Brussels: The European Union was plunged into a new crisis on Tuesday night after the Cypriot Parliament overwhelmingly rejected a bank levy plan agreed by the euro zone finance ministers at the weekend as part of a 10 billion-euro (13 billion dollars) bailout package for the cash-strapped nation.
As the EU governments searched for a speedy solution to avoid a turmoil in the financial markets, they are pinning their hopes on President Nicos Anastasiades to come up with a new proposal acceptable to all parties represented in Parliament.
Faced with public outrage over the controversial plan to impose a one-off levy on all bank accounts on the island and opposition within the government, the President presented a compromise shortly before the Parliamentary debate in Nicosia, but it failed to win support even from a single member of Parliament.
Among the proposals to find a compromise was to spare small savers up to 20,000 euros from the proposed bank levy and to impose a one-time levy of 6.75 per cent on deposits between 20,000 euros and 100,000 euros.
Deposits above that level are to be charged 9.9 per cent as agreed by the finance ministers on Saturday.
The bank levy plan is intended to raise a revenue of 5.8 billion euros. After a heated debate in parliament, 36 MPs out of a total of 56
Parliamentarians voted against a legislation on the bailout package and the President's compromise plan while 19 MPs abstained and one deputy failed to attend.
The rejection of the bailout deal by Parliament raised new fears that it could reignite the euro zone debt crisis after a few months of relative stability.
Without the financial assistance from the EU and the International Monetary Fund, the Mediterranean island nation faced bankruptcy in May.