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Cyprus a 'guinea pig' for EU haircut experiment

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(Globalpost/GlobalPost)

Cyprus was a "guinea pig" for an EU-imposed experiment that saw bank depositors slapped with a levy on their savings, President Nicos Anastasiades told a meeting of EU parliament speakers on Monday.

The eurozone last week formally approved a bailout for Cyprus, which will have to stump up 13 billion euros ($17 billion) of its own to secure 10 billion euros from the European Union and International Monetary Fund.

Most of the amount Cyprus must raise is to come from a hit of up to 60 percent or even more on deposits above 100,000 euros at the island's two largest banks, in an unprecedented move that sparked controversy.

"Cyprus is not asking for a special treatment, but expects a just and fair treatment, based on the same terms and conditions applied to all other EU partners in need," Anastasiades told EU speakers gathered at the presidential palace in Nicosia.

"We are requesting simply what we are entitled: solidarity," the conservative leader said in a prepared speech.

"Regrettably, this fundamental EU principle was not respected. On the contrary, decisions reached beforehand by the interested parties were coercively imposed."

Anastasiades did not name the parties to whom he was referring, but Cypriots angered by the EU-IMF agreement argue eurozone powerhouse Germany was behind the tough measures.

"Cyprus was treated as an experimental guinea pig for testing the economic theory of enforcing a haircut on bank deposits and the consequent repercussions which were to follow," said the president.

This, he added, was "irrespective of the fact that there was reckless management by the banks affected and ineffective prudential supervision of the banking system in general.

"I sincerely hope that this precedent in relation to Cyprus is not going to be applied elsewhere in Europe, although, as it is well known, the main raison d'etre of a precedent is that it can serve the purpose of establishing norms and guidelines to be repeatedly and universally applied."

Anastasiades called for a greater role for parliaments at the EU level, as set out under the Lisbon Treaty.

"Further developing the interparliamentary cooperation between national legislatures and the European Parliament provides the best possible solution for lessening the EU's democratic deficit and bringing the Union closer to its citizens."

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http://www.globalpost.com/dispatch/news/afp/130422/cyprus-guinea-pig-eu-haircut-experiment