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EXCAVATIONS at the 12th century Georgian monastery near Gialia village in the Paphos District have uncovered the ruined building’s main church and two smaller chapels on the north side of the structure.Also uncovered as part of the two-year old excavations, some five kilometres from Polis, were storerooms on the south side and cisterns connected to the water channel.Twelve graves, dating from the 15th to 16th century, with Greek and Georgian inscriptions, were also discovered, and ...
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Cyprus Articles [ Deputies throw out bailout deal ]

Deputies throw out bailout deal

Stefanos Evripidou

PARLIAMENT last night rejected a second draft bill on the proposed levy on bank deposits in Cyprus, considered a precondition to any bailout of the troubled island. 

The initial deal banged out in Brussels at the weekend imposed a 6.75 per cent levy on small savers with insured deposits of under €100,000 and 9.9 per cent on those over €100,000.

Following the global and local backlash to the idea of taxing insured depositers, eurozone finance ministers decided on Monday night that the finer details of the levy could be left up to Cyprus as long as the near-bankrupt member state is able to come up with a €5.8 billion ‘bail-in’ which would then trigger a €10 billion EU/IMF ‘bailout’.

The surprise haircut introduced by the IMF, Germans, Finnish and Dutch in the Eurogroup meeting hit a nerve among small and big depositors, both in Cyprus and abroad, particularly Russia, given that this would be the first time a eurozone bailout requires bank depositors, not bondholders or investors, to take a hit.

With an acute sense of the pervading anger among depositors, the government tabled a new draft bill before parliament yesterday, this time leaving deposits up to €20,000 exempt from the bank levy, while imposing a 6.75 per cent levy on savings between €20,000 and €100,000 and a 9.9 per cent tax on anything higher.

President Nicos Anastasiades was reportedly reluctant to increase the contribution of big depositors even if this meant forcing insured depositors with over €20,000 to contribute, fearful that any levy over 10 per cent would cause the flight of foreign capital from Cyprus, and the end of the country’s business model as a financial services centre, not to mention a potential run on banks. 

However, failing to increase the levy on big depositors while exempting a portion of small savers meant the new bill would create a shortfall in the €5.8 billion expected to be raised.

Perhaps the foreseen deficit was a moot point for the government as Anastasiades earlier yesterday 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”.

And he was right. A total of 36 MPs - from opposition AKEL, EDEK, the Greens, as well as coalition partners DIKO and EVROKO - all voted against the bill. 

Ruling DISY’s acting head Averof Neophytou requested a postponement of the vote until today, which was rejected, after which he and 18 other DISY deputies decided to abstain. Only one MP did not vote, DISY’s Stella Kyriakidou who was abroad. 

Ahead of the parliamentary session, between 6,000 and 7,000 people gathered outside parliament waving mostly Russian flags and chanting “Troika out of Cyprus” and “People fight, they’re sucking your blood”. 

During the parliamentary debate, DIKO leader Marios Garoyian said now was the time for parliament to send its own message. He warned that some want to see Cyprus starved so that when the time comes they will give away their natural gas deposits and agree to supply them via pipeline to Turkey. 

EVROKO leader Demetris Syllouris complained that during his recent visit to the German parliament, German MPs adopted an air of polite insult, telling the delegation of Cypriot MPs that their intelligence service had compiled a report saying Cyprus is engaged in money laundering.

“I’d like to see that report and see what it says about Germany,” he said from the plenum floor.

House Speaker Yiannakis Omirou said the Eurogroup’s decision made Cyprus a guinea pig of neo-colonial policies while violating the EU’s own rules on deposits and private property.

The EDEK leader also questioned those who tried to “blackmail” Cyprus by saying failure to pass the bill would be catastrophic.

“Are we naοve? If we pass this, won’t every foreigner leave?” he asked.

AKEL leader Andros Kyprianou said the upcoming German elections should not be the criteria for putting together such an unpopular and unprecedented measure as a haircut on deposits, which destroys any hope for Cyprus’ future.

He called on the government to withdraw Cyprus’ application for an EU bailout and instead work with the opposition party on a number of new proposals to raise cash, including issuing state ‘solidarity’ bonds of 10-year length.

Neophytou noted his disappointment with the Eurogroup’s position last Friday. He said just a few hours before the eurozone finance ministers’ meeting, EU friends and partners were assuring Anastasiades that there would be no haircut, but then slapped it on the table. 

A haircut on deposits was the equivalent of “economic hara-kiri (ritual suicide) for the eurozone”, said Neophytou. 

He called on all political parties to show a united front to send the message that they are behind the president as he works to find an alternative proposal and to send the message to Brussels, Berlin and Washington that Cyprus does not want to be pushed out of the single currency.

Speaking to foreign media outside parliament, Chairman of the House Finance Committee Nicolas Papadopoulos said parliament’s message was clear: Cyprus does not want to be Europe’s experiment, nor does it want to leave the euro; it accepts that reforms are necessary but what is being proposed will lead to the collapse of the country’s economy. “Parliament wants to renegotiate,” he said. 

One MP said that an idea being floated is the nationalisation of state pension funds which could raise up to two to three billion euros, which still leaves an equal figure to be found. 

Anastasiades last night expressed his absolute respect for the decision taken by parliament, said government spokesman Christos Stylianides.

He noted that the president has already called a meeting of the party leaders for this morning to discuss the situation, after a planned meeting with Archbishop Chrysostomos at the Presidential Palace.

Anastasiades will chair a cabinet meeting after his discussion with the party leaders and before meeting a delegation from the troika at midday. 

After sending his finance minister to Moscow yesterday, the president also had a half-hour phone conversation with Russian President Vladimir Putin last night on the latest developments regarding a Cyprus bailout. He also spoke on the phone with Greek PM Antonis Samaras and Greek President Karolos Papoulias.

Reports said he had a second phone call with German Chancellor Angela Merkel following his earlier call on Monday about the latest news on the domestic front in Cyprus.

Reacting to the Cypriot parliament's rejection of a proposed levy on savings in banks, Eurogroup President Jeroen Dijsselbloem said he “deeply regretted” the lawmakers’ decision.

“The offer from the eurozone and the Eurogroup to Cyprus still stands,” Dijsselbloem told reporters.

“The ball is in Cyprus’ court... the greatest volumes of wealth in Cyprus are in the banks, and it’s the banks that have problems, so it’s unavoidable that we look at this.”

German Finance Minister Wolfgang Schaeuble said he also regretted parliament’s decision.

Speaking to ZDF television, he said: “Cyprus requested an aid programme. For an aid programme we need a calculable way for Cyprus to be able to return to the financial markets. For that, Cyprus’ debts are too high.”

Schaeuble added that it was a “serious situation” now in Cyprus and that the country had no one to blame for its situation other than itself. He said he doesn’t think its “business model” works anymore and warned Cyprus must act quickly.

“In a situation like this, when an insolvency looms, then the creditors have to participate if they want to avoid an insolvency. If you want to avoid that, then the investors in the bank have to make a corresponding contribution. Whether that’s a ‘bail in’ or a levy, that’s for Cyprus to decide itself.”

The European Central Bank said it “took note” of the vote and remained “committed to provide liquidity as needed within the existing rules”.

Thousands gathered outside parliament to protest the troika proposals

(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.


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