President scrambles to save deposits tax

To raise a €10 billion bailout loan from the unholy trinity of IMF, European Central Bank and the European Union, the hapless rightwinger had for some reason accepted a 6.75 per cent levy on all bank deposits below €100,000, rising to 9.9 per cent on those above - a straightforward confiscation of savings which no other bailout has dared to attempt to inflict.

Unsurprisingly, this raised fury among the island's people, who are also going to be hit by pay cuts, privatisations and benefit freezes.

About 25 MPs from the communist Akel party, the socialist Edek and the Greens immediately said they wouldn't vote for the disastrous tax in the 56-seat Cypriot parliament.

President Anastasiades is faced with the task of convincing the deeply divided house to accept it because it needs MP's approval.

The vote was postponed for a second time as a furious row continued over possible changes to the tax rates, with the parliament speaker saying it will now take place today.

In a nationally televised speech on Sunday, the president had claimed that he was trying to find a way to adjust the deal.

But he failed to convince MPs to support what he claimed was the only way to avoid bankruptcy yesterday.

And it wasn't only the Cypriot left that was exercised.

"If European policymakers were looking for a way to undermine the … foundation of any banking system they could not have done a better job," said CMC Markets analyst Michael Hewson.

And US economist Paul Krugman wrote in The New York Times: "It's as if the Europeans are holding up a neon sign, written in Greek and Italian, saying 'Time to stage a run on your banks!'"

Ordinary Cypriots agreed, queueing at cash machines to get as much of their money out as possible and demonstrating in small but angry groups in the streets of Nicosia.