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Cyprus parliament set to agree do-or-die bailout

CYPRUS’S lawmakers were set agree a bailout on Tuesday which will force it to wind down its second-largest bank and impose heavy losses on uninsured depositors at another, conditions that have intensified calls from islanders to exit the euro.

Shut out of financial markets for two years, Cyprus would fall into chaotic default if parliament votes against the bill, government officials have warned.

"We have had enough of delusions. We don't have another choice. Whoever has one should tell us what it is," Cypriot government spokesman Christos Stylianides told state radio.

No single party has a majority in the 56-member parliament, and the government is counting on support from members of its three-party centre-right coalition which has 30 seats in total. It needs 29 votes for the bill to pass, considered a certainty.

Left wing parties and independents planned to vote against.

"A 'yes' from Cyprus's parliament is by far the biggest defeat in our 8,000 year history," said George Perdikis, an MP for the Greens party, as the extraordinary parliamentary session opened on Tuesday.

"Its democratically elected representatives have a gun to their head to agree to a deal of enslavement," he said.

Cyprus, the euro zone's third smallest country, is bracing for at least two more years of economic misery and record unemployment as terms on the €10bn bailout start to bite.

Attempts to agree a deal triggered financial chaos last month when parliament rejected a plan to make both insured and uninsured depositors pay a levy to fund the recapitalisation of banks heavily exposed to debt-crippled Greece.

It was followed by a two-week bank closure. The fallback option was to wind down one of the banks, Laiki, and impose losses of up to 60pc on uninsured deposits - over €100,000 - in a second, Bank of Cyprus.

About three hundred demonstrators gathered outside parliament on Tuesday, calling politicians "thieves". One group took gallows, which they said was for lawmakers.

Communist AKEL, in government until it lost presidential elections in February, said it planned to vote against the bill. It has 19 seats in parliament. The socialist Edek party, with 5 seats, also said it would reject it.

AKEL, which had made the initial application for financial aid in June 2012, said Cyprus should seek alternative sources of funding, without specifying from where.

Online Editors