Cypriot Parliament Rejects Bank Levy Bill

by Reuters  |  published on March 20, 2013

cyprus

Cyprus’s parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing euro zone efforts to rescue the latest casualty of the currency area’s debt crisis into disarray.

The vote by the small state’s legislature was a stunning setback for the 17-nation euro zone, after lawmakers in Greece, Portugal, Ireland, Spain and Italy had repeatedly accepted unpopular austerity measures over the last three years to secure European aid.

The rejection, with 36 votes against, 19 abstentions and one absence, brought the east Mediterranean island, one of the smallest European states, to the brink of financial meltdown.

EU countries said before the vote that they would withhold 10 billion euros ($12.89 billion) 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.

But jubilant crowds outside parliament broke into applause, chanting: “Cyprus belongs to its people.”

“The voice of the people was heard,” said Andreas Miltiadou, a 65-year-old pensioner among the demonstrators.

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