* President says cash-strapped island had no choice
* Cypriots rush to cashpoints to withdraw money
By Michele Kambas
NICOSIA, March 17 Cyprus's parliament will
decide on Sunday whether savers must pay a levy on bank deposits
under terms for an international bailout to avert bankruptcy -
with approval far from certain.
The euro zone demand on Saturday that savers pay up to 10
percent of deposits as a condition for the 10 billion euro ($13
billion) bailout drew fury in the eastern Mediterranean island
and caused some jitters elsewhere in the region.
Cypriots emptied cashpoints after news emerged of bailout
terms which broke a previous euro zone taboo on protecting
depositors in its efforts to address the regional debt crisis.
Newly elected Cypriot President Nicos Anastasiades said
refusing the bailout would have led to the collapse of the
island's two largest banks, badly singed by their exposure to
bailed out neighbour Greece.
The tax on deposits in Cyprus, which accounts for only 0.2
percent of the euro zone's economy, is expected to raise up to 6
billion euros as a condition for the bailout, mainly needed to
Those affected will include rich Russians with deposits in
Cyprus and Europeans who have retired to the island as well as
The size of foreign deposits in Cyprus - estimated at 37 of
the total - was one reason the euro zone agreed to the tax on
savings, to take effect when banks reopen on Tuesday. Cyprus
stopped electronic transfers over the weekend.
In Spain, one of four other states getting euro zone help
and seen as a possible candidate for a sovereign rescue,
officials were quick to say that Cyprus was a one-off. A Bank of
Spain spokesman said there had been no sign of deposit flight.
Two Cypriot banks in Britain told savers their money was
Cyprus's parliament was due to convene at 4 p.m. (1400 GMT)
in an emergency session to discuss the proposed penalties on
deposits: 9.9 percent for those exceeding 100,000 euros and 6.7
percent on anything below that.
PAIN OR CATASTROPHE
The choice facing Cyprus was between "the catastrophic
scenario of disorderly bankruptcy or the scenario of a painful
but controlled management of the crisis," President Anastasiades
said in a written statement.
His right-wing Democratic Rally party, with 20 seats in the
56-member parliament, needs support from other factions for a
vote to pass.
"The dilemmas are very tough," said Marios Karoyian, head of
the Democratic Party, junior partner in the coalition
government. "Things are unbelievably hard."
He did not say which way his party would vote on Sunday. It
is already split over backing Anastasiades three weeks ago.
Cyprus's Communist party AKEL, accused of stalling on a
bailout during its tenure in power until the end of February,
was likely to vote against the measure. The socialist Edek party
called EU demands "absurd".
"This is unacceptably unfair and we are against it," said
Adonis Yiangou of the Greens Party, the smallest in parliament
but with the potential ability to swing any vote.
"They have got a gun to our head," he said.
Saving Cyprus's financial sector would have been impossible
without the levy because of its size relative to output - more
than twice the EU average, Dutch Finance Minister Jeroen
Dijsselbloem said in Brussels.