NEWS,24.03.2013

Cyprus faces moment of truth

Cyprus President Nicos Anastasiades headed to Brussels on Sunday for emergency talks with the island's international creditors in a bid to avert bankruptcy in a crisis that is again threatening the stability of the wider eurozone.The clock is ticking for the tiny country after the European Central Bank threatened to halt emergency funding if there is no deal by Monday, a day before Cyprus's banks are due to reopen after a 10-day shutdown.Cyprus and its creditors are trying to nail a deal that will restructure the island's banks and deliver up to €6bn from bank deposits in order to resurrect an agreement for a bailout worth up to €10bn."Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. There are only hard choices left," European Union economics head Olli Rehn warned Saturday. He acknowledged that Cypriot leaders faced hard choices to try to limit the damage from the blow to its bloated banking sector, after a firestorm of protest over the EU plans to impose a special levy on bank customer deposits that caused global concern. Rehn said he welcomed "progress" made towards meeting the EU-IMF demands but said it was essential that an agreement was reached on Sunday night. "The negotiations are at a very delicate stage. The situation is very difficult and the time limits are very tight," Cypriot government spokesperson Christos Stylianides said after Anastasiades left on a special flight for Brussels.Anastasiades meets at 13:00 GMT with ECB head Mario Draghi, IMF managing director Christine Lagarde, EU president Herman Van Rompuy, European Commission president Jose Manuel Barroso and Eurogroup chairman Jeroen Dijsselbloem, sources told AFP.Dijsselbloem will then gather finance ministers from all 17 currency partners from 17:00 GMT for what is likely to prove yet another sleepless night in snow-covered Brussels. The sums involved are a pittance compared to Cyprus's closest ally Greece, which needed hundreds of billions all told in the eurozone's first bailout three years ago.But with Cypriot banks in lockdown already for 10 days and the ECB threatening to pull the rug out from under Nicosia on Monday, the fallout from the current crisis could infect other troubled economies."We have learnt down the years that even little problems can become intractable," said Holger Schmieding, chief economist with Germany's Berenberg Bank. "There's just no telling what can unfold in this type of situation."German Finance Minister Wolfgang Schaeuble also warned that if Cyprus was to stay in the eurozone it had to meet the terms of the rescue package."The eurozone countries want to help Cyprus, but the rules must be respected, the aid must be relevant and the programme must tackle the problems at their root," he told the Welt am Sonntag.Cypriot reports suggested officials had made progress with EU and IMF representatives, having agreed a 20% haircut on Bank of Cyprus and a 4% levy on other banks.Private channel Mega TV said the final stumbling block might not be settled before Sunday's meetings.A radical restructuring of the island's second largest lender Laiki (Popular Bank) will see all deposits over €100 000 put into a "bad bank" where they will be tied up for years and may never be fully recovered.But negotiations stumbled on EU-IMF demands for a substantial levy on deposits above the same threshold in the Bank of Cyprus to avoid it facing similar restructuring. It holds more than a third of all deposits.The haircut would take the form of a bond or share swap in a bid to get the measure through parliament, after MPs flatly rejected an earlier plan for a levy on all deposits.Cyprus negotiators had been desperate to avoid the Bank of Cyprus being subjected to the same bitter pill imposed on Laiki.A threat to Bank of Cyprus's pension fund sparked an angry march on parliament by bank staff on Saturday and a threat of industrial action.The Cypriot economy is reeling from the prolonged bank closure, imposed for fear of a run by panicked depositors, which has seen many businesses accept only cash transactions.Overnight, vandals spray-painted the front of Anastasiades' Nicosia party headquarters with slogans including "Kleftes" Greek for "thieves" and "Get out."

