Bloomberg News

Anastasiades Says Russia Deal on Cyprus Bailout a Priority

February 21, 2013

Nicos Anastasiades, the front-runner to be Cyprus’s next president, said brokering a deal with Russia on its participation in a financial rescue will be one of the first matters he tackles if he wins the Feb. 24 election.

“My feeling from recent contacts with Russian officials is that Russia is ready to seriously examine this possibility” of contributing to Cyprus’s bailout, Anastasiades said today in an e-mailed response to questions. “Reaching an agreement with Russia will be one of my first and immediate priorities.”

Anastasiades will compete with communist party-backed Stavros Malas this Sunday after no candidate secured an absolute majority in a first round vote on Feb. 17. Anastasiades placed first with 45.5 percent to 26.9 percent for Malas. The winner of this weekend’s election needs to revive stalled talks with the European Union on funds to save the island nation from collapse.

German officials insist that Russia, which lent Cyprus 2.5 billion euros ($3.3 billion) in 2011, participates in any rescue and have called for an investigation into whether the island is being used for money laundering.

Accusations that Cyprus is used for Russian money laundering are “unfair and exaggerated,” Anastasiades said. Cyprus already adheres to anti-money laundering regulations and is committed to working with international organizations and the EU to further improve their implementation, he said.

Bank Losses

Cyprus has been in negotiations with the European Commission, European Central Bank and International Monetary Fund over the size and terms of a bailout since June, when it became the fifth euro-area country to request aid after its banks lost 4.5 billion euros in Greece’s sovereign debt restructuring.

After the losses on the Greek writedown, the biggest in history, Pacific Investment Management Co. was hired to review the portfolios of Cypriot banks to assess their recapitalization needs, which will determine the size of the nation’s bailout. The banks disagree with Pimco’s worst-case scenario figure of 10.1 billion euros in capital needs over the next three years, Phileleftheros newspaper reported today, without citing anyone.

Reassurances Sought

“The assumptions should be reconsidered,” Anastasiades said, without referring to the Phileleftheros report. Cyprus doesn’t want special treatment, it wants reassurances that the methods employed to assess bank capital needs were the same as in other bailed-out euro-area countries, he said.

Cyprus has been divided since 1974, when Turkey invaded the northern third of the island following a coup by supporters of the country’s union with Greece.

Reunification of the island is a top priority, however it’s unrelated to Cyprus’s economic problems, Anastasiades said. He said he would resist any attempt to link the two.

“The call for assistance from our EU partners is a completely different issue,” he said.

Cyprus entered the EU in 2004 after a referendum to re-join the island was rejected. It is represented by the internationally recognized Republic of Cyprus in the south. Turkey is the only country to recognize the northern Cyprus state, where it keeps about 30,000 troops.

Anastasiades said he is committed to working with the United Nations and the EU on a “more direct and effective” way to find a viable solution and that Turkey needs to take steps to facilitate the reunification process, including withdrawing troops it has stationed there.

To contact the reporter on this story: Georgios Georgiou in Athens at ggeorgiou5@bloomberg.net

To contact the editor responsible for this story: Maria Petrakis at mpetrakis@bloomberg.net


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