* Cypriot president says Russia can "save" island
* Island hobbled by exposure to debt-wracked Greece
* Russia's Putin quoted as saying stands ready to assist
By Michele Kambas
NICOSIA, Jan 30 Debt-hobbled Cyprus limped
closer to an international financial bailout on Wednesday,
saying it had won Russian assurances that Moscow would join in
international efforts to salvage the island's finances.
The Mediterranean nation, one of the euro zone's smallest
economies, applied for aid from the European Union and the
International Monetary Fund last June.
Talks are complicated by the sheer size of the bailout,
which could equal the 17.5 billion euro size of the Cypriot
economy, and German misgivings about the island's commitment to
financial transparency because of its close ties with Russia.
Cyprus, shut out of financial markets for almost two years,
got a 2.5 billion euro bilateral loan from Moscow in late 2011.
Russian President Vladimir Putin discussed the situation
with Cypriot President Demetris Christofias on Tuesday, a
statement from Cyprus's presidency said.
"President Putin assured me that the Russian Federation is
ready to contribute with the European Union in the financing of
Cyprus," the statement quoted Christofias telling Cypriot
reporters during a visit to Belgrade.
"I strongly believe that this assistance can save us,"
It is not clear what form any Russian assistance might take.
Cyprus has already asked for a five-year extension in repaying
its 2.5 billion euro loan to Moscow, to 2021 from an initial
Last week, European Economic and Monetary Affairs
Commissioner Olli Rehn told Reuters he believed it was only fair
Russia make a contribution to the bailout effort because of the
significant Russian business presence on the island.
Christofias, the EU's only Communist head of state and a
fluent Russian speaker, said he spoke to Putin by phone on
Tuesday evening. A government source said Putin made the call.
Russian Prime Minister Dmitry Medvedev was quoted as saying
on Monday that Russia could provide support to Cyprus under
certain conditions but the island itself and the European Union
would have to take the biggest share in a potential bailout.
Cyprus has been toiling under financial stress since its two
largest banks sought state support after losses on an
EU-sanctioned writedown on privately-held Greek sovereign debt.
Shut out of markets, it has been increasingly relying on
high-yield short-term borrowing.
Unless a bailout were settled soon, the island could start
causing wider problems, according to former euro group Chairman
"If we don't definitively solve the problem case of Cyprus,
there is a contagion risk even from this very small national
economy," Juncker was quoted as telling Austria's Kleine Zeitung
in an interview published on Wednesday.