NICOSIA: Leaders in Cyprus and Brussels have scrambled to contain the fallout from an unprecedented effort to force ordinary bank depositors in this crisis-hit nation to pay for part of an international bailout, as stock markets faltered on concerns about the wider implications for Europe's long-running debt crisis.
President Nicos Anastasiades was trying to compel policymakers in Brussels to soften demands for a tax to be assessed on Cypriot bank deposits, saying EU leaders used "blackmail" to get him to agree to those conditions early on Saturday in order to receive a bailout package worth €10 billion euros ($12.5 billion).
Outrage over Cyprus bank levy
Britons living in Cyprus are outraged by bailout plans to impose a levy on bank deposits, as some threaten to withdraw their savings as soon as possible.
Cyprus, whose banking system is verging on collapse, is now the fifth nation in the 17-member euro union to seek financial assistance since the crisis broke out three years ago.
As anger swelled against the measure, Mr Anastasiades delayed an emergency parliamentary vote on the bailout plan until Tuesday, the second step in as many days. Faced with a lack of support from MPs, the vote could be delayed until as late as Friday.
The government said Cypriot banks would stay closed until at least Wednesday, beyond a bank holiday that was supposed to end on Monday, a move aimed at staving off a possible bank run.
Cyprus' banking association issued a statement calling on people to remain calm, saying it was ready to implement whatever measures were needed to protect the stability of the banking sector. The association said it would instruct banks to load automated teller machines with cash while banks remained closed.
For the first time since the onset of the eurozone sovereign debt crisis and the bailouts of Greece, Portugal and Ireland, ordinary depositors — including those with insured accounts — were being called on to bear part of the cost, €5.8 billion.
The previous bailouts have been financed by taxpayers, and the new direction raised fears that depositors in Spain or Italy, two countries that have struggled economically of late, might also take flight.
A crowd of protesters gathered in front of the presidential palace, shouting angrily at Mr Anastasiades and inveighing against Germany and European leaders as he entered the building to meet with his cabinet.
"Merkel, U stole our life savings," read one banner tied to a bus stop. "EU, who is next, Spain or Italy?" read another.
The finance ministers from the eurozone countries were to take up the Cyprus issue on a conference call later on Monday.
New York Times