The Cyprus parliament was scheduled to vote March 18 on whether bank depositors should hand over part of their savings to help fund an international bailout to prevent the Mediterranean island country from going bankrupt.
During the years of the eurozone crisis, the savings of depositors have been considered something that could not be touched by officials.
But Cypriot leaders and international lenders announced a deal March 16 calling for savers to contribute up to 10 percent of their deposits in return for an offer of 10 billion euros in aid to recapitalize banks.
The move – described as a one-time-only tax – has infuriated Cypriots, some of whom are calling it legalized theft.
President Nicos Anastasiades has defended the deal, calling it the “least painful” option to prevent Cyprus from going bankrupt and being forced to leave the euro-zone.
"This solution is certainly not the one we would have wanted, but it is the least painful under the circumstances, because above all it leaves the operation of this country in our hands," he said March 17.
Under the plan being considered by parliament, accounts of more than 100,000 euros will be hit with a 9.9 percent levy, while lower deposits will face a 6.75 percent charge.
Estimates suggest the levies could raise 5.8 billion euros.
The charge will apply to both Cypriot residents and non-residents. It is expected to impact wealthy Russian and European citizens who have put money in Cyprus banks.
Reports said it was not clear how the deeply split 56-member parliament will vote on the question.
March 18 is a bank holiday in Cyprus. Reports say banks could face massive withdrawals if the measure is not approved.
In his address, Anastasiades pledged an effort to limit the impact of the levies on small depositors. He also said savers forced to pay would be compensated by receiving shares in banks that would be guaranteed by future natural gas revenues.
The president compared the crisis to 1974, when Turkey invaded Cyprus in response to a Greek-backed coup. That crisis led to the division of the island into Greek- and Turkish-controlled parts.
"Cyprus finds itself in a state of emergency," Anastasiades said. "It is unfortunately living through its worst period since 1974. We took over an administration on the brink of bankruptcy."
Residents in the capital Nicosia who were making withdrawals from bank machines on Sunday expressed dismay.
"I feel like everyone else: Annoyed and angry at the situation," said one man. "We have no idea what we will face tomorrow. The situation is really difficult."
Said another man: "It is unfair. I have a bank loan from a government organization for 12,000 euros to support my daughter's studies. I deposited the money at the bank and now I will lose an amount that I have to pay back with interest."
European officials have sought to calm the situation by saying the situation in the country of less than one million people will not set a precedent for other nations that may need international bailouts.
Based on reports from Reuters, AFP and AP