UK & World News
Cyprus Bailout: Savings Tax Rejected By MPs
The Cypriot parliament has voted overwhelmingly against a deeply unpopular plan to tax bank deposits, putting an international bailout in jeopardy.
The 56-seat legislature buried the bill with 36 votes against and 19 abstentions. One member of parliament was not present.
The seizure of savers' deposits, in return for shares in the lenders, was meant to raise 5.8bn euros (£4.96bn), towards the country's financial rescue.
But outrage from Cypriots and the impact on international markets had already apparently pushed politicians to consider an exemption for smaller savers.
The draft bill being discussed in parliament was believed to suggest a 6.75% tax on all savings between 20,000 and 100,000 euros and 9.9% on all savings over 100,000 euros.
But even that was dismissed after the ruling party tried to delay the vote for a day before deciding not to take part.
Opposition member†Pambos Papageorgiou told Sky News: "We were asked to legitimise the confiscation of savings, that has never happened anywhere in the world.
"It would have set a very dangerous precedent for the whole of Europe. Don't forget that for the whole of Europe there is a law protecting up to 100,000 euros in terms of savings."
Outside parliament, thousands of protesters gathered holding up banners reading "Hands Off Cyprus" and chanted: "It will not pass."
When the bill was rejected they cheered and sang the national anthem.
EU countries said before the vote that they would withhold 10bn euros (£8.5bn) in bailout loans unless depositors in Cyprus shared the cost of the rescue.
However, amid the backlash against the plan to hit all savers, eurozone finance ministers had pushed Nicosia to only target accounts with more than 100,000 euros.
The European Central Bank said after the vote it was still committed to providing liquidity to Cyprus' cash-strapped banks within "existing rules".
Banks have been closed since before the weekend in order to prevent a run on them and were not due to reopen until Thursday.
Nicholas Papadopoulos, the chairman of the parliamentary finance committee, said banks would now stay shut "for as long as we need to conclude an agreement".
He stressed this would be "in the next few days".
Meanwhile, a British military plane has arrived in Cyprus with one million euros onboard to ensure soldiers have access to cash during the crisis.
British soldiers stationed on the island and their families would be able to borrow from the money if cash machines and debit cards in Cyprus stop working completely, the Ministry of Defence said.
"The MoD is proactively approaching personnel to ask if they want their March, and future months' salaries paid into UK bank accounts, rather than Cypriot accounts," it said in a statement.
"We're determined to do everything we can to minimise the impact of the Cyprus banking crisis on our people."
Around 2,500 to 3,000 British military personnel are currently stationed in Cyprus.
Chancellor George Osborne has already pledged that military personnel and civil servants would be protected from the levy, telling Cabinet they would be "compensated in full" for any losses.
Earlier it was reported that Cyprus' finance minister had resigned amid the fallout from the original proposal, but Reuters said Michael Sarris had told them by text message that there was "no truth" to the story.
He has flown to Moscow to seek Russian financial assistance for the island.
President Nicos Anastasiades is due to meet party leaders on Wednesday morning in an attempt to find a way forward.
what do you think?
Why let the world know? Its asking for trouble.
Glad our government are looking after the troops but agree telling the world is asking for trouble
Only a matter of time before other countriesin Europe including Britain start doing the same
Totally agree James. I have a few pounds saved in Santander and am thinking of switching it out to a Building Society before I lose it!
Same here Andrew
Better off facing the wrath of the EU and the IMF than being shot by angry voters. Will they send in Eurogendfor and impose it by force or keep voting until they get the 'right' answer?
So, if the bill has been thrown out, then surely these banks are open for business again, and will soon collapse when everyone closes their accounts.
Paul thats a possibility because people will not want to go through this again a few weeks down the road.
Nice to see a goverment with SOME sence.
The banks have caused the problems through the investment arms of the banks, now the nutters in Europe are wanting to put thins right in part by raiding the savings of people. It is good they have let the rest of the world know what had been proposed and got it nipped in the bud before it's tried on some other country.
You can never nip it in the bud. They will try again, and again, and again...................... But its has revealed the way they think.
Russia will bail them out with the 6.8 billion shortfall so no one will look into their dealings and money laundering
Excellent. The first flickering light of re-emerging national democracy. Time for Nigel Farage in Downing Street to save our democracy.
Couldn't agree more Steve. I've voted Tory all my life but, like a lot of Tories, Nige is the man for me come the next election. If we want change in this country we've got to stop voting for the two main parties who are as bad as each other.
We may all thank Cyprus in the not too distant future for its stand as this would no doubt have set a precedent. It also sends a message to the EU and IMF
It also reminds the EU and the IMF that the banks cannot function without the cash and confidence of their depositors, something they seem to have forgotten. The EU and the IMF are well known for their beligerance so they may send in Eurogend for to impose their wishes or keep going back until they get the answer they want. The whole fiasco has been completely mishandled by the EU and IMF and may yet result in the collapse of the Cyprus banks.
Must agree with you Phil the IMF way and now the EU needs a serious re-think. The IMF have caused more problems than they seem to have resolved now the EU is doing the same. What worries me is the systemic effect this could have