EU Cyprus act like bull in China shop Medvedev

Russian Prime Minister Dmitry Medvedev Wednesday slammed the European Union and Cyprus for what he described as their dismal management of the island nation’s debt woes.

Medvedev told journalists from European media outlets in an interview the mishandling of the crisis had undermined confidence in financial institutions, in Cyprus and beyond.

“The actions of the EU, the European Commission and the Cypriot government to settle the debt problem unfortunately only resemble the actions of a bull in a china shop,” Medvedev said.

Anxiety spread across Europe Tuesday after the Cypriot parliament overwhelming rejected a windfall levy on bank accounts that international creditors, including the EU and the International Monetary Fund, had set as a condition for providing a 10 billion euro ($13 billion) bailout.

The bill, rejected this week, envisioned a 6.75 percent levy on deposits of less than 100,000 euros ($128,950) and 9.9 percent on larger deposits.

Developments in Cyprus are being closely monitored by Russia, which stands to suffer considerably from the fallout of the worsening debt impasse.

Russian lenders are heavily exposed to Cyprus risk as they had an estimated $12 billion on deposit with banks on the island at the end of last year, with Russian corporate deposits accounting for another $19 billion, according to Moody’s international rating agency.

But if the island nation defaults on its obligations, Russian depositors risk losing over $50 billion, considering the loans granted by Russian banks to Cyprus-registered companies, Moody’s estimates.

Cypriot Finance Minister Michael Sarris travelled to Moscow Wednesday to discuss the extension of a 2.5-billion-euro loan from Russia in 2011 issued at a rate of 4.5 percent.

Meanwhile, Jeroen Dijsselbloem, chairman of the Eurogroup of EU finance ministers, says the European bailout is still on table, but that Cyprus would have to find a way of raising 6 billion euros ($7.8 billion) to unlock the package.

–IANS/RIA Novosti


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