Sunday, 24 March 2013

Cyprus Facing Ruin Regardless of Deal, Islanders Warn

THE SUNDAY TELEGRAPH: Cyprus may be on the verge of hammering out a deal to address its chronic debt crisis but many Cypriots fear that the island’s economy is destined for ruin regardless.

Nicos Anastasiades, the Cypriot president, and Michalis Sarris, his finance minister, are on their way to Brussels for emergency talks over a deal under which deposits of more than 100,000 euros in the Bank of Cyprus will be hit by a 20 per cent levy.

Deposits of more than 100,000 euros in other banks will be targeted by a four per cent forced levy.

Cyprus’s leaders are expected to submit to the drastic plan - which critics call daylight robbery - in return for a 10 billion euro bail-out loan to save the country from bankruptcy. While the deal may stave off immediate disaster, many Cypriots said the measures will shatter confidence in the island’s hugely profitable banking and financial services industry and lead to a massive exodus of investors, among them Russian tycoons and British retirees.

Islanders also fear that as the bank levies bite, businesses and big investors will have to start laying off staff, heralding high levels of unemployment.

Around 70 per cent of Cypriots are employed in the financial services and banking sector, a number that dwarfs the 20 per cent working in tourism.

“People are worried not just because they could lose their savings but because they could lose their jobs too,” said Ioanna Constantinou, 24, who works in the financial services industry in Nicosia, the Cypriot capital. » | Nick Squires, Nicosia | Sunday, March 24, 2013