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Cypriot president 'warned his friends to move money abroad' before financial crisis hit: Leader under fire as he faces just FOUR DAYS to save country from collapse
- Italian media said 4.5 billion euros left the island in the week before the crisis
- Russia's finance minister: Talks on new financial aid for Cyprus have failed
- Cyprus: 'Next few hours will determine the future of the country'
- Russia has vast cash reserves in Cypriot banks
- Mrs Merkel warned that Cyprus' partners may soon 'lose'
- Italian media said 4.5 billion euros left the island in the week before the crisis
By Allan Hall, James Chapman and Jill Reilly
PUBLISHED:03:33 EST, 22 March 2013| UPDATED:19:07 EST, 22 March 2013
Claims: Cypriot president Nikos Anastasiades 'warned' close friends of the financial crisis about to engulf his country'
Cypriot president Nikos Anastasiades 'warned' close friends of the financial crisis about to engulf his country so they could move their money abroad, it was claimed on Friday.
The respected Cypriot newspaper Filelftheros made the allegation which was picked up eagerly by German media.
Germans are angry at the way their country has been linked to the Nazis and Hitler by Cypriots angry at the defunct rescue deal which called for a levy on all savings.
The Cyprus newspaper did not say how much money was moved abroad but quoted sources saying the president 'knew about the possible closure of the banks' and tipped off close friends who were able to move vast sums abroad.
Italian media said the 4.5 billion euros left the island in the week before the crisis.
Meanwhile sources close to the 'troika' - the IMF, ECB and EU Commission responsible for trying to create a viable rescue deal before Monday - said that attempts to put together a 'plan B' rescue package had failed.
'The coming hours will determine the country's future,' a government spokesman in Nicosia said.
Nearly a full week after the European Union agreed to a €10 billion rescue for the island country of one million people the Cypriot parliament still hasn't approved any new deal.
Nicosia hoped to raise its €5.8 billion share of the bailout through a fund based on a portfolio of government assets. Early Friday afternoon, Greek TV station Skai-TV and the newspaper Ta Nea reported the troika has rejected the proposal following a meeting with president Anastasiades.
Troika officials reportedly told the leader it was unlikely the country could raise the funding shortfull with the plan.
Anger: Banking sector workers protest outside of the Cyprus' parliament in Nicosia as lawmakers debate emergency legislation
Anger: Laiki bank employees bank react during a rally outside the Cypriot parliament
Out in force: Today Cypriot authorities were putting the final touches to a plan they hope will convince international lenders to provide the money the country urgently needs
Tension: A large number of depositors wait to withdraw money from Laiki Bank ATM's machine at a closed Bank of Laiki branch in Nicosia
Decisions: The European Commission delegation members led by EU commission President Jose Manuel Barroso (lefr) meet with Russian Government delegation led by Prime Minister Dmitry Medvedev (right) in Moscow
They are reportedly sticking to the demand that Cyprus impose a deposit tax, but only on accounts holding sums above €100,000.
German government patience is said to be 'wearing very thin,' with Chancellor Merkel reportedly seething at seeing herself caricatured as Hitler on demonstrators' placards in Cyprus.
At a special meeting of her party group in parliament on today Mrs Merkel warned that Cyprus' partners may soon 'lose ' and that the country should 'not try to test the troika.'
News magazine Der Spiegegl said participants in the meeting quoted Merkel as saying that Cyprus appears not to have recognized that the business model it has used up until now has ended.
At the same time, she added: 'We want Cyprus to remain in the euro zone.' She also said that she hopes the situation in Cyprus doesn't lead to a 'crash'.
Angry crowds demonstrated in Cyprus today as leaders battled to prevent total economic collapse in four days time.
Cyprus's government urged lawmakers this afternoon to 'take the big decisions' - MPsare due to start voting on a series of bills that aim to raise the funds the country needs to secure an international bailout before their emergency funding runs out on Monday, triggering a possible exit from the Euro.
'The next few hours will determine the future of the country,' government spokesman Christos Stylianides said in a televised statement before parliament was due to debate.
Discussions: German Chancellor Angela Merkel (left) talks with Finance Minister Wolfgang Schaeuble before discussing a Cyprus bailout plan today
Outraged protestors gathered outside parliament - Despo Pambaka, 28, a customer services manager at Laiki Bank told The Telegraph: 'I never expected this would happen. They are trying to take our lives, our money. Even in 1974 in the war (with Turkey) they didn't rob us of our deposits. This is not the Europe that we went into. Germany showed her real face. We will not accept it.'
This morning it emerged that British savers with Laiki Bank could get the same deal as their Cypriot counterparts.
Laiki Bank, which has three UK branches is not covered by the FSA compensation scheme, unlike Bank of Cyprus, meaning their customers could be hit by the bank restructures.
Meanwhile Greek Finance Minister Yannis Stournaras announced that a Greek banking group had begun acquiring the Greek units of Cypriot banks - this would safeguard all the deposits of Greek citizens in Cypriot banks.
