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| Under Pressure, Cyprus Lawmakers to Vote on Bailout | Under Pressure, Cyprus Lawmakers to Vote on Bailout |
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| NICOSIA — Under pressure from the European Central Bank to reach a deal quickly or risk a cutoff of financing for Cypriot banks, members of the Cypriot Parliament were preparing to vote Friday on yet another revamped formula for an international bailout. | NICOSIA — Under pressure from the European Central Bank to reach a deal quickly or risk a cutoff of financing for Cypriot banks, members of the Cypriot Parliament were preparing to vote Friday on yet another revamped formula for an international bailout. |
| Without lawmakers’ approval for new measures, the country will not receive the €10 billion, or $13 billion, bailout it has requested and could risk a disorderly default. | |
| The govermnent spokesman, Christos Stylianides, underscored the urgency of the situation. “The coming hours will seal our fate,” he said. “The country must be saved.” | The govermnent spokesman, Christos Stylianides, underscored the urgency of the situation. “The coming hours will seal our fate,” he said. “The country must be saved.” |
| Members of the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — met Friday morning with President Nicos Anastasiades and were planning to review the new proposal, should Parliament pass it. | Members of the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — met Friday morning with President Nicos Anastasiades and were planning to review the new proposal, should Parliament pass it. |
| A crowd of several hundred demonstrators massed again Friday morning in front of the Parliament building. Many angrily demanded compensation for their losses at the banks. | A crowd of several hundred demonstrators massed again Friday morning in front of the Parliament building. Many angrily demanded compensation for their losses at the banks. |
| With anger and anxiety growing across Cyprus, Mr. Anastasiades’s new plan would scrap a tax on bank deposits. Experts warned, however, that the deposit-tax plan might need to be revisited unless the government found other means to reach the goal of raising €5.8 billion to satisfy Cyprus’s creditors and unlock the full bailout funds. | With anger and anxiety growing across Cyprus, Mr. Anastasiades’s new plan would scrap a tax on bank deposits. Experts warned, however, that the deposit-tax plan might need to be revisited unless the government found other means to reach the goal of raising €5.8 billion to satisfy Cyprus’s creditors and unlock the full bailout funds. |
| The plan sent to Parliament would nationalize pension funds from state-run companies and conduct an emergency bond sale to help raise the €5.8 billion. Gone was any reference to a deposit tax, which Parliament roundly rejected in a vote Tuesday. | The plan sent to Parliament would nationalize pension funds from state-run companies and conduct an emergency bond sale to help raise the €5.8 billion. Gone was any reference to a deposit tax, which Parliament roundly rejected in a vote Tuesday. |
| Before concrete details emerged, German leaders made it clear they would not back a deal that involved nationalizing the state-owned companies’ pensions, a measure that is rejected in Berlin as more socially dangerous than even the original plan to tax smaller savings. | Before concrete details emerged, German leaders made it clear they would not back a deal that involved nationalizing the state-owned companies’ pensions, a measure that is rejected in Berlin as more socially dangerous than even the original plan to tax smaller savings. |
| In a closed-door meeting with members of her junior coalition partner, the Free Democrats, Chancellor Angela Merkel made clear her impatience with the government in Cyprus, stating that “under no circumstances can we give up our principles,” the public television network ARD reported. | In a closed-door meeting with members of her junior coalition partner, the Free Democrats, Chancellor Angela Merkel made clear her impatience with the government in Cyprus, stating that “under no circumstances can we give up our principles,” the public television network ARD reported. |
| “When you consider that there was massive resistance against involving the savings, then it is not easy to see how tapping the pension funds, which we view as socially a much more drastic step, is a very good idea,” Steffen Seiber, Ms. Merkel’s spokesman, told reporters. | “When you consider that there was massive resistance against involving the savings, then it is not easy to see how tapping the pension funds, which we view as socially a much more drastic step, is a very good idea,” Steffen Seiber, Ms. Merkel’s spokesman, told reporters. |
