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.

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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