Cypriot lawmaker voted for the bailout, which included a proposed levy that would have taken up to 10% from accounts over 100,000 euros.
Smaller bank accounts would also have been hit, although the government proposed to spare small savers with less than 20,000 euros in the bank.
It was the first time a national legislature had rejected the conditions for EU assistance, after three years in which lawmakers in Greece, Ireland, Portugal, Spain and Italy all accepted biting austerity measures to secure aid.
German Chancellor Angela Merkel, whose country is Europe's main paymaster, said it was up to the Cypriot government to come up with an alternative proposal but it was fair to expect savers with deposits over 100,000 euros to contribute to the bailout.
Meanwhile, a British military plane arrived in Cyprus last night with one million euros onboard to ensure soldiers have access to cash during the crisis.
British soldiers stationed on the island and their families would be able to borrow from the money if cash machines and debit cards in Cyprus stop working completely, the Ministry of Defence said.
"The MoD is proactively approaching personnel to ask if they want their March, and future months' salaries paid into UK bank accounts, rather than Cypriot accounts," it said in a statement.
"We're determined to do everything we can to minimise the impact of the Cyprus banking crisis on our people."
Around 2,500 to 3,000 British military personnel are currently stationed in Cyprus.
what do you think?
I can see a Cyprus Missile Crisis looming, history repeating itself
Go back to the original currency. The value of the Cypriot Pound initially would be low but tourists would be inclined to go and that would lift employment and bring in revenue.
Yes yes yes yes. Won't happen though..
Gordon. I suspect many of the other eurozone countries would like to do the same. Meanwhile chalk up another raging success to the flawed political creation that is the Euro. How many more Southern European countries economies must suffer before it finally crashes & burns.
Total agree. Many rumoured to be printing alternative money- accepting it a case of when rather than if Euro fails. Meanwhile those on the commission would rather save their egos a year or two than end people's suffering.