Cyprus struggles to dodge disaster
NICOSIA, CYPRUS— Cypriot President Nicos Anastasiades flies to Brussels on Sunday to seek an 11th-hour reprieve from financial meltdown, with a bailout from the European Union and the island’s place in Europe’s single-currency bloc hanging in the balance.
Facing a Monday deadline to avert a collapse of the Cypriot banking system, talks in Nicosia to seal a bailout from the EU and International Monetary Fund broke up late on Saturday without result.
“Negotiations are at a very delicate phase,” the Cypriot government said in a statement. “The situation is very difficult and the deadlines are very tight.”
Anastasiades, barely a month in the job and wrestling with Cyprus’ worst crisis since a 1974 invasion by Turkish forces, will arrive in Brussels in the mid-morning to continue the talks.
The tone of the statement differed sharply from earlier expressions of cautious optimism during days of intense negotiations between Cypriot leaders and officials from the island’s “troika” of lenders: the EU, IMF and European Central Bank.
The EU says the east Mediterranean island, whose outsized banking sector has been crippled by exposure to crisis-hit Greece, must raise € 5.8 billion on its own before it can receive a € 10-billion bailout.
Without a deal on Monday, the ECB threatens to sever emergency funds to Cypriot banks, spelling certain collapse and potentially pushing the country out of the eurozone.
Scrambling to find the funds, officials said Cyprus had conceded to one-time levies — from 4 per cent to 20 per cent — on bank deposits over € 100,000, a dramatic U-turn from five days ago when lawmakers angrily threw out a similar proposal as “bank robbery.”