Cyprus turning to Russia for a rescue

According to Reuters, Cyprus will ask Russia for a new loan in order to avoid a financial bankruptcy, as the island country rejected the 10 billion Euro bailout offered from the European Union, which increased the risk of bank crash and default. The negotiations with Russia are still going on even if the Finance Minister or Cyprus has not made a deal with his Russian colleague the first time. Currently Cyprus has a 2.5 billion euro loan from Russia, but has asked for five-year extension and a second 5 billion Euros loan. At the same moment, Russia has a serious interest to help the banks in Cyprus, as a great deal of the billions is owned by Russian individuals and businesses. In case the country does not take an aid plan soon, the Central European Bank will have to take measures on the Cypriot banking sector.

Cyprus has already rejected the plan offered by the European Union, according to which a levy had to be put on all deposits in order to collect 5.8 billion Euros. Actually, not even one of the lawmakers in Cyprus voted for the bailout scheme offered by the European Union. This is the first time when a national legislature rejects the assistance of the European Union due to its harsh conditions. In the last three years the European Union had offered helping plans to Spain and Portugal, Ireland, Greece and Italy and they all have accepted the measures in order to receive the aid. In general, the European Union usually achieves the outcome they are up to by pressing the smaller countries, but Cyprus is looking for another way out of the crisis.