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Published: Monday, 3/25/2013 - Updated: 2 years ago

Cyprus tries to satisfy E.U. leaders on bailout

President in Brussels to present its proposal

Protesters criticize proposed conditions for financial aid from euro-zone nations. The rally was outside the Cyprus presidential palace in Nicosia on Sunday. Protesters criticize proposed conditions for financial aid from euro-zone nations. The rally was outside the Cyprus presidential palace in Nicosia on Sunday.

BRUSSELS — European Union leaders convened emergency meetings Sunday night, hoping to devise a bank bailout package that would enable Cyprus to stay in the euro zone and rebuild its devastated economy.

Cyprus President Nicos Anastasiades arrived earlier with a proposal for raising $7.5 billion that his country is supposed to contribute in order to receive a $13 billion bailout from the International Monetary Fund and euro-zone countries.

After Parliament rejected a deal that included a one-time tax on all deposits in Cypriot banks, Mr. Anastasiades on Sunday presented revamped terms under which a stiffer tax would be levied, but only on deposits above $130,000 to protect smaller account holders.

Lenders such as the International Monetary Fund and the European Central Bank were also represented at the Brussels meetings. They support a deal in which Cyprus imposes a substantial tax on wealthier depositors, many of whom are Russians.

Cyprus faces a deadline today. If there is no bailout deal, the European Central Bank has said it will cut off the financing now keeping Cyprus’ teetering banks from collapsing.

Arriving at the meeting, German Finance Minister Wolfgang Schauble was blunt about what Cypriots would need to do to reach a deal after an accord hammered out eight days earlier fell through.

“The numbers have not changed. If anything, they have worsened,” said Mr. Schauble, apparently referring to falling confidence in the Cypriot banking system. Bailout talks have dragged; Cypriot banks have been closed more than a week.

Pierre Moscovici, French finance minister, stressed the need for a “fair” deal for Cyprus and for lenders to make a “shared effort” to help Cyprus.

“The outlines of a solution exist, but the devil is often in the details,” Mr. Moscovici said before the meeting of the finance ministers from the 17 euro-zone countries.

Before leaving Nicosia, Mr. Anastasiades briefed Cypriot political leaders on his proposal. It was said to call for imposing a one-time tax of 20 percent on amounts above $130,000 in deposits at the Bank of Cyprus.

Because the Bank of Cyprus, which has the largest number of savings accounts on the island, suffered huge losses on bets it took on Greek bonds, the government appears inclined to make that bank’s wealthy depositors bear the biggest burden. The 20 percent tax would also hit those with large accounts at Laiki Bank.

A smaller tax, of 4 percent, would be assessed on deposits exceeding $130,000 in all other banks.

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