Cyprus considers both sources of financial aid

As the debt crisis contagion spreads across the EU, Cyprus has fallen victim of Greece’s problems, and is considering help from both the EU and Russia. The Cypriot Finance Minister warns that it’s the final countdown for the country to secure funding

­The move could make it the fifth euro-zone country to turn to Europe for a multibillion-euro bailout.

"I calculated that there's 278 hours left until June 30," the date, by which the Cyprus Popular Bank has to be recapitalized, Vassos Shiarly said on Tuesday. "We're counting the hours."

The Cyprus Popular Bank suffered heavy losses on its holdings of Greek debt in the large-scale debt restructuring earlier this year, and now needs an estimated €1.8 billion ($2.26 billion) to be saved.

European authorities are pressuring Cyprus to take a full bailout package worth as much as 10 billion euros ($12.7 billion), opposing the country’s attempt to limit any aid to its banking system.

“We have to obtain financing to recapitalize the banks. This is unavoidable,” Finance Minister Vassos Shiarly told reporters on Monday. "If euro-area cash comes with too many strings attached, Cyprus will have other options. A negotiating position in talks with the European Union is much better when there’s a bilateral loan already approved,” he added.

Cyprus which may need as much as 6 billion euros ($7.6 billion) to give its banks a boost, is also considering a loan from Russia and if the Russian loan comes through, the country could use that agreement to improve its bargaining position with its euro-bloc partners.

Cyprus would be the fifth of 17 nations to take a financial lifeline, since Spain is already in talks for a rescue limited to its banks.

Vassos Shiarly said that unlike a loan from Russia, European aid would come with conditions, probably including implementation of the European Commission’s recent recommendations intended to rectify macroeconomic imbalances and overhaul the Cypriot economy.

Pavel Medvedev, an adviser to Bank Rossii Chairman Sergey Ignatiev, said he “wouldn’t be surprised” if Russia extended a second loan to Cyprus in as many years. Last December, Russia lent 2.5 billion euros to the island nation.

Meanwhile the Russian Finance Ministry hasn’t received an official loan request from Cyprus. Cyprus also hasn’t yet put in a bid for euro-area aid.