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Government: Bailout Vote To Decide Cyprus's Future

Protesters take part in an antibailout rally by employees of Cyprus Popular Bank outside the parliament in Nicosia on March 22.
The government of Cyprus is urging lawmakers to make "big decisions" as the EU member races to avoid financial collapse.

Government spokesman Christos Stylianides said that "the next few hours will decide the country's future, so we must all take responsibility."

The parliament is meeting on March 22 to decide on a new bailout package, which includes restructuring the banking sector and setting up a vaguely defined "investment solidarity fund."

Cyprus must raise 5.8 billion euros ($7.5 billion) to qualify for a 10 billion-euro ($13 billion) international bailout.

Unless it comes up with a new plan by March 25, the European Central Bank said it will curb emergency funding, letting banks collapse.

An earlier Cypriot plan that proposed to seize up to 10 percent of all domestic deposits was rejected by legislators on March 19.

Reports say the new fund would consist of voluntary contributions from individuals and companies, including foreign ones, funds donated by the country's powerful and prosperous Orthodox Church, and could also draw from pension funds.

However, the proposal to draw on pension funds was met with fierce resistance by the powerful union of bank employees.

"They have brought us to a dead-end and, at this moment, we must fight to safeguard the pension funds of the employees and, even more importantly, the worker's jobs," union chief Loizos Hadjicostis told reporters in Nicosia.

"All this is unacceptable, we believe that whatever decision is made these two things must be ensured."

German Chancellor Angela Merkel has also strongly rejected the proposal, saying that touching the pension funds would lead to a "crash."

Looking To Moscow

Pressed for time, Cyprus has turned to Russia, which gave Nicosia an emergency loan of 2.5 billion euros in 2011. Russian individuals and companies have billions of euros in deposits in Cyprus.

On March 22, Russian Prime Minister Dmitry Medvedev kept Cypriot hopes alive, saying it is still possible Moscow would help Nicosia.

"As for our participation in the [Cyprus] process, we haven't closed the door, we didn't say we would not discuss it anymore," Medvedev said after a meeting with visiting European Commission President Jose Manuel Barroso.

However, Medvedev added that specific assistance to Cyprus would be discussed only after it reached a deal with the EU.

Russian Finance Minister Anton Siluanov said earlier on March 22 that Russian investors "showed no interest" in a deal to provide financial aid to Cyprus in exchange for exploitation rights for offshore natural-gas reserves.

Siluanov spoke at the end of two days of crisis talks with his Cypriot counterpart, Michael Sarris.

Siluanov also said that no new Russian loan had been discussed because of limits imposed by the EU on Cypriot borrowing.

With reporting by dpa, AP, AFP, and BBC