Cyprus rescued with €10bn bailout but savers will have to pay
Savers in Cypriot banks will be forced to hand over up to 10 per cent of their deposits to raise about €6bn
Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across the Independent titles. He writes a weekly column, Parliamentary Business, published on a Wednesday, that covers politics and the City. He is a multi-award winning reporter and was named Press Gazette's business magazine journalist of the year prior to joining The Independent on Sunday.
Saturday 16 March 2013
Cyprus's stricken economy has been rescued with a €10bn (£8.65bn) bailout, but on terms that are more draconian than those forced on Portugal, Ireland and even Greece.
Cyprus this weekend became the fifth country in three years to receive an international rescue package. However, in a notably tough departure from previous deals, savers in Cypriot banks will be forced to hand over up to 10 per cent of their deposits to raise about €6bn.
Acknowledging furious reaction from residents of the Mediterranean island, finance minister Michael Sarris said: "I am not happy with this outcome in the sense that I wish I was not the minister to do this. Much more money could have been lost in a bankruptcy of the banking system or indeed of the country."
Greece has been plagued by violent rallies by the extreme austerity measures that the country has had to impose, with police using water cannon and tear gas to subdue protesters hurling firebombs outside the parliament building in Athens. Cyprus could suffer similar problems, because it has a relatively high trade union membership that accounts for more than half of the working population.
Antonis Neophytou, a leader of the biggest union, the PEO, warned that his members would oppose the €1.4bn privatisation programme that is a condition of the bailout, because they "look to salvage what has been built on over decades in Cyprus". According to reports out of Nicosia, he added: "All Cypriots will react ... workers are ready and have decided to respond, but unions will have to co-ordinate and [do so] in collaboration with all unions."
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