Brussels, 11/03/2013 (Agence Europe) - At a meeting in Athens on Monday 11 March with the new president of Cyprus, Nicos Anastasiades, the Greek prime minister, Antonis Samaras, renewed his support for Cyprus, which is closely linked with the Greek economy, being Greece's fourth biggest trading partner and providing 27% of all foreign investment in Greece, explained Samaras. Events in the Cypriot economy therefore have a direct impact on Greece. Stressing the brotherly connection between the two countries, the Greek and Cypriot leaders are planning to co-ordinate a common approach to dealing with the economic crisis.
There were rumours at the weekend of a hidden agenda in Anastasiades' visit to Greece. The Financial Times says the Cypriot president wants to give Cyprus two billion euros of its aid from the eurozone (aid for bailing out Greek banks) to bail out Cypriot banks based in Greece. Cypriot banks have been badly affected by the writedown in Greek sovereign bonds a year ago, which cost them EUR 4.5 billion (a quarter of Cypriot GDP). Anastasiades says in the weekend edition of the To Vima newspaper that the Cypriot government did not handle the writedown very well..
In January 2013, the Greek finance minister said that the Greek bank industry might not need all the cash earmarked for its bailout (a total of fifty billion euros). Asked whether Greece could give it to Cyprus, the European Commission was unable in the afternoon of Monday 11 March to give an answer.
Athens has not received any special request from Cyprus for any aid in recapitalising its banks, said a Greek government spokesman, Simos Kedikoglou, quizzed about the article in the FT. A Cypriot source says the request for aid is not new - it was made for the first time five months ago, when Greece refused to help. The process is cumbersome. The request would need the approval of the troika of lenders (European Commission, European Central Bank and International Monetary Fund) and their fact-finders in Athens, along with the troika negotiating aid for Cyprus, along with approval by the Greek government and the Central Bank of Greece. AFP says the Cypriot government has asked for unofficial political backing from Greece in its aid negotiations.
What about Moscow? The negotiations between Cyprus and Russia are continuing over an extension of the repayment deadline and a reduction in the interest rates on a two-and-a-half billion loan granted to Cyprus in 2011. Anastasiades may travel to Moscow shortly to chivvy the talks along. A well-placed source says that more Russian aid might be forthcoming if Russia is given the same status as the IMF.
This week's Eurogroup meeting? If the eurozone heads of state hold a meeting on Thursday evening, they will not discuss Cyprus, says another source, but a special Eurogroup meeting on Friday is highly likely to make it possible for the aid plan for Cyprus to be decided upon by the end of the month. (EL/transl.fl)