| Germany is not alone. Luc Frieden, Luxembourg’s finance minister, expressed frustration over a lack of communication in Nicosia, telling Germany’s RBB radio, “It is difficult that we are not getting any details from Cyprus.” | Germany is not alone. Luc Frieden, Luxembourg’s finance minister, expressed frustration over a lack of communication in Nicosia, telling Germany’s RBB radio, “It is difficult that we are not getting any details from Cyprus.” |
| The European Central Bank has told Cyprus that it has until Monday to reach an agreement with the European Union and the International Monetary Fund, if the government wants its banks to continue to receive the low-interest loans essential to keeping them afloat. | The European Central Bank has told Cyprus that it has until Monday to reach an agreement with the European Union and the International Monetary Fund, if the government wants its banks to continue to receive the low-interest loans essential to keeping them afloat. |
| The Cypriot central bank said the new bailout package included “consolidation measures” to enable Cyprus Popular Bank, also known as Laiki Bank, to continue operating. | The Cypriot central bank said the new bailout package included “consolidation measures” to enable Cyprus Popular Bank, also known as Laiki Bank, to continue operating. |
| As the country’s most troubled lender, it would be reorganized by placing underperforming loans and questionable assets into a so-called bad bank and transferring healthy assets to the Bank of Cyprus, the nation’s largest financial institution. By effectively shutting down one of the banks needing support, the government would lower the large tab for supporting the banking system. | As the country’s most troubled lender, it would be reorganized by placing underperforming loans and questionable assets into a so-called bad bank and transferring healthy assets to the Bank of Cyprus, the nation’s largest financial institution. By effectively shutting down one of the banks needing support, the government would lower the large tab for supporting the banking system. |
| On Friday, Greece struck a deal to take over the Greek units of Cyprus’s three main banks, a move that would reduce the bill Cyprus now foots to support the banks, and ensure that Greek savers in those banks do not get taxed on their holdings. | On Friday, Greece struck a deal to take over the Greek units of Cyprus’s three main banks, a move that would reduce the bill Cyprus now foots to support the banks, and ensure that Greek savers in those banks do not get taxed on their holdings. |
| Lawmakers will also vote Friday on restrictions on taking cash out of banks and out of the country, known as capital controls, when the banks reopen Tuesday after a national holiday Monday. The bill would limit cash withdrawals, prohibit or restrict check cashing and bar “premature” account closings and any other transaction the authorities deemed unwarranted. | Lawmakers will also vote Friday on restrictions on taking cash out of banks and out of the country, known as capital controls, when the banks reopen Tuesday after a national holiday Monday. The bill would limit cash withdrawals, prohibit or restrict check cashing and bar “premature” account closings and any other transaction the authorities deemed unwarranted. |
| The authorities have ordered Cypriot banks to keep A.T.M.’s filled with cash as long as the banks themselves are closed. But that has been of little help to the thousands of international companies that do banking in Cyprus, which cannot transfer money in and out of those accounts to conduct business. | The authorities have ordered Cypriot banks to keep A.T.M.’s filled with cash as long as the banks themselves are closed. But that has been of little help to the thousands of international companies that do banking in Cyprus, which cannot transfer money in and out of those accounts to conduct business. |
| European authorities said on Friday that members of the troika were focused on the laws being drafted by the Cypriots to wind up failing banks and restrict flows of money out of the country. | European authorities said on Friday that members of the troika were focused on the laws being drafted by the Cypriots to wind up failing banks and restrict flows of money out of the country. |
| “The law on bank resolution that is adopted needs to be a law applicable in a generic fashion, so not a law that would be applicable in only one particular case,” Simon O’Connor, a spokesman for Olli Rehn, the E.U. commissioner for economic and monetary Affairs, told a daily news conference in Brussels. | “The law on bank resolution that is adopted needs to be a law applicable in a generic fashion, so not a law that would be applicable in only one particular case,” Simon O’Connor, a spokesman for Olli Rehn, the E.U. commissioner for economic and monetary Affairs, told a daily news conference in Brussels. |
