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| Cyprus parliament overwhelmingly rejects bailout savings tax | Cyprus parliament overwhelmingly rejects bailout savings tax |
| (4 months later) | |
| The Cypriot parliament rejected a planned levy on bank deposits on Tuesday, throwing a European bailout plan for the tiny economy into disarray. | The Cypriot parliament rejected a planned levy on bank deposits on Tuesday, throwing a European bailout plan for the tiny economy into disarray. |
| The vote was overwhelming, 36 with against and 19 abstentions, and brings Cyprus to the brink of financial collapse. Shortly after the vote, the euro fell 0.8 of a cent to $1.2874, its lowest level for three months. The euro has been on the slide since it became clear that even the government's own party would not stand behind the deal. | The vote was overwhelming, 36 with against and 19 abstentions, and brings Cyprus to the brink of financial collapse. Shortly after the vote, the euro fell 0.8 of a cent to $1.2874, its lowest level for three months. The euro has been on the slide since it became clear that even the government's own party would not stand behind the deal. |
| News that MPs had resoundingly rejected the bailout was greeted with applause and cries of "bravo" from the crowds outside the Cyprus parliament, according to those at the scene. | News that MPs had resoundingly rejected the bailout was greeted with applause and cries of "bravo" from the crowds outside the Cyprus parliament, according to those at the scene. |
| MPs in the main government party abstained, and most of the other members of the tiny legislature else voted against. There were no votes in favour of the deal. | MPs in the main government party abstained, and most of the other members of the tiny legislature else voted against. There were no votes in favour of the deal. |
| Cyprus's banks were due to open again on Thursday, but there is already speculation that the current bank holiday could be extended. Next Monday is also a scheduled bank holiday, so the prospect of a longer period of disruption is possible. | Cyprus's banks were due to open again on Thursday, but there is already speculation that the current bank holiday could be extended. Next Monday is also a scheduled bank holiday, so the prospect of a longer period of disruption is possible. |
| EU countries said before the vote that they would withhold €10bn in bailout loans unless depositors in Cyprus shared the cost of the rescue, and the European Central Bank has threatened to end emergency lending assistance for teetering Cypriot banks. | EU countries said before the vote that they would withhold €10bn in bailout loans unless depositors in Cyprus shared the cost of the rescue, and the European Central Bank has threatened to end emergency lending assistance for teetering Cypriot banks. |
| After the vote, the ECB said it remained committed to providing liquidity to Cyprus's banks "within the existing rules". | After the vote, the ECB said it remained committed to providing liquidity to Cyprus's banks "within the existing rules". |
| "The ECB takes note of the decision of the Cypriot parliament and is in contact with its troika partners. The ECB reaffirms its commitment to provide liquidity as needed within the existing rules." | "The ECB takes note of the decision of the Cypriot parliament and is in contact with its troika partners. The ECB reaffirms its commitment to provide liquidity as needed within the existing rules." |
| There were fears that the ECB could pull the plug on the country's two biggest banks, by terminating the support provided under its Emergency Liquidity Assistance – on the grounds that they could be insolvent. But Cyprus could be gambling that the ECB would not risk turning off the tap. | There were fears that the ECB could pull the plug on the country's two biggest banks, by terminating the support provided under its Emergency Liquidity Assistance – on the grounds that they could be insolvent. But Cyprus could be gambling that the ECB would not risk turning off the tap. |
| Sebastien Galy, senior currency strategist at Société Générale, said that Cyprus's government will eventually manage to hammer out a new deal, but not before a great deal more uncertainty. | Sebastien Galy, senior currency strategist at Société Générale, said that Cyprus's government will eventually manage to hammer out a new deal, but not before a great deal more uncertainty. |
| He said: "Superficially it is negative, more practically it means we are off to the next round of negotiations which means more uncertainty and eventually some form of deal. Drama is sadly a part of the negotiation process." | He said: "Superficially it is negative, more practically it means we are off to the next round of negotiations which means more uncertainty and eventually some form of deal. Drama is sadly a part of the negotiation process." |
