Cypriot Finance Minister Michalis Sarris is in Russia for his talks with his counterpart Anton Siluanov as Nicosia searches for alternative forms of financing after rejecting a deposit tax demanded by the eurozone as part of a bailout.
“We are hoping for a positive result but we really can’t make any prediction,” said Sarris before the meeting. He is expected to hold a news conference at noon Greek time (10 a.m. GMT).
Nicosia has asked Moscow to extend the maturity of an existing 2.5-billion-euro loan, due in 2016, by five years. It is also asking for the 4.5 percent interest rate to be reduced.
Beyond that, there is speculation that Cyprus will ask Russia to contribute towards the recapitalization of at least one local bank. Representatives of the island’s most troubled lender, Cyprus Popular Bank (Laiki), are also in Moscow, according to Cypriot state broadcaster RIK.
Cypriot Trade Minister Giorgos Lakkotrypis is also in Moscow.
It is likely the Russians will seek some form of compensation for such an investment. A naval port in Cyprus for the Russian fleet and access to the country’s natural gas reserves are among the rewards Moscow might seek.