MOSCOW: Cypriot Finance Minister Michalis Sarris left Moscow on Friday after two days of talks aimed at securing a financial lifeline from Russia without reaching an agreement.
Russian officials said two major state-owned energy firms had turned down deals put forward by Sarris and that Russia refused a loan request to fill a 5.8 billion euro shortfall left by an EU-IMF 10 billion euro bailout offer.
“Our investors examined this issue and showed no interest,” Russian news agencies quoted the country's Finance Minister Anton Siluanov is saying. He added that Moscow never reviewed the issue of providing a new loan fearing Cyprus, already on the brink of bankruptcy, could not withstand more debt.
“We did not examine the question of offering them a loan because the Europeans have set a debt limit that (Cyprus) should not exceed,” Siluanov added.
There were no news however on a request to Russia, holder of between one third and half of all the island's bank deposits by the Cypriot delegation to extend the terms of a five-year 2.5 billion euro loan that Moscow extended in 2011.
Sarris had originally said he would stay in Russia until a deal was reached even while the banking crisis raged back home and the government pushed ahead with a 'Plan B' that could stave off a default and Cyprus's possible exclusion from the Euro zone. He had told Cypriot television on Thursday that he was not seeking new loans from Moscow but offering it stakes in Cyprus's banks and energy deposits.
“As you know a loan can't be given to Cyprus because this would create a problem with debt sustainability, so we have to find investment opportunities,” the finance minister told Sigma television.
“There isn't much time, so before the weekend is over we should know where we stand, and see if we can find the best solution. We will stay in Russia as long as is needed,” he said on Thursday.
A Russian finance ministry source said Sarris's energy proposals fell short of requirements for both the state oil giant Rosneft and its natural gas counterpart Gazprom. “ They invited us to take part in a tender for fields in which the seismic survey work has not been completed,” the source told the state RIA Novosti news agency.
Some analysts have questioned the amount of oil and gas resting off Cyprus's southern shore. They have also noted the uncertainties related to Turkey's own claims to a share of the deposits.
“Gazprom and Rosneft were not interested in these proposals,” said the source. Sarris met on Wednesday with his Russian counterpart Anton Siluanov and First Deputy Prime Minister Igor Shuvalov.
No other details of his two-day talks have been released. Moscow has been angered by the original terms of a rescue plan for Cyprus proposed by the troika of international lenders that would have slapped a levy of up to 9.9 per cent on deposits of more than 20,000 euros.
“Russia is effectively being asked to throw more good money after bad and double up on the commitments it has already made,” JP Morgan Chase analyst Alex White said in reference to Moscow's hesitance to strike a deal.
“The risk-reward trade off (for Moscow) doesn't appear to make sense,” said White.