Cyprus seeks 11th-hour deal

 NICOSIA: Cypriot President Nicos Anastasiades was expected in Brussels yesterday to seek an 11th-hour reprieve from financial meltdown, with a bailout from the European Union and the island’s place in Europe’s single currency bloc hanging in the balance.

Underlining the gravity of Cyprus’ position, the EU’s economic affairs chief said there were now “only hard choices left” for the latest casualty of the euro zone crisis.

Facing a deadline today to avert a collapse of the Cypriot banking system, talks in Nicosia to seal a bailout from the EU and International Monetary Fund broke up late on Saturday without result.

“Negotiations are at a very delicate phase,” the Cypriot government said in a statement.

“The situation is very difficult and the deadlines are very tight,” it said. 

Anastasiades was due to arrive in Brussels mid-morning yesterday to continue the talks, it said.

The tone of the statement differed sharply from earlier expressions of cautious optimism during days of intense negotiations between Cypriot leaders and officials from the island’s “troika” of international lenders, the EU, IMF and European Central Bank.

Cyprus’ overgrown banking sector has been crippled by exposure to crisis-hit Greece, and the EU says the east Mediterranean island must raise €5.8 billion on its own before it can receive a €10 billion bailout.

Without a deal on Monday, the ECB says it will cut off emergency funds to Cypriot banks, spelling certain collapse and potentially pushing the country out of the euro zone.

Conservative leader Anastasiades, barely a month in the job and wrestling with Cyprus’ worst crisis since a 1974 invasion by Turkish forces split the island in two, is expected to meet heads of the EU, the European Central Bank and IMF.

Finance Ministers of the 17-nation euro zone were to meet at 1700 GMT yesterday.

Scrambling to find the funds, officials said Cyprus had conceded to a one-time levy on bank deposits over €100,000, a dramatic U-turn from five days ago when lawmakers angrily threw out a similar proposal as “bank robbery.”

A senior Cypriot official said Nicosia had agreed with its lenders on a 20% levy over and above €100,000 euros at the island’s largest lender, Bank of Cyprus, and 4% on deposits above the same level at other banks.

Finance Minister Michael Sarris spoke of “significant progress” in morning talks, as angry demonstrators outside the finance ministry chanted “resign, resign!”

The EU’s Economic Affairs Commissioner, Olli Rehn, said progress was being made, but warned of tough times ahead. – Reuters