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

Bernie Sanders Surge Reflects US Shift on Socialism

Although most analysts say it is unlikely he will get the Democratic nomination, Sanders' campaign opens up questions and issues that are otherwise marginalized More

Crowdfunding Helps Save Neil Armstrong's Spacesuit

Smithsonian turns to Kickstarter to raise more than $700,000 to help preserve the spacesuit worn by the first man to walk on the moon More

Video On IS Frontline, Kurdish Fighters Ready for Offensive

Peshmerga soldiers say although they need more heavy artillery, they are poised to take the fight to the Islamic State extremists on their turf More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Drowned Migrant Toddler Photo Triggers European Outragei
X
Henry Ridgwell
September 04, 2015 11:36 AM
The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Drowned Migrant Toddler Photo Triggers European Outrage

The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Russians Observe 11th Anniversary of Beslan School Attack

This week, Russians have been observing the 11th anniversary of the attack by Islamic militants on a school in Russia's North Caucasus region that killed more than 330 hostages, including 186 children. The three-day siege and massacre that started on September 1, 2004 took place in Beslan, a town in the republic of North Ossetia, and is one of the bloodiest terrorist acts ever in Russia. VOA's Mike Richman reports.
Video

Video Native Americans Debate: Father Serra, Saint or Sinner?

Pope Francis will canonize an 18th century missionary to Spanish California during a papal visit to the United States this month.  But some Native Americans have criticized the elevation to sainthood of the missionary priest, Junipero Serra. VOA's Mike O’Sullivan has more from Los Angeles.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video China Announces Troop Cuts at WWII Parade

Chinese President Xi Jinping Thursday announced plans to cut the world’s largest military force by 300,000 troops. The announcement was made during a massive military parade to commemorate victory over Japan in World War II. The event was shunned by most Western leaders and for some is raising fresh concerns about China’s military ambitions. VOA’s Bill Ide has more from Beijing.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.

VOA Blogs