Cyprus: bailout terms 'painful' but necessary

NICOSIA — Cyprus President Nicos Anastasiades says the terms of his country's new $13 billion bailout are "painful," but that he had to agree to the deal with international lenders to keep the island nation from economic collapse.

NICOSIA — Cyprus President Nicos Anastasiades says the terms of his country's new $13 billion bailout are "painful," but that he had to agree to the deal with international lenders to keep the island nation from economic collapse.

In a televised speech to his country Monday night,  Anastasiades said, "Our choices were not easy."

He said that at banks on the Mediterranean island, capital restrictions will be imposed to prevent depositors from making massive cash withdrawals. But he said the restrictions would be "very temporary."

Most of those banks were due to reopen Tuesday, but now all will remain closed until Thursday. Banks in Cyprus have been closed for more than a week during the crisis and the size of withdrawals by customers at automated teller machines has been limited.

In securing the rescue package, Cyprus avoided bankruptcy and an exit from the euro currency union. But the impact of the deal is drawing widely different interpretations.

Wealthy Russian investors have parked vast sums in Cypriot banks. But Russian Prime Minister Dmitry Medvedev said Monday that Cyprus, by agreeing to impose a tax of about 30 percent on big, uninsured accounts with more than $130,000, is "continuing, I think, to plunder the loot" of his countrymen.

German Chancellor Angela Merkel, Europe's chief advocate for forcing debt-ridden countries to resolve their financial woes, described the Cyprus rescue plan as fair.

"I am very pleased that a solution was found last night and that we have been able to avoid an insolvency," said Merkel. "I believe that a fair burden distribution was achieved. On the one hand, banks have to take responsibility for themselves which is what we have always said. We do not want taxpayers to save banks. Banks must save themselves. This is what will happen in the case of Cyprus.''

Have Your SayLeave a comment