Cyprus bailout talks go to the wire

Cyprus still had no final agreement early on Sunday on the terms of a bailout deal to save its eurozone economy from imminent bankruptcy as its leaders braced for make-or-break talks in Brussels.Cypriot officials huddled with EU and IMF representatives until nearly midnight (22:00 GMT) on Saturday in a bid to find a way to meet their conditions for unlocking €10bn in desperately needed emergency loans by a Monday deadline.The so-called troika of the EU, IMF and European Central Bank is demanding that Cyprus raise €5.8bn in return and shrink its bloated financial sector.Privately run Mega TV said the government had reached agreement with troika representatives on most elements of a deal but that the final stumbling block might not be settled before the crunch 17:00 GMT talks between President Nicos Anastasiades and EU chiefs.EU Economy and Euro Commissioner Olli Rehn welcomed the "progress" made by Cyprus towards meeting the troika's demands and vowed "intensive work and contacts" through the night to try to a reach deal before the Brussels meeting."It is essential that an agreement is reached by the Eurogroup on Sunday night," Rehn said.The Cypriot parliament has already approved a painful package of banking reforms and there was reluctant consensus on a raft of other revenue-raising measures to put to eurozone ministers.A swinging restructuring to the island's second largest lender Laiki (Popular Bank) passed by MPs on Friday will see all deposits over €100 000 put into a "bad bank" where they will be tied up for years and may never be recovered in full.But negotiations stumbled on troika demands for a substantial levy on deposits above the same threshold in Bank of Cyprus the island's largest lender with more than a third of all deposits to avoid it being subjected to a similar restructuring.Mega TV said the government had finally agreed to a 20% haircut on Bank of Cyprus and a 4% levy on other banks, the latter to pay for the €600m Laiki pension fund lost in its restructuring.It said the haircut would be in the form of a bond or share swap in a bid to get it through parliament.MPs flatly rejected an earlier plan for haircut on bank deposits when it was put to them last Tuesday.The Cyprus president has invited all the island's party leaders to accompany him to Brussels in a bid to convince eurozone ministers that there will be no repetition of that defeat.Mega TV said the remaining sticking point was over whether Bank of Cyprus should absorb the "good bank" carved out of Laiki or they should remain two separate lenders as argued for by the government. The EU's Rehn acknowledged that Cypriot leaders had faced hard choices to try to limit the damage to the island's economy from the blow to its huge banking sector. "Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available," he said."There are only hard choices left." Cyprus negotiators had been desperate to avoid Bank of Cyprus being subjected to the same bitter pill imposed on Laiki.Laiki economist Yiannis Tirkides said that savings hived off into the bad bank would be "blocked" for years while it absorbs the lender's non-performing loans, which he put at about 30% of all Laiki lending.The threat to the bank's pension fund sparked an angry march by bank staff on parliament on Saturday and a threat of industrial action."If you don't secure our pension fund, we will go on strike from Tuesday," when branches are finally scheduled to reopen after a closure of more than a week, banking union chief Loizos Hadjicostis said.The strike threat was a serious one for an economy reeling from the prolonged bank closure that has seen many businesses accept only cash transactions.The streets of Nicosia were otherwise largely deserted on Saturday, as anxious residents waited to see which way the crisis turns."People don't know if they will have money tomorrow or the day after," said Yiorgos Andoniou, a jobless 57-year-old."We are in this situation because... we were living beyond our means for 25 years and now the bill has come," said a woman identifying herself as Catherine."Eventually we'll tighten our belts and go back to the practical and hard-working people that we were before."

