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.
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.
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.
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.
“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.”
Lawmakers will also vote 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 central bank said Thursday that Cyprus had until Monday to reach an agreement with the European Union and the International Monetary Fund, if the government wanted its banks to continue to receive the low-interest loans essential to keeping them afloat.
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.
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.
“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.
Reporting was contributed by Melissa Eddy in Berlin, David M. Herszenhorn in Moscow, James Kanter in Brussels and Andreas Riris in Nicosia.
Article source: http://www.nytimes.com/2013/03/23/business/global/cyprus-bailout-vote.html?partner=rss&emc=rss
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