Cyprus President Tries To Calm Public After Anger Over Bailout Deal
There's news from Cyprus that could have broader implications for Europe when the eurozone's banks open Monday.
It comes a day after officials from the eurozone and the International Monetary Fund signed off on a $13 billion bailout for Cyprus. The money was needed because Cyprus' banks lost 4.5 billion euros on their Greek bond holdings, which were written down last year after Greece's second bailout.
The deal reached Saturday imposes a one-time levy of 6.75 percent on all deposits under 100,000 euros and a 9.9 percent levy above that amount. The levy is expected to raise 5.8 billion euros. Cyprus' bailout follows those for Greece, Portugal, Ireland and Spain's banking sector, but it is the first time eurozone states and the IMF have dipped into people's savings to pay for a bailout.
The deal has met with widespread anger in Cyprus, a run on bank deposits over the weekend and fears that the public unease might spread to other at-risk EU countries such as Spain and Italy.
Here's more from Joanna Kakissis, who is reporting on the development for our Newscast team:
"President Nicos Anastassiades went on national television today to calm people who are emptying the country's ATMs of cash. He promised revenues from natural gas reserves to those who keep their money in Cypriot banks for the next two years. The government has closed banks through Tuesday to prevent mass withdrawals."
Anastassiades, who assumed the presidency March 1, urged Cypriot lawmakers to approve the levy in a vote Monday. But he also said he was working to amend "in the next hours to limit the effect on small depositers." He didn't specify what he meant by "small depositers."
Here's more from The Associated Press:
"He said the tax would only be as much as the interest collected on deposits over two years and stressed that it would only happen once because it would ensure the bailout wouldn't push the country's debt to unsustainable levels. ...
"He said pension and provident funds will remain untouched, and there won't be any need for further salary and pension cuts, or an earlier demand by creditors for a financial transaction tax, which would have damaged Cyprus' financial services-driven economy."
About half of bank deposits in Cyprus are from Russia, Britain and Greece. Joanna has been reporting on the Cypriot crisis for quite a while now. In January, she reported on the Russian deposits in Cyprus, estimated to be 20 percent of all deposits. Some of those holdings have led to the Mediterranean country being called a money-laundering center for Russian oligarchs.
In his television appearance Sunday, Anastassiades said not accepting the deal would have meant a collapse of the country's banking system and a massive blow to its economy and workers.