* Parliamentary vote scheduled for 1600 GMT
* Bank levy unlikely to pass - govt spokesman
* Ministers try to soften blow to small depositors
* Cypriot, Russian presidents due to talk
By Michele Kambas and Karolina Tagaris
NICOSIA, March 19 Cyprus's parliament was set to
reject a divisive tax on bank deposits in a vote scheduled for
Tuesday, a government spokesman said, a move that would push the
island closer to a default and banking collapse.
A weekend announcement that Cyprus would break with previous
practice and impose a levy on bank accounts as part of a 10
billion euro ($13 billion) EU bailout prompted some turmoil on
European financial markets on Monday.
Cypriot and euro zone officials have sought to soften the
initially proposed levy of 6.75 percent on depositors of up to
100,000 euros and 9.9 percent above 100,000 to ease the burden
on small savers.
But passage of the bill in the 56-member chamber, where no
party has a majority, was unlikely and it was not clear if the
vote would even go ahead later on Tuesday if leaders were sure
it would be rejected.
"It looks like it won't pass," Cypriot government spokesman
Christos Stylianides told state radio.
The House of Representatives was expected to meet at 1600
GMT. Rejection of the measure would effectively block a bailout
that Cyprus needs to keep its banks afloat and government paying
wages and welfare.
Tuesday's vote, originally planned for Sunday, has been
postponed twice already. Three parties have said outright they
will not support the tax, while a fourth, in the co-governing
coalition, said it cannot support it as it stands either.
Cypriot President Nicos Anastasiades asked the EU for more
aid during a telephone conversation with German Chancellor
Angela Merkel on Monday, with a second call likely on Tuesday.
Stylianides said Anastasiades may also speak to Vladimir
Putin, the Russian president.
French Finance Minister Pierre Moscovici said the bailout
was the maximum that could realistically be expected to be paid
back. "Above 10 billion euros we are entering into a size of
debt that is not sustainable," he told reporters.
The tax will batter not only Cypriots, but thousands of
Europeans and Russians with business interests on the island.
Putin on Monday described it as "unfair, unprofessional and
Cypriot Finance Minister Michael Sarris was due to hold
meetings in Moscow on Wednesday, partly to try and get an
extension to an existing 2.5 billion euros loan.
Stunned islanders emptied cash machines over the weekend and
banks are to remain shut on Tuesday and Wednesday to avoid a
bank run. Hundreds of protesters rallied outside parliament on
Monday, honking horns and holding banners saying "We are not
your guinea pigs!"
"If they vote for this tax they will face the fury of the
people," said Markos Economou, a 47-year-old physics teacher and
father of two. "The banks and the politicians should pay for
this mess, not the people."
The island's stock exchange also suspended trading for
another two days.
International market reaction has been muted so far but if a
vote was lost, or postponed, that could change. The uncertainty
saw the euro drop 0.2 percent as it remained near a
three-month low and European shares fall 0.4 percent in
Seeking to overcome divisions within the government's own
ranks, ministers scrambled to ease the pain for small savers by
tilting more of the tax towards those with deposits greater than
Euro zone finance ministers were in favour of imposing a
15.6 percent levy on deposits of above 100,000 euros to help
recapitalise Cyprus' financial sector while sparing depositors
up to that level.
It was not clear what version of the levy would eventually
be voted on in Cyprus. The government maintains Cyprus has no
choice but to accept the bailout with the levy, or go bankrupt.
While Brussels has emphasised that the measure is a one-off
for a country that accounts for just 0.2 percent of European
output, fears have grown that savers in other, larger European
countries will be spurred to withdraw funds.
"If you're a small depositor in Cyprus you'll tell yourself
that it would have been better to keep your money under the
carpet than in a bank," said a French bank executive who
declined to be named.
"And if you're a Greek, a Spaniard or an Italian, well,
you'll tell yourself that you might be next."