Cyprus weighs bailout options: Europe or Russia?

NICOSIA, Cyprus (AP) — Cyprus faces the choice of asking for a bailout from its European partners in the euro or from Russia, and will decide where to turn after this weekend’s crucial elections in Greece, officials said Friday.

Government spokesman Stefanos Stefanou wouldn’t name the country where a possible loan could come from. But an official, speaking on condition of anonymity because of the sensitivity of the matter, identified it as Russia.

Stefanou said Cyprus is looking at both options in order to have ‘‘flexibility to deal with the issue.’’
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The Cypriot government is wary of turning to the EU bailout fund due to fears that it might, like Greece, be forced to make painful austerity measures as a condition for the money. Cyprus is particularly afraid it might be asked to raise its 10 percent corporate tax rate, which attracts much foreign business.

Cyprus’ left-wing President Dimitris Christofias has repeatedly lamented what he described as Europe’s erroneously single-minded focus on austerity at the expense of policies that promote economic growth.

Because of these concerns, the government is again reaching out for a helping hand from Russia, a trusted ally with vested interests in the island’s economy.

Russians have billions stashed in Cypriot banks and Russian companies are looking to invest in natural gas exploration off the island’s south coast, where a large mineral deposit has already been discovered.