Cypriots hit hard by bailout deal | Europe| News and current affairs from around the continent | DW | 26.03.2013
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Europe

Cypriots hit hard by bailout deal

The deal that has been struck to save the country from bankruptcy badly hurts small business owners. People who saved money for retirement lost their old-age insurance.

An employee of Cyprus Laiki (Popular) Bank reacts as he takes part in a protest outside the parliament in Nicosia. (Photo: PATRICK BAZ/AFP/Getty Images)

Zypern Bankenkrise

The hotel owner doesn't need to say anything. His red eyes tell the story of what he went through over night. He lost a lot of money in one fell swoop, hit hard by the levy on the accounts of those who had saved more than 100,000 euros ($128,640). Tears flowed - and he wants to remain anonymous because he's ashamed of that now.

The hotel owner has almost reached retirement age, owns a small supermarket and deals in real estate, a typical small business man on Cyprus. Business people need to have a lot of money in their accounts. Goods need to be paid, sales need to be booked. In addition, many people need to have a certain amount of money in their account for an overdraft loan. Unlucky ones like the hotel owner now have to watch a large part of this capital being taken away.

Deep Descent

Members of Cypriot communist party hold a protest outside the European Union House guarded by police in Nicosia. (Photo: PATRICK BAZ/AFP/Getty Images)

Cypriots protested against an EU deal that would introduce a bank levy

Money is a lubricant for the economy, and that's especially true for businesses in Cyprus.

"If we take part of this away from the business owners, it will have unforeseeable consequences," said Postas Apostolides, a well-regarded economist from Cyprus. He is frustrated when we meet at the hotel the morning after the deal was struck. "Do you want me to be friendly? Or should I say what I really think about the German government?" Apostolides asks. "The government and Angela Merkel have known about the problems here for a long time. It was their responsibility, too, to act early on. But in Germany's view, Cyprus is no more than some small island in the Mediterranean."

Of course, Cypriots see things differently. For the island's residents, the country was successful until a couple of years ago, when unification plunged it into a descent. In fact, Cyprus was once known as the "Switzerland of the Mediterranean." The economy was growing every year, there was hardly any unemployment. That's different now. Since the recession hit, the economy has stagnated, and the unemployment rate has tripled. After the decisions made on the weekend, there is no end in sight, many economists say.

Old-age pensions endangered

Many people in Europe are surprised that the number of Cypriots with more than 100,000 euros is so high. It's not wealth, though, that is accumulating on the accounts, but simply old-age pensions. Many people don't have other forms of pensions and are saving for their own old age and that of their children. This form of insurance has dissolved into thin air for some this weekend. Chrysanthos Trokkoudes is one of them. "At least a decision has been made," the 71-year-old merchant who owns a china-shop in Nicosia said. He'd like to retire soon, but will probably run his store for a while longer.

The parade of school students marking the Independence Day of Greece in Nicosia. (Photo: Vladimir Astapkovich/RIA Novosti)

Despite the crisis, Cypriots still celebrated their independence from Greece on Monday

In spite of all the bad news, the Monday after the deal on the capital levy was also a day of celebration. It happened to be a national holiday on which many Cypriots take to the streets. A procession with a marching band moved across the entire capital, followed by big meals with families.

A visitor who came to the procession with her husband and daughter said with a smile that she, too, has lost a large sum of money. "Sure, it's a problem for everyone, but this is how we help our country," she noted. "We have to help our country." Many Cypriots share that opinion. They want a new beginning and hope that the crisis will be history in a few years.

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