Painful EU bailout goes before Cyprus parliament

Cyprus President Nicos Anastasiades braced for a rough ride through parliament on Sunday for a desperately needed EU bailout for the island’s banks that will impose an unprecedented tax on savers.Anastasiades was set to brief MPs at 11:30 am (0930 GMT) on the details of the controversial agreement he struck in Brussels early Saturday before an emergency debate from 4:00 pm (1400 GMT) on the legislation needed to ratify it.Faced with protest calls, the rightwing president said he would address the nation later on Sunday to defend the deal which he admitted was “painful” but insisted was the only way to save the banking sector from total collapse.“Either we could choose the catastrophic scenario of a disorderly default or a painful but controlled management of the crisis that definitively ends the uncertainty and provides a starting point to kick-start the economy,” he said.Anastasiades said thousands of small businesses would also have gone bankrupt because of cash flow problems without the deal and the unprecedented bank levy attached for an EU bailout.Savers in Cyprus banks reacted with shock and anger after the government agreed to the levy on bank deposits in return for a desperately needed 10-billion-euro ($13 billion) bailout.The debt rescue package, agreed with the eurozone and International Monetary Fund early on Saturday after around 10 hours of talks in Brussels, is significantly less than the 17 billion euros Cyprus had initially sought.Most of the balance is to be made up through the bank deposit levy of up to 9.9 per cent — the first eurozone bailout in which private depositors are having to help foot the bill. Ministers are in a race to push the necessary legislation through parliament before banks reopen on Tuesday after a long holiday weekend, including a pre-Easter carnival Sunday marred by the news.The government had held out against the levy on savings until the 11th hour, arguing it would risk a run not only on the island’s own banks but also on those of other debt-ridden eurozone economies.Only last Monday, Finance Minister Michalis Sarris said that a haircut on deposits in local banks would be “disastrous for Cyprus and the eurozone.”Opposition politician George Lillikas has called on his supporters to protest on Tuesday, charging that the president who was elected only last month had “betrayed the people’s vote.”Anastasiades’s conservative DISY party holds just 20 of the 56 seats in parliament and he faces strong misgivings among the other parties to the terms of the deal.The communist AKEL party, which has 19 seats, had refused to sign an agreement on the terms on offer while it in power before last month’s election. Even Anastasiades’s partners in the ruling coalition had strong words against the deal. DIKO leader Marios Garoyian said he had spoken to the president about seeking “alternative choices” amid opposition from some of his centrist party’s nine MPs.