THE DAILY TELEGRAPH: Cyprus turned to Russia for help on Tuesday night after the country's parliament overwhelmingly rejected a tax on the deposits of bank savers.
With protesters celebrating in the streets, the rejection of a draconian levy left a planned £8.5 billion eurozone bail-out to save the Mediterranean island in chaos.
The country's finance minister defied explicit warnings from Angela Merkel, the German chancellor, and left Cyprus for urgent talks in Russia.
Michael Sarris flew to Moscow to plead for aid, despite Mrs Merkel warning Cyprus not to enter into negotiations with Russia, raising the spectre of eurozone disintegration.
"The chancellor once again emphasised that the negotiations are to be conducted only with the troika (the European Union, European Central Bank and the International Monetary Fund)," said her spokesman.
Not a single Cypriot MP voted in favour of a eurozone rescue package that had been made conditional by Germany on the Cypriot government finding £5 billion to pay off its debts by raiding bank deposits, including the savings of up to 60,000 Britons.
Under the original eurozone deal at the weekend, Cyprus agreed to impose a levy of 6.75 per cent on bank accounts up to €100,000 (£85,000) and 9.9 per cent for larger deposits.
Despite a compromise proposal not to tax any bank deposit less than €20,000 (£17,000), the country's 36 MPs rejected a deposit tax that has rattled financial markets and threatened the island's future as an offshore banking haven for Russian investors, with 19 MPs abstaining from the vote.
"There can only be one answer: no to blackmail," Yiannakis Omirou, the speaker of the Cypriot parliament said. » | Bruno Waterfield, Brussels, Richard Spencer in Nicosia and Robert Tait in Limassol | Tuesday, March 19, 2013