| Those comments seemed to suggest that troika officials want the Cypriots to be ready to shut down troubled lenders in addition to Laiki Bank, like the Bank of Cyprus, with the option of imposing significant haircuts, or losses, on large depositors. | Those comments seemed to suggest that troika officials want the Cypriots to be ready to shut down troubled lenders in addition to Laiki Bank, like the Bank of Cyprus, with the option of imposing significant haircuts, or losses, on large depositors. |
| Revised plans for a contribution Cyprus would make toward a bailout package, dubbed a solidarity fund, were still under the troika’s microscope. “We haven’t given any green light because we still are looking at the proposal in depth,” Mr. O’Connor said. | |
| Other officials on Friday gave assurances that Cyprus can impose capital controls — probably including strict curbs on daily withdrawals and withdrawals of savings deposits — without violating European Union rules that are meant to foster flows of capital between member states. | Other officials on Friday gave assurances that Cyprus can impose capital controls — probably including strict curbs on daily withdrawals and withdrawals of savings deposits — without violating European Union rules that are meant to foster flows of capital between member states. |
| “It’s a unilateral decision by the member state and it does not require prior approval from the commission,” Chantal Hughes, a spokeswoman for Michel Barnier, the E.U. commissioner for financial services, told the same news conference. A country like Cyprus “can impose those restrictions as long as the criteria laid out in the treaties are met,” she said. | “It’s a unilateral decision by the member state and it does not require prior approval from the commission,” Chantal Hughes, a spokeswoman for Michel Barnier, the E.U. commissioner for financial services, told the same news conference. A country like Cyprus “can impose those restrictions as long as the criteria laid out in the treaties are met,” she said. |
| But she underlined that imposing capital controls was “not meant to be a never-ending situation” and that reaching an overall deal was vital. | But she underlined that imposing capital controls was “not meant to be a never-ending situation” and that reaching an overall deal was vital. |
| Many of the wealthiest citizens of Russia, which is not in the euro currency union, have bank accounts in Cyprus — one reason that euro zone finance ministers have taken such a hard line. | Many of the wealthiest citizens of Russia, which is not in the euro currency union, have bank accounts in Cyprus — one reason that euro zone finance ministers have taken such a hard line. |
| A delegation of Cypriot officials led by the finance minister, Michalis Sarris, remained in Moscow until Friday morning to press their case for additional aid, but there were no reports of progress, and the officials stayed out of sight. | A delegation of Cypriot officials led by the finance minister, Michalis Sarris, remained in Moscow until Friday morning to press their case for additional aid, but there were no reports of progress, and the officials stayed out of sight. |
| The Russian prime minister, Dmitri A. Medvedev said Friday in a joint news conference in Moscow with José Manuel Barroso, the president of the European Commission, that his country was not walking away from Cyprus. | The Russian prime minister, Dmitri A. Medvedev said Friday in a joint news conference in Moscow with José Manuel Barroso, the president of the European Commission, that his country was not walking away from Cyprus. |
| Instead, said Mr. Medvedev, Russia would wait until a deal is done between E.U. authorities and Cyprus before extending additional help. | Instead, said Mr. Medvedev, Russia would wait until a deal is done between E.U. authorities and Cyprus before extending additional help. |
| “Regarding our participation in this process, we haven’t shut the doors,” said Mr. Medvedev. “Of course we’ve got our own economic interests at stake.” Additional efforts to help Cyprus will come “only after a final settlement scheme” involving the European Union, he said. | |
| The situation in Cyprus “is very dramatic and should be addressed as soon as possible,” Mr. Medvedev said. | The situation in Cyprus “is very dramatic and should be addressed as soon as possible,” Mr. Medvedev said. |
| Reporting was contributed by Melissa Eddy in Berlin, James Kanter in Brussels, David M. Herszenhorn in Moscow, Niki Kitsantonis in Athens and Andreas Riris in Nicosia. | Reporting was contributed by Melissa Eddy in Berlin, James Kanter in Brussels, David M. Herszenhorn in Moscow, Niki Kitsantonis in Athens and Andreas Riris in Nicosia. |