Cyprus Rejects Bailout Deal Leaving Eurozone Facing Fresh Crisis

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn (£5bn) from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped country will seek a funding lifeline from Russia.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.

Late on Tuesday night the eurozone governments said that despite the vote Cyprus would still need to raise the €5.8 bn – a third of the €17bn bailout.

With the crisis escalating, an RAF flight carrying €1m in low-denomination notes landed in Cyprus to provide cash for 3,000 British service personnel based on the Mediterranean island. The banks have been shut since Friday and electronic transactions halted, although cash machines are still working and the Ministry of Defence said the euros were being flown in as “contingency measure”.

About 2,000 of the military staff, typically posted to the island for 18 or 24 months, have their salaries paid into local accounts. The MoD said it was “approaching personnel to ask if they want their March, and future months’ salaries paid into UK bank accounts, rather than Cypriot accounts”.

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