Cyprus: Parliament approves bail-out

Protesters gathered outside parliament in Nicosia yesterday. Picture: AP
Protesters gathered outside parliament in Nicosia yesterday. Picture: AP
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POLITICIANS in Cyprus last night approved a multi-billion bail-out agreement with international creditors aimed at keeping the crisis-hit country from bankruptcy.

The agreement was passed in the 56-seat parliament, with 29 votes in favour and 27 against. Cyprus struck the €23 billion (£19.5bn) deal with its euro partners and the International Monetary Fund last month.

Voting in favour were the ruling centre-right Democratic Rally party and its ally, the Democratic Party, which together hold half the seats. Casting the deciding vote was right-wing European Party leader Demetris Syllouris.

“If there was another realistic alternative, our decision would surely be different. Unfortunately, we have no other choice,” said Democratic Party leader Marios Garoyian.

The communist Akel and socialist Edek parties voted against the deal they said undermines the country’s sovereignty and leads to social misery.

“Our vote cannot be positive to the prospect of national, state and economic subjugation,” said parliamentary speaker and Edek leader Yiannakis Omirou.

The government had warned rejection would mean economic collapse and possible exit from the euro, which is used by 17 European Union countries.

Government spokesman Christos Stylianides hailed the vote as a decision of “responsibility” that underscores the country’s determination to deal with an “unprecedented economic crisis”.

Mr Stylianides said in a written statement that the government will dedicate itself to implementing the terms of the bail-out and to keep the country in the eurozone and the EU. He urged all party leaders, whether they voted for or against the deal, to rally around the government.

However, anger still lingers over the deal’s terms, which include forcing depositors to take major losses on savings of more than €100,000 in the country’s two biggest lenders. Second-largest lender Laiki – which was worst affected by its exposure to toxic Greek debt and loans – is being wound down and folded into the bigger Bank of Cyprus.

Cyprus’s creditors had insisted on depositors taking a hit in exchange for a €10bn loan.

Another condition was for the country to raise the other €13bn.

A string of capital controls such as a €300 daily withdrawal limit that authorities imposed last month to prevent a run on banks have added to the frustration among businesses and ordinary Cypriots.

Hundreds of protestors gathered outside parliament for an anti-bailout demonstration called by left-wing trade unions. Demonstrators held aloft banners reading: “No, this homeland not for sale.”

As the result of the vote was heard, about 100 protesters tried to push through barricades to reach the parliament’s entrance, but were prevented by a cordon of riot police. Some protesters hurled rocks and bottles at police, but no arrests were made.

Other European parliaments, including those of Germany and the Netherlands, have signed off on the accord and Cypriot lawmakers have approved most of its terms.

Before the vote on the bailout, Cypriot lawmakers approved additional, bailout-mandated public sector pay cuts and a property tax.