Cyprus accepts new package, will stay in Eurozone
Eurozone finance ministers and Cypriot authorities reached an agreement early on Monday on a package of aid for Cyprus.Source: Tanjug
The deal came after a dramatic Brussels meeting that was repeatedly delayed.
Cypriot President Nicos Anastasiades accepted an EUR 10 billion aid package from the European Central Bank, provided that the Cyprus restructures its two largest banks, while the accounts of those who have more than 100,000 euros deposited will suffer the most.
During a dramatic meeting of the Ministerial Council that ended a little after two in the morning, Anastasiades, according to the reports of several news agencies, several times threatened to resign rather than agree to measures that would jeopardize the status of Cyprus as a tax haven and offshore zone, mainly for Russian clients .
Faced with the threat of Cyprus being expelled from the eurozone as early as on Monday or Tuesday, the Cypriot president agreed to the conditions set by the so-called troika, consisting of the ministers set the Eurogroup, the European Central Bank and the International Monetary Fund.
Banks closed in Cyprus last week, while ATM withdrawals were limited to 100 euros a day after a panic caused by the announcement that the government, at the request of the troika, would remove tax accounts of all depositors, including those with less than 100,000 euros.
The Cypriot parliament then rejected the measures and asked for Russian financial assistance to its indebted banks, but Russia refused to intervene on the grounds that the issue should be resolved within the EU.
Cyprus then had no choice but to accept the new proposal from the troika.
The Cypriot parliament has yet to accept the new package.
In the EU, there is fear that Russia, whose citizens and companies with property in Cyprus will be most affected, could recover the damages by confiscating assets of European companies operating on Russian soil.
It is estimated that there is about EUR 20 billion of Russian money in Cyprus, of which about a quarter will be confiscated when the new package takes effect.
Cypriot banks found themselves in trouble after investing a large portion of their funds in the purchase of Greek bonds, which proved to be worthless.