18 March 2013, 09:05

Cyprus parliament delays 'bailout' vote

Cyprus parliament delays 'bailout' vote

When the Eurogroup and the president of Cyprus announced the terms of the bailout package, it was assumed that the parliament will automatically support it. It turns out that the result of the parliamentary vote on the bailout terms is far from certain.

Bloomberg reports that the governing party doesn’t have enough votes to secure the passage of the bailout package through the parliament. The vote has been repeatedly postponed and now the estimated time for the decisive vote is 16:00 GMT. So far, there have been no reports on the existence of an ad-hoc majority willing to vote for the bailout package.

For any parliamentary party lending support to the measure to confiscate up to 10% of the money held in Cypriot bank accounts is the equivalent of a political suicide. It is unlikely that the supporters of  expropriation will be elected again to parliament.

Creating a parliamentary coalition to support the measures imposed by the Eurogroup, ECB and IMF will be quite difficult. The president of Cyprus has already warned the politicians that a failure to support the bailout package will mean that two of the biggest Cypriot banks will face immediate bankruptcy. It is also possible that Cyprus will be forced to leave the eurozone. According to the presidential statement, if Cyprus is forced to reintroduce a local currency instead of the euro, this local currency will instantly lose 40% of its value.

The president of Cyprus is actually repeating the threats he has received from the Eurogroup. After being coerced into accepting the “unique solidarity levy” in exchange for a bailout, he is trying to coerce the members of the Cypriot parliament into voting for the bailout package.

Bloomberg interviewed George Perdikes, a representative of the Green Party and a member of the parliament’s finance committee, who believes there is no good solution for the ongoing crisis. “This is a lose-lose situation,” he said. “Whatever happens there will be a massive outflow from Cypriot banks, with or without a haircut”.

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