Cyprus in last-ditch bailout talks

Cyprus President Nicos Anastasiades entered emergency talks with the island's international creditors Sunday seeking to avert bankruptcy in a crisis that is again threatening the stability of the wider eurozone.The clock is ticking for the tiny country after the European Central Bank threatened to halt life-support funding if there is no deal by Monday, a day before Cyprus's banks are due to reopen after a 10-day shut down.Cyprus and its creditors are trying to nail a deal that will restructure the island's banks and deliver up to €6bn from large bank deposits in order to resurrect an agreement for a bailout worth up to €10bn."Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. There are only hard choices left," European Union economics head Olli Rehn warned on Saturday. He acknowledged that Cypriot leaders faced hard choices to try to limit the damage from the blow to its bloated banking sector, after a firestorm of protest over the EU plans to impose a special levy on bank customer deposits that caused global concern.Rehn said he welcomed "progress" made towards meeting the EU-IMF demands but said it was essential that an agreement was reached on Sunday night."The negotiations are at a very delicate stage. The situation is very difficult and the time limits are very tight," Cypriot government spokesperson Christos Stylianides said.Anastasiades's cortege complete with police escort entered EU headquarters in Brussels shortly after 14:00 (13:00 GMT), an AFP correspondent said. That followed a pit-stop in Athens on a special plane laid on by the European Commission, the Cypriot government said in a statement. Anastasiades was to meet with ECB head Mario Draghi, IMF managing director Christine Lagarde, EU president Herman Van Rompuy, European Commission president Jose Manuel Barroso, Eurogroup chairman Jeroen Dijsselbloem and Rehn, sources told AFP.Dijsselbloem will also bring in the finance ministers from all 17 currency partners from 17:00 GMT for what is likely to prove yet another sleepless night in snow-covered Brussels. One of those, France's Pierre Moscovici, said on television before leaving for Brussels that it was time to put an end to "casino economy" practices on Cyprus."If we don't, it's you, it's me, it's all of us who will be left picking up the tab," Moscovici said.The volume of Cyprus sovereign aid is a pittance compared to Nicosia's closest ally Greece, which needed hundreds of billions all told in the eurozone's first bailout three years ago.But with Cypriot banks in lockdown already for 10 days, the fallout from the current crisis could infect other troubled economies."We have learnt down the years that even little problems can become intractable," said Holger Schmieding, chief economist with Germany's Berenberg Bank. "There's just no telling what can unfold in this type of situation."German Finance Minister Wolfgang Schaeuble also warned that if Cyprus was to stay in the eurozone it had to meet the terms of the rescue package."The eurozone countries want to help Cyprus, but the rules must be respected, the aid must be relevant and the programme must tackle the problems at their root," he told Welt am Sonntag newspaper.Cypriot reports suggested officials had made progress with EU and IMF representatives, having agreed a 20% haircut on Bank of Cyprus and a 4.0% levy on other banks.A radical restructuring of the island's second largest lender Laiki Popular Bank will see all deposits over €100 000  put into a "bad bank" where they will be tied up for years and may never be fully recovered.But negotiations stumbled on EU-IMF demands for a substantial levy on deposits above the same threshold in the Bank of Cyprus to avoid it facing similar restructuring. It holds more than a third of all deposits.The haircut would take the form of a bond or share swap in a bid to get the measure through parliament, after MPs flatly rejected an earlier plan for a levy on all deposits.Cyprus negotiators had been desperate to avoid the Bank of Cyprus being subjected to the same bitter pill imposed on Laiki.A threat to Bank of Cyprus's pension fund sparked an angry march on parliament by bank staff on Saturday and a threat of industrial action.