Last night an emergency Bill submitted to parliament gave the finance minister or central bank governor the right to impose capital controls on banks – a ban on moving cash outside the country, which would be a serious blow to the single market.
The European Central Bank warned it may halt funding on Monday if Cyprus fails to come up with a viable rescue plan.
Smiles all round: Russian President Vladimir Putin, right, and European Commission President Jose Manuel Barroso before their meeting
Tension: People wait in line to withdraw money from an ATM in Cyprus
Restocked: Cypriots still have access to cash for now as bank machines which were emptied at the weekend have been restocked
As horrified islanders faced new limits on cashpoint withdrawals and a ban on taking money out of the country, a poll showed more than two-thirds now want to leave the single currency and turn to Russia for help.
Prime Minister David Cameron discussed the financial crisis in Cyprus with Russian President Vladimir Putin in a phone call this morning.
Downing Street said that Mr Cameron and Mr Putin 'agreed that they hoped a solution could be found to the crisis', but added that Cyprus took up only a small part of the 30-minute call, which also touched on Syria, the upcoming G8 and G20 summits in Northern Ireland and St Petersburg and BP's Arctic oil deal with Russian company
There is growing concern that Germany's attempt to strongarm the Mediterranean island, already blamed for undermining confidence in banks across the Continent, is turning into a geopolitical blunder of historic proportions.
Even if an emergency bank restructure – which could mean big deposit holders losing almost half of their savings – goes ahead, Cyprus will need to raise billions by next week to avoid collapse.
Anger: A Cypriot woman shouts slogans as she holds a placard during a protest against an EU bailout deal outside the parliament in Nicosia this week
With the country on the verge of bankruptcy, officials announced the banks would not reopen until next Tuesday while the country seeks a bailout
Credit ratings agency Standard & Poor's cut its rating on Cyprus to CCC, which means it risks defaulting on its debts.
Russia's prime minister says Moscow will only help Cyprus out financially if the country's new money-raising measures get the backing of the European Union.
Dmitry Medvedev said Friday that Russia "hasn't closed the door, hasn't said `no' to Cyprus.
His comments come after Cyprus' finance minister left the Russian capital without a hoped-for deal.
Cypriot authorities are putting the final touches to a plan they hope will convince international lenders, including its European partners, to provide bailout money to avoid a bankruptcy within days.
Cyprus has until Monday to secure a deal after the European Central Bank warned it would stop providing the country's banks with liquidity on that day if no package is agreed.
Russian depositors have huge sums in Cyprus's banks, which critics say have become a haven for tax evasion and money laundering.
A poll for a Cypriot TV station showed that 67.3 per cent say the country should leave the euro and tighten relations with Russia, which is desperate to regain influence in the eastern Mediterranean and Middle East.
As extra police were drafted in to control angry crowds outside the parliament in Nicosia, protesters brandished placards reading 'No to Fourth Reich' and 'Better die on your feet than live on your knees'.
The Bank of Cyprus, the country's biggest bank, warned the island needed a 'liquidity lifeline' which would make the difference between 'salvation or destruction'.
Russian Prime Minister Dmitry Medvedev last night turned on Europe and accused EU countries of deliberately trying to wreck the Cypriot banking system for their own benefit
Cyprus Popular Bank announced limit on ATM withdrawals of 260 euros per customer. Banks, which have been shut all week to prevent mass withdrawals, are to stay closed until Tuesday.
Eurozone finance officials acknowledged being 'in a mess', and discussed imposing capital controls to insulate the region from a possible Cypriot collapse. One described emotions as running 'very high' and referred to'open talk' of Cyprus leaving the eurozone.
In an unprecedented snub, Cyprus decided not to take part in a conference call with EU leaders.
'If Cyprus does not even feel that they can attend the call it is a big problem for us,' one French representative said.
It is thought that Cyprus's 'Plan B' to avoid bankruptcy will mean depositors with account balances in excess of 100,000 euros would be hit hard. Cyprus Popular Bank and the Bank of Cyprus would be split to create a 'bad bank'.
Insured deposits – below the EU ceiling of 100,000 euros, supposedly guaranteed in the event of a bank collapse – would go into a 'good bank' and not sustain losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold. Losses to depositors could reach 40 per cent.
John Cridland, director-general of the Confederation of British Industry, said last night that the proposal for a levy on bank deposits in Cyprus had 'created a real mess'and 'undermined the confidence of ordinary depositors'.
He added: 'The events are a stark reminder that not only has the eurozone crisis not gone away but also how much Europe and the eurozone countries in particular, are going through a period of rapid transformation.'
Asked if the bailout row would sour relations between Moscow and the EU, Sergei Aleksashenko, a former bank governor and now an economist at Moscow's Higher School of Economics, replied: 'It's not possible to damage what does not exist.'
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