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South Cyprus edging towards Russian fold

21 March 2013

Finance Minister Michael Sarris has been in Moscow since Monday trying to extract aid and support from the Russian government.

Those discussions continue today and are said to include possible deals around the offshore natural gas reserves that have recently been discovered. These rumours are strengthened by the fact that Energy Minister George Lakkotrypis is also in Moscow, ostensibly for a trade fair.

Back in Cyprus, newly elected President Nicos Anastasiades is meeting party leaders this morning as attempts to hammer out a plan B failed last night.

Banks, shut since the weekend, will say closed until next Tuesday at the earliest. The Cyprus Stock Exchange has also extended the suspension of trading until next week.

The deputy leader of the Democratic Rally party warned time was running out: “We don’t have days or weeks, we have only hours to save our country”, Averos Neophytou told reporters.

Meanwhile the European Central Bank has applied more pressure today by  publishing a statement today saying that:

“The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013”.

The ECB’s role is crucial because it controls the provision of central bank funds to Cypriot banks’ lifeblood, without which the island’s bloated financial sector cannot function properly. Cypriot banks are greatly reliant on ELA for funding. At the end of January, they had taken around 9.1 billion euros from the country’s central bank through the program, the Central Bank of Cyprus balance sheet showed.

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