Cyprus Stalls Vote on Bailout Tax

Lawmakers bitterly decrying terms of $13B IMF deal

By Newser Editors and Wire Services

Posted Mar 17, 2013 10:30 AM CDT

(Newser) – Cyprus' parliament today postponed until tomorrow a vote on a controversial levy on all bank deposits that the cash-strapped country's creditors had demanded in exchange for a $13 billion bailout. The announcement set off an immediate scramble among top European officials, with reports that the European Central Bank was pressuring Cypriot authorities to hold the vote without delay. The stakes are high for the tiny island nation of 1 million, because a rejection of the levy by lawmakers could push Cyprus into bankruptcy and possibly out of the euro. Officials also fear a massive run Tuesday on Cypriot banks—after a national holiday tomorrow—no matter which way the voting goes. "There are two choices, voting in favor which allows the country to avoid a disorderly bankruptcy, or rejection, which will have us face a disorderly bankruptcy with all that that entails," says a lawmaker.

The Cyprus News Agency said President Nicos Anastasiades had personally requested the postponement, but no reason was given. The decision by Cyprus' 16 eurozone partners and the IMF to impose a one-time tax of 6.75% on all deposits under $131,000 and 9.9% over that amount has enraged Cypriot politicians, which brings into sharp doubt its approval chances. It marks the first time the IMF and the 17 eurozone nations have dipped into people's savings to finance a bailout. "What happens to Italy now? What happens to Spain? What happens to other countries?" complained one lawmaker.

People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013.
People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013.   (Petros Karadjias)
An elderly man passes by a cooperative bank in Limassol, Cyprus, Saturday, March 16, 2013. Many rushed to the cooperative banks which are open Saturdays in Cyprus.
An elderly man passes by a cooperative bank in Limassol, Cyprus, Saturday, March 16, 2013. Many rushed to the cooperative banks which are open Saturdays in Cyprus.   (Pavlos Vrionides)
People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013.
People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013.   (Petros Karadjias)
An elderly man holds his bank passbook as he looks through the windows of a closed cooperative bank shop in Limassol, Cyprus, Saturday, March 16, 2013.
An elderly man holds his bank passbook as he looks through the windows of a closed cooperative bank shop in Limassol, Cyprus, Saturday, March 16, 2013.   (Pavlos Vrionides)
In this image taken Saturday, March 16, 2013,  people queue to use an ATM machine outside of Bank of Cyprus branch in southern port city of Limassol, Saturday, March 16, 2013.
In this image taken Saturday, March 16, 2013, people queue to use an ATM machine outside of Bank of Cyprus branch in southern port city of Limassol, Saturday, March 16, 2013.   (Pavlos Vrionides)
Cyprus’ Central Bank chief Panicos Demetriades, right, leaves the meeting with president Nicos Anastasiades at the presidential palace in capital Nicosia, Cyprus, Sunday, March 17, 2013.
Cyprus’ Central Bank chief Panicos Demetriades, right, leaves the meeting with president Nicos Anastasiades at the presidential palace in capital Nicosia, Cyprus, Sunday, March 17, 2013.   (Petros Karadjias)
Cyprus’ Financial Minister Michalis Saris  right, leaves the meeting with president Nicos Anastasiades at the presidential palace in capital Nicosia, Cyprus, Sunday, March 17, 2013.
Cyprus’ Financial Minister Michalis Saris right, leaves the meeting with president Nicos Anastasiades at the presidential palace in capital Nicosia, Cyprus, Sunday, March 17, 2013.   (Petros Karadjias)
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