From Russia With Love

Cyprus, a member of the euro zone, is seeking external aid in propping up its finances. But, unlike the EU and IMF bail-out packages, its loan is to come from Russia, with “no strings attached.” 

The minister of finance, Aleksei Kudrin, confirmed that Russia is at an advanced stage in negotiating the rescue package with Cyprus. “Italy has not approached us,” he said -

“Eurozone countries have not approached us in general . . . At the moment we are holding talks only with Cyprus. We have good progress [in the] talks. They will conclude within one month.”

The largest-circulation Cypriot newspaper, O Fileléftheros, reported earlier that Russia will give Cyprus a €2½ billion loan at an interest rate of 4½ per cent. A €1 billion tranche is to be paid in December, and two other payments are to be made by March 2012. Quoted in the Financial Times on Wednesday, the Cypriot minister of finance, Kíkis Kazamías, said the money will be used to plug the country’s budget deficit and to help refinance maturing debt, €1 billion of which is due for repayment in early 2012.

He said that the deal is “a friendly agreement, with no strings attached,” in contrast to the onerous austerity and reform measures demanded by the EU and IMF from other euro-zone bail-out states.