| Fears over the eurozone crisis will keep pushing the euro down against the US dollar, he added. | Fears over the eurozone crisis will keep pushing the euro down against the US dollar, he added. |
| Newly elected president Nicos Anastasiades earlier told reporters he expected parliament to reject the tax on bank deposits, "because they feel and they think that it is unjust and it's against the interests of Cyprus at large." | Newly elected president Nicos Anastasiades earlier told reporters he expected parliament to reject the tax on bank deposits, "because they feel and they think that it is unjust and it's against the interests of Cyprus at large." |
| Europe's demand at the weekend that Cyprus break with previous EU practice and impose a levy on bank accounts sparked outrage among Cypriots and unsettled financial markets. | Europe's demand at the weekend that Cyprus break with previous EU practice and impose a levy on bank accounts sparked outrage among Cypriots and unsettled financial markets. |
| Anastasiades refused to accept a levy of more than 10% on deposits above €100,000, which meant taxing smaller accounts too. That would have hurt ordinary savers with deposits that they thought came with a state guarantee. | Anastasiades refused to accept a levy of more than 10% on deposits above €100,000, which meant taxing smaller accounts too. That would have hurt ordinary savers with deposits that they thought came with a state guarantee. |
| Cypriot finance minister Michael Sarris flew to Moscow on Tuesday to seek Russian financial assistance. He denied by text message reports that he had resigned, which rattled nerves as lawmakers were poised to vote. | Cypriot finance minister Michael Sarris flew to Moscow on Tuesday to seek Russian financial assistance. He denied by text message reports that he had resigned, which rattled nerves as lawmakers were poised to vote. |
| Stunned by the backlash, eurozone finance ministers urged Nicosia on Monday to avoid hitting accounts below €100,000, and instead increase the levy on big accounts, which are unprotected by the state deposit guarantee. | Stunned by the backlash, eurozone finance ministers urged Nicosia on Monday to avoid hitting accounts below €100,000, and instead increase the levy on big accounts, which are unprotected by the state deposit guarantee. |
| The European Union and International Monetary Fund are demanding Cyprus raise €5.8bn from depositors to secure its bailout, needed to rescue its financial sector. | The European Union and International Monetary Fund are demanding Cyprus raise €5.8bn from depositors to secure its bailout, needed to rescue its financial sector. |
| A revised draft bill would have exempt savings under €20,000 from the planned 6.75 percent levy on deposits of less than €100,000, leaving a shortfall, but that was not enough to sway lawmakers, even in the ruling party, to accept the tax. | A revised draft bill would have exempt savings under €20,000 from the planned 6.75 percent levy on deposits of less than €100,000, leaving a shortfall, but that was not enough to sway lawmakers, even in the ruling party, to accept the tax. |
| The French finance minister, Pierre Moscovici, said the eurozone could not lend Cyprus any more, since the country's debt would become unmanageable. "Above €10bn we are entering into a size of debt that is not sustainable," Moscovici told reporters in Paris. | The French finance minister, Pierre Moscovici, said the eurozone could not lend Cyprus any more, since the country's debt would become unmanageable. "Above €10bn we are entering into a size of debt that is not sustainable," Moscovici told reporters in Paris. |
| An influx of Russian money and influence since the collapse of the Soviet Union has led some Brussels officials to complain privately that Cyprus acts at times as a "Trojan donkey" for Moscow inside the European Union since it joined in 2004. | An influx of Russian money and influence since the collapse of the Soviet Union has led some Brussels officials to complain privately that Cyprus acts at times as a "Trojan donkey" for Moscow inside the European Union since it joined in 2004. |
| Stunned Cypriots emptied cash machines over the weekend and banks are to remain shut on Tuesday and Wednesday to avoid a bank run. The island's stock exchange also suspended trading for another two days. | Stunned Cypriots emptied cash machines over the weekend and banks are to remain shut on Tuesday and Wednesday to avoid a bank run. The island's stock exchange also suspended trading for another two days. |
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