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Eurozone crisis

Cyprus parliament delays vote on controversial bailout package

An important vote in Cyprus' parliament on a controversial levy on bank deposits has been postponed. Creditors have demanded the legislation in order to grant the country a 10 billion euro ($13 billion) bailout package.

Cyprus parliament speaker Yiannakis Omirou told reporters Monday that the vote for a controversial EU bailout, which includes the levy on bank deposits, would be delayed until Tuesday evening.

President Nicos Anastasiades had met with lawmakers Monday ahead of the vote, as police blocked off the road in front of the parliament amid heightened security to prevent protesters from disrupting proceedings (pictured above).

Many parliamentarians have said they will vote against the controversial measure, which places a 6.75 percent levy on all bank deposits under 100,000 euros and 9.9 percent on everything above. But Anastasiades has said rejecting the legislation would bankrupt Cyprus and possibly lead to the country's withdrawal from the eurozone.

The announcement over the weekend that Cyprus would impose a tax on bank accounts caused widespread concern in the European Union, sparking a drop in the euro and a dive in stock markets.

'Up to the Cyprus government'

Cyprus' share of the bailout deal is around 5.8 billion euros, and EU lawmakers have indicated that as long as that sum is paid the controversial legislation would be acceptable.

"It is up to the government alone to decide if it wants to change the structure of the … contribution [from] the banking sector," European Central Bank (ECB) policymaker Jörg Asmussen, an important part of the weekend's negotiations, told reporters in Berlin.

"The important thing is that the financial contribution of 5.8 billion euros remains," he said.

German government spokesman Steffen Seibert said EU's bailout would have a "calming effect" on the eurozone, but also said it was up to Cyprus how it chooses to finance the deal.

"How the country makes its contribution, how it makes the payment, is up to the Cyprus government," Seibert said.

Anger in Russia

The Cypriot government has tried to ease concern over the proposed measure by attempting to shift the tax more heavily to those with deposits over 100,000 euros.

Many of those account holders are Russian, and the move elicited an angry response from President Vladimir Putin, who called it "dangerous."

"Putin said that this decision, in case of its adoption, will be unfair, unprofessional and dangerous," Russian news agencies quoted Kremlin spokesman Dmitry Peskov as saying.

Estimates vary but the Moody's rating firm estimates that up to 19 billion euros in private cash is secretly kept in Cyprus – a figure that amounts to between a third and half of all Cypriot deposits.

dr/hc (Reuters, AFP, AP, dpa)