Key bills for bailout pass in Cyprus

Monday deadline looms for country to get its fiscal house in order

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NICOSIA, Cyprus -- Lawmakers in Cyprus approved three key bills Friday that aim to raise enough money to qualify the country for a broader bailout package and help it avoid financial ruin in mere days.

A total of nine bills were approved, including a key one on restructuring the country's ailing banks, which lost billions on bad Greek debt; one on restricting financial transactions in times of crisis; and one that sets up a 'solidarity fund' into which investments and contributions will flow.

More bills to meet the total target of 5.8 billion euros ($7.5 billion) Cyprus needs to secure an international bailout will be brought to a vote over the weekend. They include a crucial one to impose a tax of less than 1 percent on all bank deposits, said Averof Neophytou, deputy head of the governing DISY party. "We are voting for the least worst option," Mr. Neophytou said in a speech. "We owe an apology to the Cypriot people because we all share in the responsibility of bringing this place to this state."

Approval of the tax would come just days after Parliament decisively turned down a plan that would have seized as much as 10 percent of people's bank deposits.

The plan triggered an outcry from people who condemned it as an unfair grab of their life savings, while politicians saw it as causing irreparable damage to the country's financial center status.

Nonetheless, ordinary Cypriots have said they would willingly sacrifice a portion of their savings to save the country -- just as long as somebody doesn't impose it on them.

Cyprus' president, Nicos Anastasiades, will travel today to Brussels to present the revised package to his country's prospective creditors, its fellow nations that use the euro currency and the International Monetary Fund. There has been no indication yet that they will accept it.

Cyprus has been told to raise 5.8 billion euros to qualify for 10 billion euros in rescue loans from the eurozone and the IMF. Passage of the bills allows Cypriots to breathe a little easier, as the country faces a pressing Monday deadline, when the European Central Bank has said it will stop providing emergency funding to the country's banks if a new plan is not in place.

Without ECB support, Cypriot banks would collapse Tuesday, pushing the country toward bankruptcy and a potential exit from the 17-country eurozone. But eurozone officials said they had still not seen all the details, and would have to discuss whatever final plan Cyprus presents.

Government spokesman Christos Stylianides said there had been "consultations all day" with representatives of the IMF, European Central Bank and European Commission -- collectively known as the troika -- who monitor and vet adherence to bailout conditions.

The most important bill passed Friday is aimed at restructuring the country's second largest and most troubled bank, Laiki, and restricting some financial transactions once banks, which have been closed since last Saturday, reopen Tuesday.

Worried Laiki workers for a second day protested near parliament over the bank's restructuring, which would break the lender in two. "The bank is finished, we'll lose our jobs, and I'm worried about my kids," employee Nikos Tsiangos said. "They've brought us to the brink. The Europeans wanted to destroy our economy, and they've done it."

The restructuring of Laiki and the sale of the toxic-laden Greek branches of Cypriot banks is expected to cut the amount the country needs to raise to about 3 billion euros instead of 5.8 billion, Mr. Neophytou said.



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