Greeks pressure government to emulate Cyprus’ thumbs down to unpopular bailout terms

The Cypriot rejection of the unpopular bail out deal is having repercussions elsewhere in Europe,

Reuters reported opposition parties and citizens in Greece urged Athens on Wednesday to stand up to foreign lenders whose demands had led to repeated rounds of austerity that had turned life in the country to a misery.

The Cypriot parliament on Tuesday rejected a levy on bank deposits that the government planned to introduce in return for aid (See: Markets cheer as Cyprus rejects levy on bank deposits). The rejection has raised the prospects of a default for the island nation that could see wave after wave of spending cuts and tax rises, like Greece.

Meanwhile, Cyprus has requested Russia for a five-year extension and lower interest on an existing €2.5 billion ($3.22 billion) loan as also new loans worth €5 billion after it thumbs down to a euro zone plan for a €10 billion bailout (See: Cyprus seeks Russian loan to cut its debt).

Greece, which first sought EU and the International Monetary Fund aid in 2010, after yielding to demands has introduced harsh austerity measures that have cut household income by almost a third  and sent unemployment up to a record 26 per cent.

The "no" vote from Cyprus comes with only days to go for Athens and its lenders to resume delicate talks on the implementation of the bailout plan for the country, as creditors push Greece to respect past pledges to fire civil servants and stick to unpopular tax rises.

The EU has given Cyprus till Monday to raise the billions of euros it needed to secure an international bailout or face a collapse of its financial system that could end up seeing the country out of the euro currency zone.

Meanwhile, in a sign it was trying to prepare for the worst, the Cypriot government sought powers yesterday to impose capital controls to curb funds leaving the island if there was no deal before banks reopened following the shutdown this week.

Meanwhile, parliament would reconvene tomorrow to debate a number of government crisis measures, after a sitting was adjourned yesterday as lawmakers said they needed more time for consultation.

According to analysts even those measures looked likely to fall short of a promised "Plan B" to raise the €5.8 billion that the EU had demanded for a €10 billion lifeline from the EU and IMF.