MoD send RAF flight loaded with €1m to Cyprus

The Ministry of Defence said the cash, around £852,000, will provide people with emergency loans in the event that cash machines and debit cards stop working as the country tries to cope with its banking crisis.

The MoD said it is determined to minimise the impact of the crisis on “our people” and it will consider further shipments if required. As well as sending out the emergency fund, it is asking personnel if they would prefer this and future months’ salaries to be paid into UK bank accounts.

Meanwhile, Cyprus’s parliament last night overwhelmingly rejected a proposed levy on bank deposits, throwing eurozone efforts to rescue the latest casualty of the currency area’s debt crisis into disarray.

The vote by the state’s legislature was a severe blow for the 17-nation eurozone, after lawmakers in Greece, Portugal, Ireland, Spain and Italy had repeatedly accepted austerity measures over the past three years to secure European aid.

The rejection, with 36 votes against, 19 abstentions and one absence, brought the east Mediterranean island, one of the smallest European states, to the brink of financial meltdown.

EU countries said before the vote that they would withhold €10 billion (£8.7bn) in bailout loans unless depositors in Cyprus shared the cost of the rescue, and the European Central Bank has threatened to end emergency lending assistance for teetering Cypriot banks.

The levy, which aims to raise €5.8bn from deposits, had been proposed as a condition for Cyprus to get a €10bn (£8.7bn) loan from the European Union and International Monetary Fund to help Cyprus save its economy.

As the result of last night’s vote was announced, jubilant crowds outside parliament broke into applause, chanting: “Cyprus belongs to its people.”

Newly elected president, Nicos Anastasiades, earlier said he expected parliament to reject the tax on bank deposits “because they feel and they think that it is unjust and it’s against the interests of Cyprus at large”.

Europe’s demand at the weekend that Cyprus break with previous EU practice and impose a levy on bank accounts sparked outrage among Cypriots and unsettled financial markets.

Mr Anastasiades refused to accept a levy of more than 10 per cent on deposits above €100,000, which meant taxing smaller accounts too. That would have hurt ordinary savers with deposits that they thought came with a state guarantee.

Cypriot finance minister Michael Sarris flew to Moscow yesterday to seek Russian financial assistance and denied reports that he had resigned. The draft bill would have meant a 6.75 per cent levy on deposits over €20,000, with those over €100,000 charged at 9.9 per cent.

French finance minister Pierre Moscovici said the eurozone could not lend Cyprus any more because the country’s debt would become unmanageable. “Above €10bn we are entering into a size of debt that is not sustainable,” Mr Moscovici said.

It was feared the levy could affect many of the 3,000 UK military personnel in Cyprus, and up to an estimated 25,000 expatriates. The cash flown out of Britain was on board one of the two weekly flights that travel between Britain and Cyprus, carried on a Voyager aircraft, which took off from RAF Brize Norton.

An MoD spokesman said the situation was being kept under review and that it would consider further shipments if required. He said: “We’re determined to do everything we can to minimise the impact of the Cyprus banking crisis on our people.”

Chancellor George Osborne has already said the UK will compensate any British troops in Cyprus hit by plans to introduce the bank levy and that British government workers would also be protected.