EU irked by Cypriot talks with Moscow

Published on 25 June 2012 at 12:16

Will Cyprus be the next state to receive aid from the European Financial Stability Facility (EFSF)? The answer to this question will in part be determined by a new development which has emerged much to the annoyance of the European Union, remarks Le Monde: Nicosia “is conducting parallel negotiations in a bid to find an alternative source of funding” —

In the wake of an EU offer to bankroll the island to the tune of 10 billion euros — more than half of the Cypriot GDP — and at a time when the country is preparing to take over the rotating presidency of the EU on 1st July, the Cypriot bid to avoid a European bailout is perceived as an annoyance.

The French daily explains that “it is this second option involving support from a third country, in this case Russia, which is favoured by the government.” The Europeans are critical of the double game being played by Nicosia which views the EFSF as a less advantageous choice, even though the reasons the Cypriot position are well understood —

Cyprus is worried about the possibility of a visit from troika experts that could accompany EU aid. [...] Even more daunting than the possibility of pressure to raise the island’s 10% corporate tax rate, which is the lowest in Europe, Cyprus is alarmed by the prospect of austerity.

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Le Monde reminds its readers that Russia is particularly attentive to the economic well-being of the Mediterranean island —

Moscow has a special interest in ensuring that the financial climate on the island remains calm: the Russian funds based in Cyprus, which take advantage of the bilateral tax agreement between the two countries, have made Cyrus the world’s biggest investor in Russia.

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