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EU keeps Cyprus president waiting amid 'difficult' talks

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(Globalpost/GlobalPost)

EU leaders kept Cyprus's president waiting for anticipated face-to-face talks in Brussels around a planned meeting of eurozone finance ministers on Sunday seeking to resolve a bailout crisis that has seen banks on the island shuttered.

Several Brussels sources told AFP on Saturday that the timing of Cyprus President Nicos Anastasiades's meeting with European Union President Herman Van Rompuy and European Commission head Jose Manuel Barroso would depend on "difficult" EU and IMF negotiations with the Cypriot government in Nicosia on Saturday.

"I'm not expecting any meetings on Saturday, put it that way," said one key source.

The Eurogroup talks planned for 1600 GMT on Sunday still have to be confirmed officially by the group's chairman, Dutch Finance Minister Jeroen Dijsselbloem.

European Commission economics spokesman Simon O'Connor said on Twitter: "Intensive contacts are ongoing at many levels. At this time there are no meetings confirmed in Brussels this weekend."

Cyprus Finance Minister Michalis Sarris described progress over the course of Saturday morning as "significant" despite "several issus" still to be resolved.

But EU sources said the negotiations remained difficult, leaving a question mark over the timing of the Brussels meetings, according to one source.

As a condition for eurozone-IMF loans of up to 10 billion euros, Cyprus has to find another nearly six billion euros.

An initial plan to raid deposits in Cypriot banks backfired badly last week, and the banks will have been closed for 10 days if they indeed re-open their doors as negotiators hope on Tuesday.

The new plan -- a dusted-down version of an earlier proposal in negotiations -- would see the island's two biggest banks broken up, involving significant job losses.

"Good" and "bad" assets within both the Bank of Cyprus and Laiki (or Popular) Banks would be hived off into new holdings -- with a "haircut" applied to the new "good" bank.

This would extend to 15 to 20 percent of these "good" assets, and would raise the majority of the six billion euros.

This plan was rejected by Cyprus during summit negotiations on its bailout that unleashed the current crisis. Cypriot leaders instead proposed a levy on all savings, including an estimated 30 billion euros in Russian investments in the Cypriot financial system.

This "wealth tax", as Dijsselbloem subsequently labelled it, would not only apply to accounts with more than 100,000 euros in them -- the target of a rival plan -- and would therefore avoid accusations that the EU would be breaching its own deposit guarantee legislation.

Still to be cleared up, though, is whether this would also apply to non-residents, after days of talks in Moscow for both Sarris and Barroso that yielded little obvious progress.

Rates for this tax would be on a sliding scale, with an estimated one billion euros collected.

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http://www.globalpost.com/dispatch/news/afp/130323/eu-keeps-cyprus-president-waiting-amid-difficult-talks