Three political parties in Cyprus oppose bailout

Three political parties in Cyprus have said that they will not back the EU/IMF bailout plan.

Several political parties in the 56-member chamber in Cyprus are meeting this morning to formulate their positions over the bank levy.

Cyprus's parliament has postponed an emergency session to discuss the levy on bank savings until tomorrow.

The levy is being imposed as part of the EU/IMF terms to partially fund thel bailout needed to stave off bankruptcy.

The President of Cyprus, Nicos Anastasiades postponed an informal briefing to parliament.

It had been called to vote on the levy on bank savings that requires savers in Cypriot banks to take losses amounting to €5.8bn.

Mr Anastasiades's right-wing Democratic Rally party, with 20 seats in the 56-member parliament, needs the support of other factions for the vote to pass.

It is unclear whether even his coalition partners, the Democratic Party, would fully support the levy.

Cyprus's Communist party AKEL, accused of stalling on a bailout during its tenure in power until the end of February, was likely to vote against the measure.

The socialist Edek party called EU demands "absurd".

Green Party leader Adonis Yiango said: "This is unacceptably unfair and we are against it." 

Yesterday, account-holders began withdrawing funds from cashpoints.

Banks do not re-open in Cyprus until Tuesday as it is a bank holiday tomorrow.

One bank, the Cyprus Popular Bank, could have its emergency liquidity assistance (ELA) funding from the European Central Bank cut by 21 March.

A default in Cyprus would threaten to unravel investor confidence in the eurozone.

Confidence had been fostered by the European Central Bank's promise last year to do whatever it takes to shore up the currency bloc.

Making bank depositors bear some of the costs of a bailout had been taboo in Europe.

Eurozone officials said it was the only way to salvage Cyprus's financial sector, which is around eight times the size of the economy.

European officials said it would not set a precedent.

In Spain, one of four other states getting eurozone help and seen as a possible candidate for a sovereign rescue, officials were quick to say Cyprus was a unique case.

A Bank of Spain spokesman said there had been no sign of deposit flight.

The crisis is unprecedented in the history of the Mediterranean island, which suffered a war and ethnic split in 1974 in which a quarter of its population was internally displaced.

Cypriat leader Mr Anastasiades, elected only three weeks ago, said he had no choice but to accept the eurozone's aid terms.

"We would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis," Mr Anastasiades said in a statement.

With a gross domestic product of barely 0.2 percent of the bloc's overall output, Cyprus applied for financial aid last June, but negotiations were stalled by the complexity of the deal and reluctance of the island's previous president to sign.

International Monetary Fund Managing Director Christine Lagarde, who attended the meeting, said she backed the deal and would ask the IMF board in Washington to contribute to the bailout.

Cyprus is expecting the results of an offshore appraisal drilling this year to confirm the island is sitting on vast amounts of natural gas worth billions.

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island, as well as Cypriots themselves.

British finance minister George Osborne told the BBC that Britain would compensate its about 3,500 military personnel based in Cyprus.

Many Cypriots, having contributed to bailouts for Ireland, Portugal and Greece - Greece's second bailout contributed to a debt restructuring that blew the €4.5bn hole in Cyprus's banking sector - are aghast at Europe's treatment.

The newspaper Phileleftheros said that Cyprus received a "stab in the back" by its EU partners.

But it and another newspapers highlighted the danger of plunging the banking system into further turmoil if lawmakers sat on the fence.

"Even if the final agreement is wrong, if this is not approved by parliament the damage will be even greater," Politis economics editor Demetris Georgiades said in an editorial.

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