World News

Cyprus Says Its Future at Stake in Debt Crisis

Cyprus said its future stood in the balance Friday as parliament prepared to consider ways to rescue the island nation's troubled banking system and secure a bailout from its European neighbors.

Government spokesman Christos Stylianides told the 56-member parliament that the Mediterranean country must be saved.

"The next hours will determine the future of the country. We must all take responsibility.''

Cypriot lawmakers were set to consider several proposals in another attempt to raise $7.5 billion by Monday, the deadline set by the European Central Bank to cut off emergency funding for Cypriot banks. Cyprus' international lenders have demanded that it raise the money as a condition for extending a $13 billion rescue package to the debt-ridden island.

If no solution is found, Cyprus could default on its loans, and possibly become the first country to leave the 17-nation euro currency bloc.

Cyprus is considering restructuring at least one of its key banks, Laiki. The Bank of Cyprus and Laiki both urged parliament to impose a tax on deposits of more than $130,000, which are uninsured, as one way to solve the debt crisis.

But parliament earlier this week overwhelmingly rejected a tax on all deposits, including insured accounts, after angry savers protested. A tax on the biggest deposits would hit numerous Russian oligarchs who have parked vast sums in the tax haven's banks.

Cyprus has sought more aid from Russia, which initially rejected its plea. But Prime Minister Dmitry Medvedev said Russia might still reach a deal with Cyprus, but only if the island first reaches an agreement with its European neighbors on a rescue package.

"We have not closed the door. We have not said that we would not discuss anything anymore and that we would not want even to hear anything because Cyprus is a European Union member state and it is not our business. Of course, we have understandable economic interests there. And we will (OVER WIDE OF NEWS CONFERENCE) and we are ready to discuss different options of supporting this country, bearing in mind that we have already given our support, we gave them a loan some time ago (OVER JOURNALISTS TAKING NOTES) - but only after a final scheme is worked out involving European Union countries (BACK TO MEDVEDEV) and Cyprus itself.''

The island's banks are closed until Tuesday to prevent panicked investors from withdrawing large sums. However, anxious depositors are able to withdraw limited amounts from automated teller machines.

If it eventually secures a bailout, Cyprus is planning on using much of the money to refund its beleaguered banks that have been weighed down with losses on Greek government bonds that were reduced in value to help resolve the Athens debt crisis.

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