Cyprus scrambles to avert meltdown, EU threatens cutoff

Wed Mar 20, 2013 6:59pm EDT
 
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By Michele Kambas and Matt Robinson

NICOSIA (Reuters) - Cyprus considered nationalizing pension funds and ordered banks to stay shut till next week to avert financial chaos after it rejected the terms of a European Union bailout and turned to Russia for aid.

Crisis talks among the political leadership in Nicosia are set to resume on Thursday after late-night meetings to discuss a "Plan B" broke up on Wednesday without result.

EU officials voiced frustration but little sympathy for an ambitious but now bust banking system that extended itself well beyond the island; Russia, whose citizens have billions to lose in those Cypriot banks, called the EU a "bull in a china shop".

President Nicos Anastasiades, just a month in office and wrestling with his country's worst crisis since the Turkish invasion of 1974 that divided Greek- and Turkish-speaking Cypriots, is due to meet party leaders at 9:30 a.m. (2.30 a.m. EST).

The deputy leader of his Democratic Rally warned time was running out: "We don't have days or weeks, we have only hours to save our country," Averos Neophytou told reporters.

Banks, shut since the weekend, are to stay closed for the rest of the week and so not reopen till Tuesday after a holiday weekend, a government official told Reuters, extending the misery of Cypriot businesses already feeling the pinch.

Without a resolution, the fate of the small nation of just 1.1 million has shaken confidence in the single-currency euro zone and raised geopolitical tension between the EU and Russia.

Finance Minister Michael Sarris extended a stay in Moscow, where Russian officials said he asked for a further 5 billion euros on top of a five-year extension and lower interest on an existing 2.5-billion euro loan from Moscow.   Continued...

 
Cypriot Finance Minister Michael Sarris speaks to journalists after arriving for a meeting at Russia's Finance Ministry in Moscow March 20, 2013. REUTERS/Maxim Shemetov