Israel must ease new Gaza restrictions

Two Israeli rights groups demanded on Sunday that Israel lift fishing restrictions imposed on Gaza after militants fired two rockets across the border, slamming them as "collective punishment."Israel on Thursday halved the area in which Palestinian fishermen are permitted to work, closed the Kerem Shalom goods terminal and imposed restrictions on people wanting to leave the territory after two rockets hit southern Israel, causing damage but no casualties.The move, which saw the fishing zone cut from six nautical miles to three, was condemned by the Israeli human rights group B'Tselem as well as by Gisha, which campaigns for Palestinian freedom of movement."The decision to once again reduce the fishing range in response to missile fire by armed groups constitutes collective punishment imposed on fishermen for the actions of others," said a statement from B'Tselem.It said Israel's duty to protect its citizens "cannot justify the harsh damage to fishermen who have done nothing wrong"."B'Tselem calls on the military to rescind its latest decision and the restrictions imposed on fishermen in the Gaza Strip in the past years, and to permit fishing in the 20 nautical miles range, as was set under the Oslo agreements."In a letter to Defence Minister Moshe Yaalon, Gisha director Sari Bashi said it was "the second time in less than a month" Israel had blocked civilian travel and goods transfer in response to rocket fire and urged him to lift the restrictions."In the last month, there appears to be a new policy toward the Gaza Strip, in which Israel is openly restricting civilian movement to and from Gaza, not because of a concrete security necessity, but rather as a punitive step taken against the civilian population in direct response to fire by combatants," she wrote.The group condemned the rocket fire as "a blatant violation" of international law, but also noted Israel's obligation to avoid harming civilians, saying the recent steps were "entirely unacceptable".Israel on Friday resumed full diplomatic ties with Turkey after apologising for a deadly 2010 raid on a Gaza aid flotilla which left nine Turkish activists dead.As part of the deal, Prime Minister Benjamin Netanyahu pledged "to work on improving the humanitarian situation" in the Palestinian territories in a phone call with his Turkish counterpart Recep Tayyip Erdogan brokered by US President Barack Obama on a landmark visit.The radical Palestinian group Islamic Jihad on Sunday slammed the Israeli apology as "poisonous."It was an "imaginary victory for Turkey and a poisoned apology from Israel... which came under pressure from US President Barack Obama," Islamic Jihad leader Khaled al-Batsh said in a statement on the group's Facebook page.Batsh said the apology was an Israeli attempt to "renew military, security and political cooperation with Turkey... and to prevent it from improving any further than necessary its relationship with the Islamist dimension: Iran and Egypt.""The suggestion that this is a victory for Turkey is one of lies. It will not result in lifting the blockade on Gaza the one who will benefit is the Zionist enemy," he said.

NY's Bloomberg predicts more gun checks

New York Mayor Michael Bloomberg predicted on Sunday that pressure from the American public would eventually force the US Congress to expand background checks for gun buyers, even though the measure faces an uncertain fate in the Senate.As Bloomberg launched a $12m national advertising campaign aimed at prodding members of the Senate to support expanded background checks, he said the measure's widespread popularity would trump gun-rights groups like the powerful National Rifle Association that oppose it."If 90% of the public wants something and their representatives vote against that, common sense says they are going to have a price to pay for that," Bloomberg said on NBC's Meet the Press. A top NRA executive predicted that the self-made billionaire' s efforts would change few minds. "He can't buy America," NRA executive vice president Wayne LaPierre said on the same programme.Lawmakers are scaling back President Barack Obama's ambitions for sweeping gun control measures, which took on a new urgency after the 14 December school shooting in Newtown, Connecticut, that killed 20 children and six adults.Senate Democratic leader Harry Reid effectively ruled out an assault weapons ban last week, and limits on high-capacity ammunition clips also are likely to fall short.Gun-control advocates say a system of expanded background checks would be the single most effective way to reduce gun violence across the country. Opinion polls show that more than 90% of all American voters and 85% of gun owners support it.While such a measure could pass the Democratic-controlled Senate, it faces long odds in the House of Representatives, where Republicans hold the majority."I don't think their bill will pass the Senate and even if it does it won't pass the House," Republican Senator Tom Coburn said on C-SPAN.The NRA argues that expanding existing background checks to cover the 40% of gun sales that are now exempt would only create more hurdles for law abiding citizens and do little to deter criminal purchases. The NRA instead wants the federal government to step up prosecutions under existing gun laws and boost security in schools.Bloomberg acknowledged that a national ban on assault weapons is less popular with the public and is unlikely to succeed in Congress.Several states, including New York, have passed assault-weapons bans of their own but others like Colorado, which tightened its gun laws recently, have not restricted the military-style rifles that are popular with gun owners."I think the feeling right now around assault weapons, at least in Colorado, is that it's so hard to define what an assault weapon is," Colorado Governor John Hickenlooper said on CNN's State of the Nation. "There's a lot of questions whether the 10-year federal ban that existed made a difference," Hickenlooper said. "It's a tough sell."