Europeans Freaking Out Over Controversial Cyprus Bailout

[HuffingtonPost]

By Harry Papachristou and Sonya Dowsett                

ATHENS/MADRID, March 17 (Reuters) - Europeans' faith in the  safety of their savings has been shaken by a levy on Cypriot  bank deposits to pay for a bailout, even though there was no  sign of a rush to withdraw cash in Madrid or Dublin.                

People told Reuters they were angered but unsurprised that  politicians should dip into citizens' deposits. And as bankers  expressed concern the proposed terms of Cyprus's bailout could  unnerve savers elsewhere, some leftist leaders voiced outrage.                

Euro zone finance ministers want Cypriots to pay up to 9.9  percent of their deposits in return for a 10 billion euro ($13  billion) aid package. If approved by the island's parliament on  Monday, it will be the first time savers have had to foot part  of the bill for a European bailout.                

"What they did to the Cypriots was a disgrace," said Maria  Spyrou, 57-year-old Athens housewife who says she must support a  daughter, a nurse, who hasn't been paid for nine months.                

"We won't pull our money from the bank here," she said. "In  Greece, they have found other ways to rob us, more ingenious and  sly ways -- with fuel taxes,  property poll taxes, you name it."                                

The chief of Greece's main opposition, anti-bailout Syriza  party, leftist Alexis Tsipras, blamed the move on German  Chancellor Angela Merkel.                

"We must all together raise a shield to protect the peoples  (of Europe) from Ms Merkel's criminal strategy," said Tsipras,  who wants a pan-European debt conference to forgive debt.                

In Lisbon, Joao Semedo, leader of Left Bloc, one of the  country's smaller left-wing parties, warned Portuguese deposits  would be at risk if European creditors insist on more austerity.                

"The Portuguese government will not hesitate in resorting to  bank deposits," said Semedo.                

Greece and Portugal, like Ireland and Spain, have received  European aid to shore up their economies, in return for painful  cuts to spending and tax hikes.                

In northern European countries, concerned at how much they  might have to pay for bailing out indebted states, there was  little sign of anxiety on Sunday. Finnish Prime Minister Jyrki  Katainen said the levy was fair.                

European officials have been at pains to stress that Cyprus  is a special case - with terms not applicable to other bailouts  because of the size of Cyprus's banking sector and its large  foreign deposits.                                

NO SAVINGS TO WITHDRAW                

But in Madrid, Ana Garcia, a 62-year-old worker at a mental  health centre who was attending a protest against the  privatisation of the health service on Sunday, thought Spaniards  could also face a hit on their savings.                

"European countries are very calm thinking it could never  happen to them. But we'll all get involved sooner or later,"  said Garcia, who added she had no savings to take out of the  bank even if she wanted to.                

News of Cyprus's bailout added anxiety to St Patrick's Day  celebrations in Dublin.                

"It's outrageous" said Carmel Madden, an Irish 54-year-old  former businesswoman. The news from Cyprus made her worry about  holding proceeds from a house sale on deposit in a local bank.                

"I'm more concerned now than I was eight months ago when I  sold the house. I just don't know where my money would be safe."                

She said she was not planning any withdrawal in the short  term, mainly because she had not found a less risky alternative.                

Despite the assurances that Cyprus is an exception, the tax  on bank deposits risks unnerving savers elsewhere in Europe,  according to the chief executive of one Greek bank.                

"It's an extreme move, Cyprus may be a tiny state but this  will injure the fragile sentiment in the euro zone's south,"  said the banker, who declined to be named.                

Another senior Greek banker said: "What timing, just when  the crisis seemed to be stabilising. How can savers not worry  that this may happen again elsewhere as part of bailouts?"                

In Italy, where media and political parties are focused on  the quagmire following last month's deadlocked election and  support for an anti-establishment party has soared, many turned  to social media to express their concerns.                

"After Cyprus I suggest we find a way to protect our savings  from possible forced levies ... the solutions exist!!," read a  tweet by Giovanni Cuniberti, independent financial analyst and  lecturer at the University of Turin.

Via: HuffingtonPost