Cyprus president desperately seeks to stop bank run

AFP-JIJI

Amid fears of a run on bank accounts in Cyprus, President Nicos Anastasiades is trying to persuade lawmakers to back an EU bailout deal that slaps a levy on bank savings.

Anastasiades, in an address to the nation Sunday night, said that rejecting the EU demands would have seen Cyprus exit the eurozone and face bankruptcy.

“I chose the least painful option, and I bear the political cost for this, in order to limit as much as possible the consequences for the economy and for our fellow Cypriots,” Anastasiades said.

He also vowed to continue to try to persuade the Eurogroup of EU finance ministers that imposed the harsh conditions to “limit the impact on small depositors.”

As a condition for a desperately needed ?10 billion ($13 billion) bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island’s banks.

Deposits of more than ?100,000 will be hit with a 9.9 percent charge, while under that threshold the levy drops to 6.75 percent.

“The first choice (rejecting the EU’s terms) would have led to a disorderly default as a result of the ECB (European Central Bank) cutting emergency funding to maintain liquidity in the two largest banks,” Anastasiades said.

“The second choice (accepting the terms) was very difficult but controlling and managing the situation leading to economic stability of the economy.”

Cyprus bank customers have voiced dismay and anger that their nation has been the only one expected to help foot the bill among the five eurozone member countries forced to seek bailouts so far.

“Many countries have economic problems more than Cyprus. Why are they doing this only in Cyprus?” lamented dentist Andreas Hadgigeorghiou.

Anastasiades sought to calm bank depositors, who were seen lining up outside ATMs making whatever limited withdrawals of their savings they were allowed.

“I fully share the unhappiness caused by a difficult and painful decision,” he said. “That’s why I continue to fight with the Eurogroup to amend their decisions in the coming hours to limit the impact on small depositors.”

Local media said he is struggling to secure even a simple majority for the terms of the bailout in the 56-member Parliament in which his conservative DISY party holds just 20 seats.

Anastasiades needs to get the legislation ratifying the deal through Parliament before banks reopen Tuesday, after a long three-day weekend, or face a run on accounts.

But local media reported that the scale of revolt against the agreement among lawmakers has thrown into disarray his efforts to do so over the weekend, and he may have to declare an additional bank holiday Tuesday.

The president was to meet his Cabinet on Monday before briefing lawmakers. Parliament was expected to vote on the bailout around 4 p.m.

The bank levy will hit everyone who has money deposited in Cyprus banks, from pensioners to Russian oligarchs.

Despite the public statements of opposition, many Cypriots said they expected that Parliament would eventually be forced to approve the deal.

“I am not happy, but they have to sign,” said Irini Makrides, who owns a shoe shop.

Nicosia-based political analyst Hubert Faustmann said that ultimately lawmakers have little choice. “Parliament will have to vote it through because the alternative is bankruptcy. They cannot amend it, as far as I know. It is a ‘yes’ or ‘no’ vote — and a ‘no’ means bankruptcy.”