“Talks between Russian officials and the government of Cyprus broke up early Friday, with no agreement on a cash infusion that could have helped the tiny island nation to secure an EU bailout.
Russian investors were ultimately not interested in the plans proposed by the Cypriot finance minister during a trip to Moscow, Russia’s finance minister said Friday, according to state run news agency RIA Novosti.
One proposal was for Russian investors to develop the country’s natural gas reserves. But the Russians will stand aside while Cyprus tries to find a way to recapitalize its insolvent banks with help from the so-called troika of European Central Bank, European Commission and International Monetary Fund.
Another way Russia could contribute is by relaxing the terms of an existing €2.5 billion loan to Cyprus.
“With the E.C.B. vowing to cut off financing for the banks unless a deal is in place, Cyprus risks a run on its banks, a disorderly default on its international debts and a potential exit from the euro currency union. Monday is a national holiday, but banks are supposed to re-open on Tuesday for the first time in more than a week.
“Cyprus was just hours away from a deal on Friday to raise billions of euros and unlock a bailout from the European Union that could avert financial meltdown and exit from the euro, its ruling party said.
The remarks came after Moscow had rebuffed requests from Nicosia for assistance to save Cypriot banks in which Russians have billions at risk and at least one euro zone minister, Finland’s Alexander Stubb, said an EU accord would be reached.
Averof Neophytou, deputy leader of the ruling Democratic Rally party, said Cypriot political leaders were close to a compromise that would let parliament reverse its rejection of a rescue package offered by euro zone partners a week ago under which holders of bank deposits would suffer losses.
Finance Minister Michael Sarris, returning empty-handed from Moscow, said a bank deposit levy was back “on the table”.
Germany warned Cyprus it was “playing with fire”.