Cyprus struggles to contain financial crisis

President urges EU to modify tax on savings

A crowd at the presidential palace in Nicosia, Cyprus, rallied against a plan to tax bank deposits to pay for a bailout.

FILIP SINGER /european PressPhoto Agency

A crowd at the presidential palace in Nicosia, Cyprus, rallied against a plan to tax bank deposits to pay for a bailout.

NICOSIA, Cyprus — Leaders in Cyprus and Brussels and elsewhere in Europe scrambled Monday to contain the fallout from the eurozone’s decision over the weekend to force ordinary bank depositors to share the pain of an international bailout.

Much of the day was given over to cross-border finger pointing and a public reluctance for anyone to take responsibility — some might say blame — for a decision that some analysts worry could cause a run on banks in Cyprus, and possibly in Italy and other troubled eurozone countries. Cyprus, whose banking system is on the verge of collapse, is now the fifth nation among the 17 members of the euro to seek financial assistance since the crisis broke out three years ago.


Members of the Eurogroup, the club of eurozone finance ministers, which finished a bailout plan for Cyprus in the wee hours of Saturday, were holding a conference call Monday evening to talk things through once more.

As announced on Saturday, depositors in Cypriot banks with balances of more than $129,500 would have to pay a one-time tax of 9.9 percent on their holdings.

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Those with balances below that threshold would pay 6.75 percent.

The Cypriot president, Nicos Anastasiades, was trying to compel policy makers in Brussels to soften the terms of the deal, saying EU leaders used ‘‘blackmail’’ to get him to agree to penalize depositors in order to receive a bailout package worth $13 billion.

A crowd of about 800 protesters gathered in front of the presidential palace, shouting angrily at Anastasiades and inveighing against Germany and European leaders as he entered the building to meet with his Cabinet.


The government said it would keep Cypriot banks shuttered through Wednesday, well beyond a bank holiday that was supposed to end Monday.

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