Wednesday, March 20 10:23:02
Cyprus's finance minister pleaded with Russia for help today to avert a financial meltdown after the island's parliament rejected the terms of a European bailout, raising the spectre of a looming default and bank crash.
Finance Minister Michael Sarris said he had reached no deal on financing with his Russian counterpart, Anton Siluanov, but talks were continuing.
Cypriot officials disclosed that the country's energy minister was also in Moscow, ostensibly for a tourism exhibition. Cyprus has found big gas reserves in its waters adjoining Israel but has yet to develop them.
"We had a very honest discussion, we've underscored how difficult the situation is," Sarris told reporters after talks with Siluanov. "We'll now continue our discussion to find the solution by which we hope we will be getting some support.
"There were no offers, nothing concrete," he said.
Austria's finance minister made clear the European Central Bank could soon pull the plug on Cypriot banks after the island's parliament rebuffed EU demands for a levy on bank deposits to raise 5.8 billion euros.
Not a single lawmaker voted for a proposed levy that would have taken up to 10 percent from larger accounts, many of which are held by Russians and other foreigners, while sparing small savers with less than 20,000 euros in the bank.
It was the first time a national legislature had rejected the conditions for EU assistance, after three years in which lawmakers in Greece, Ireland, Portugal, Spain and Italy all accepted biting austerity measures to secure aid.
Rejection of the key condition for a 10 billion euro bailout, cast the 17-nation currency bloc into uncharted waters, with a risk of financial contagion to other troubled member states.
However, the EU has a tradition of pressing smaller countries to vote again until they achieve the desired outcome. Reuters