Cypriots quietly await fate as negotiations on bailout terms continue with Brussels

Some demand resignation of president and referendum on any proposed bailout

Cypriots gather for Mass at an Orthodox church in Nicosia yesterday. Talks between the the International Monetary Fund and European Union continued as the country sought to agree terms to a bailout for its ailing banking sector. Photograph: Milos Bicanski/Getty Images

Cypriots gather for Mass at an Orthodox church in Nicosia yesterday. Talks between the the International Monetary Fund and European Union continued as the country sought to agree terms to a bailout for its ailing banking sector. Photograph: Milos Bicanski/Getty Images

Mon, Mar 25, 2013, 06:00

Some Cypriots went to church to pray, others gathered in cafes as Brussels decided the fate of their economy and country.

Traffic was light and there were few visits to cash points, which on the order of the Central Bank were doling out €100 only to each cardholder.

Parliament did not meet to debate legislation, as it had been agreed that “voluntary” levies on deposits did not require approval. It was being speculated that there would be a levy of 20-25 per cent on deposits of more than €100,000 in the Bank of Cyprus and 4 per cent at this level in all other banks. No levy would be imposed on deposits of less than €100,000. The figures were subject to change during negotiations expected to continue late into the night.


‘Great efforts’
Party leaders were summoned in the afternoon to the presidential palace to be briefed on Skype by President Nicos Anastasiades on talks with the troika. The president tweeted: “We are undertaking great efforts. I hope we have a solution soon.” He also spoke by phone to US secretary of state John Kerry, who was in Baghdad.

On Saturday, thousands of employees of Laiki Bank and the Bank of Cyprus demonstrated outside their union offices, the finance ministry and the presidential palace. They chanted: “Enough” and “Hands off provident funds.”

These banks are set to be nationalised and incorporated into a solidarity investment fund along with sums raised from the sale of Central Bank gold, and from mortgages on property held by the wealthy Cyprus Orthodox Church.

Some accused the president of betraying the Cypriot people, demanded his resignation and called for a referendum on any bailout.A strike threatened by employees on Tuesday if banks reopen would lose support among Cypriots and foreign residents, who have not been able to access funds since March 15th.

Supermarkets, neighbourhood shops, petrol pumps, pharmacies and other vendors have insisted on payment in cash. Some Cypriots have cancelled travel arrangements, while those outside the country, deprived of ready cash, tried to change flights to return home early.

Meanwhile, tourists began to arrive on the island for the Easter break. Fuel lorries supplying Larnaca airport were busier than usual.

One banker said the economic situation had deteriorated seriously over the past week. “We should have accepted the haircuts” [of 9.9 per cent on deposits over 100,000 and 6.75 per cent on deposits below that]. “Now we will have to raise more money to rescue the banks and the economy.”

Cyprus television reported that the agreement to transfer 300 branches of three Cypriot banks – Laiki, Bank of Cyprus and Hellenic – in Greece to Greece’s Piraeaus Bank has not gone through.

The deal could have reduced the indebtedness of these banks and contributed €250 million to the €5.8 billion Cyprus must raise to qualify for the €10 billion bailout.