British Government STOPS Pension Payments to
Expats in Cyprus So Government Won't Seize 10% Tax for EU Bank Bailout
Hugo Gye and Mario Ledwith
to Britons living in Cyprus are being suspended amid growing uncertainty
on the island due to an unprecedented raid on bank accounts.
will not be made until the country's parliament votes on the controversial
levy on bank deposits, proposed as part of a £8.6billion bailout
by the European Union and IMF.
Greg Clark said payments had been frozen today to ensure money from
the Government reaches its intended recipient.
across Europe and Asia also felt the effect of growing economic
uncertainty due to the heavily criticised bailout package.
As the Cypriot
parliament delayed a crucial vote on the measure for the second
time and it was announced that banks will remain closed on Tuesday
and Wednesday, angry scenes erupted on the streets of the capital
who stand to lose ten per cent of their savings stood outside the
Parliament building holding anti-German banners which left no doubt
where they believe the blame lies for the latest crisis to envelope
who have moved to the Mediterranean island face losing thousands
in savings as they are unlikely to be compensated, with one MP today
calling the move 'daylight robbery of British pensioners'.
In a statement
to Parliament, Mr Clark, Financial Secretary to the Treasury, said
withholding pension payments to thousands of Britons allowed the
Government to 'take stock of developments', but assured expats that
their payments were 'being held safely'.
Mr Clark said
expats could opt to switch payments to another bank account and
reiterated that the pensions are 'safe'.
government has said it will pay back troops stationed on Cyprus
who have cash seized.
that members of the armed forces based in Cyprus would be compensated
for 'reasonable losses', but could not confirm how much this was
expected to cost the Government.
to claims from former foreign secretary Jack Straw that the Cypriot
banking system had become a 'haven for Russian money laundering,
Mr Clark said the weekend agreement included action to address this
MP Caroline Lucas said it is 'immoral and unfair to pilfer the savings
of the people of Cyprus', criticising the UK Government for not
fully condemning the levy.
Mr Clark was
also targeted for failing to condemn the proposed levy, but retorted
that the UK is outside the eurozone and therefore not responsible
for the plans.
whether Britons in other struggling EU countries such as Ireland,
Italy and Portugal should repatriate their money, Mr Clark responded:
'The ECB has said the situation in Cyprus is unique and a study
of the situation in Cyprus would confirm that.'
Clark's assertion that the bailout is a worry for 'many of our constituents',
opposition minister Chris Leslie said: 'It is never a good sign
to savers that they would be better putting their savings under
the mattress than in a bank.'
an initial slump in the stock markets this morning, Mr Leslie said
that the market reaction 'may just be the start'.
Vladimir Putin has also weighed into the row saying that the measure
was 'unfair, unprofessional and dangerous.'
been claims that Europe and the IMF who engineered the bailout wanted
to enforce the levy because there is a large amount of Russian cash
held on Cyprus.
The move was
intended to ensure the stability of the island state's economy,
but instead there are fears it could plunge Europe back into crisis.
Anastasiades is currently negotiating with minsters at the parliament
building in Nicosia under tight security due to rising tensions.
The FTSE 100,
which soared to a five-year high in recent days, initially fell
by 100 points, or 1.5 per cent, after markets opened, with banking
shares particularly suffering.
It closed the
day down 31 points at 6457 - 0.5 per cent.
also fell, with Japan's Nikkei ending the day down by 2.5 per cent.
The Dow Jones was down 71 points to 14443, in early training but
the fall was only 0.5 per cent.
shares also fell more than 2 per cent, as traders warned that the
bailout meant it was 'no longer taboo to touch deposits'.
worried that the precedent set by the Cyprus move could spark an
exodus of capital from other fragile European economies and jeopardise
the region's tentative recovery.
previous rescues for Greece, Portugal, Ireland, and Spanish banks,
the proposed Cypriot bailout is the first one that dips into ordinary
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