News / Europe

    Cyprus: Bailout Terms 'Painful' but Necessary

    Cypriot President Nicos Anastasiades speaks with the media after an emergency eurogroup meeting in Brussels, March 25, 2013.
    Cypriot President Nicos Anastasiades speaks with the media after an emergency eurogroup meeting in Brussels, March 25, 2013.
    VOA News
    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.''
     
    The bailout terms were reached in last-minute negotiations in Brussels, just ahead of a deadline set by the European Central Bank. The central bank has said it would cut off emergency funding to Cypriot banks if no deal was reached. With the bailout secure, the bank said it would continue the emergency assistance.

    Cypriot officials warned of tough times ahead for the country, whose economy accounts for just two-tenths of one percent of the eurozone's economic fortunes. Cypriot Finance Minister Michael Sarris predicted the Cypriot economy would recover. But he said the nation will be paying for the past mistakes of its bankers and the government, who together turned the island into a tax haven for offshore investors, with limited regulation.

    "I don't think there is any denying that the Cyprus people will have to go through some tough times and will suffer the consequences of a protracted period where wrong decisions were made, primarily at the banking level, but also the fiscal excesses that we had to adjust over a relatively short period of time," said Sarris.

    Greek Orthodox Archbishop Chrysostomos II said there "will be a lot of difficulties, some will lose their jobs, the poverty will increase."

    To secure the $13 billion bailout from their European neighbors, the central bank and International Monetary Fund, Cyprus had to raise $7.5 billion. As part of the deal, it agreed to close the island's second largest bank, Laiki, and enforce heavy losses on wealthy bank depositors. The island last week rejected an earlier plan sanctioned by the lenders that also would have taxed the insured accounts of small investors.

    If no deal had been reached, Cyprus would have defaulted, and likely been forced to leave the eurozone.

    Cyprus becomes the fifth eurozone country where billions of dollars in bailouts have been needed to ward off bankruptcy, following Greece, Portugal, Ireland and Spain.

    You May Like

    Former US Envoys Urge Obama to Delay Troop Cuts in Afghanistan

    Keeping troop levels up during conflict with both Taliban and Islamic State is necessary to support Kabul government, they say

    First Lady to Visit Africa to Promote Girls' Education

    Michele Obama will be joined by daughters and actresses Meryl Streep and Freida Pinto

    Video NYSE Analyst: Brexit Will Continue to Place Pressure on Markets

    Despite orderly pricing and execution strategy at the New York Stock Exchange, analyst explains added pressure on world financial markets is likely

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Brexit Vote Plunges Global Markets Into Unchartered Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Unchartered Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora