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| Edgy Calm as Banks in Cyprus Reopen | Edgy Calm as Banks in Cyprus Reopen |
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| NICOSIA, Cyprus — As Cyprus shuffled partway back toward monetary modernity Thursday, with mostly orderly lines outside banks open for the first time in nearly two weeks, Stelios Sofroniou, a pig farmer, fumed at being able to withdraw only 300 euros. He needs 30 times that to buy feed and make sure his 15,000 increasingly hungry pigs ‘‘don’t start eating each other.’’ | NICOSIA, Cyprus — As Cyprus shuffled partway back toward monetary modernity Thursday, with mostly orderly lines outside banks open for the first time in nearly two weeks, Stelios Sofroniou, a pig farmer, fumed at being able to withdraw only 300 euros. He needs 30 times that to buy feed and make sure his 15,000 increasingly hungry pigs ‘‘don’t start eating each other.’’ |
‘‘We were in the Stone Age, and now we’re entering the 19th century,’’ he said after a trip to Akaki’s village square to visit his branch of Bank of Cyprus, which opened Thursday for the first time since March 15. He cursed the new strict controls that for at least the next week will give him access to only a tiny portion of his money and will not allow him to cash checks freely or use his bank to pay suppliers who use different ones. | ‘‘We were in the Stone Age, and now we’re entering the 19th century,’’ he said after a trip to Akaki’s village square to visit his branch of Bank of Cyprus, which opened Thursday for the first time since March 15. He cursed the new strict controls that for at least the next week will give him access to only a tiny portion of his money and will not allow him to cash checks freely or use his bank to pay suppliers who use different ones. |
| Here in Akaki, a village of around 4,000, as in the nearby capital, Nicosia, fears that the reopening of banks could lead to a chaotic stampede gave way Thursday to conflicting emotions: relief that bank doors were at least open again, but anxiety over new rules that allow bank customers to make deposits but tightly ration out the money already on deposit. | Here in Akaki, a village of around 4,000, as in the nearby capital, Nicosia, fears that the reopening of banks could lead to a chaotic stampede gave way Thursday to conflicting emotions: relief that bank doors were at least open again, but anxiety over new rules that allow bank customers to make deposits but tightly ration out the money already on deposit. |
| The restrictions are meant to keep customers from draining their accounts in the wake of the bailout deal announced early Monday morning in Brussels that European leaders hailed as saving Cyprus’s teetering banks — and the country as a whole — from collapse. | The restrictions are meant to keep customers from draining their accounts in the wake of the bailout deal announced early Monday morning in Brussels that European leaders hailed as saving Cyprus’s teetering banks — and the country as a whole — from collapse. |
| But the prevailing view in Cyprus is that the leaders of the European currency project have mainly sought to quarantine a potential Cypriot financial contagion by limiting it to a disease whose only real victims will be Cyprus and its bank depositors. | But the prevailing view in Cyprus is that the leaders of the European currency project have mainly sought to quarantine a potential Cypriot financial contagion by limiting it to a disease whose only real victims will be Cyprus and its bank depositors. |
| For Mr. Sofroniou, the bailout terms show that the European Union is driven by the same merciless forces now playing out in the long concrete and aluminum sheds of his family farm. ‘‘The weakest pigs in the pen don’t eat,’’ Mr. Sofroniou said. ‘‘The strong ones eat everything. This is the law of nature.’’ | For Mr. Sofroniou, the bailout terms show that the European Union is driven by the same merciless forces now playing out in the long concrete and aluminum sheds of his family farm. ‘‘The weakest pigs in the pen don’t eat,’’ Mr. Sofroniou said. ‘‘The strong ones eat everything. This is the law of nature.’’ |
| ‘‘The weak ones will be eaten,’’ he continued, pointing to specks of blood on the ears and tails of scrawny pigs that can’t fend for themselves in a daily struggle for meager rations of food. He needs 30 tons of feed a day, but with the limited money he can now withdraw, he can buy only one ton from his supplier, who is still demanding cash because his own suppliers of grain, all of it imported, are also insisting on cash. | ‘‘The weak ones will be eaten,’’ he continued, pointing to specks of blood on the ears and tails of scrawny pigs that can’t fend for themselves in a daily struggle for meager rations of food. He needs 30 tons of feed a day, but with the limited money he can now withdraw, he can buy only one ton from his supplier, who is still demanding cash because his own suppliers of grain, all of it imported, are also insisting on cash. |
| Mr. Sofroniou has a sheaf of checks from customers who have bought pigs from him over the past two weeks. But they were nearly all drawn on accounts at cooperative banks and are not yet honored by Bank of Cyprus. | Mr. Sofroniou has a sheaf of checks from customers who have bought pigs from him over the past two weeks. But they were nearly all drawn on accounts at cooperative banks and are not yet honored by Bank of Cyprus. |
| Not since the introduction of the euro currency in January 1999 has a European country prevented bank depositors from having full access to their own cash. Originally, the controls on cash were supposed to be in place for only a week. But acknowledging that that may not be long enough to prevent a bank run, the Cypriot foreign minister, Ioannis Kasoulides, said Thursday that restrictions on financial transactions would not be lifted for a month. | Not since the introduction of the euro currency in January 1999 has a European country prevented bank depositors from having full access to their own cash. Originally, the controls on cash were supposed to be in place for only a week. But acknowledging that that may not be long enough to prevent a bank run, the Cypriot foreign minister, Ioannis Kasoulides, said Thursday that restrictions on financial transactions would not be lifted for a month. |
| Earlier Thursday, as banks were preparing to open at noon, local radio stations and Twitter messages pleaded for patience, urging people to show patriotic discipline and not to stampede cashier windows. To make sure there was enough cash on hand, on Wednesday the European Central Bank had flown in a container with about 1.5 billion euros, or $1.9 billion, to the Larnaca airport near Nicosia, which was then trucked under police escort to the Cypriot central bank. | Earlier Thursday, as banks were preparing to open at noon, local radio stations and Twitter messages pleaded for patience, urging people to show patriotic discipline and not to stampede cashier windows. To make sure there was enough cash on hand, on Wednesday the European Central Bank had flown in a container with about 1.5 billion euros, or $1.9 billion, to the Larnaca airport near Nicosia, which was then trucked under police escort to the Cypriot central bank. |
| Bank employees had started preparing early for reopening day. Many were given three pages of instructions to follow when customers came in to demand their money, outlining the transactions they would be permitted to conduct. Bags of coins were piled high on a desk at Laiki Bank in central Nicosia, while a manager in a dark business suit stood at the front door waving away a retiree who was trying to enter early. | Bank employees had started preparing early for reopening day. Many were given three pages of instructions to follow when customers came in to demand their money, outlining the transactions they would be permitted to conduct. Bags of coins were piled high on a desk at Laiki Bank in central Nicosia, while a manager in a dark business suit stood at the front door waving away a retiree who was trying to enter early. |
| Some of those who lined up Thursday at banks across the country conceded understanding for the rigid restrictions, imposed by Cypriot officials in consultation with the E.C.B., the European Commission and the International Monetary Fund — the so-called troika of lenders that now largely dictates Cyprus’s fate. The triumvirate has promised the country 10 billion euros as long as it shrinks a banking sector bloated by money from wealthy Russians and other foreigners seeking to dodge taxes back home. | Some of those who lined up Thursday at banks across the country conceded understanding for the rigid restrictions, imposed by Cypriot officials in consultation with the E.C.B., the European Commission and the International Monetary Fund — the so-called troika of lenders that now largely dictates Cyprus’s fate. The triumvirate has promised the country 10 billion euros as long as it shrinks a banking sector bloated by money from wealthy Russians and other foreigners seeking to dodge taxes back home. |
| ‘‘They need to control the money,’’ said Dimitris Dimitriou, the owner of an optical business. He stood in line for 45 minutes in Nicosia to get inside a branch of Laiki Bank, which is due to be dismantled as part of the bailout deal. ‘‘Financially it’s been a disaster, for me and for the entire population.’’ | ‘‘They need to control the money,’’ said Dimitris Dimitriou, the owner of an optical business. He stood in line for 45 minutes in Nicosia to get inside a branch of Laiki Bank, which is due to be dismantled as part of the bailout deal. ‘‘Financially it’s been a disaster, for me and for the entire population.’’ |
| As security guards let only a slow trickle of customers through a revolving door, a small crowd pressed Mr. Dimitriou toward the bank’s entrance. But he was in no physical danger. With the police on high alert and extra private security guards called in to prevent disorder, no incidents of violence were reported. | As security guards let only a slow trickle of customers through a revolving door, a small crowd pressed Mr. Dimitriou toward the bank’s entrance. But he was in no physical danger. With the police on high alert and extra private security guards called in to prevent disorder, no incidents of violence were reported. |
| Few think that the reopening of banks marks a return to normality or even a sign that a bank run still will not happen whenever the currency controls are lifted. ‘‘People here have not recovered from the shock that has happened to us,’’ Mr. Dimitriou said. When they do, ‘‘a lot more people will want to get their money out of the banks.’’ | Few think that the reopening of banks marks a return to normality or even a sign that a bank run still will not happen whenever the currency controls are lifted. ‘‘People here have not recovered from the shock that has happened to us,’’ Mr. Dimitriou said. When they do, ‘‘a lot more people will want to get their money out of the banks.’’ |
| Analysts said that as long as the controls remain in place, the measures effectively create two classes of the same money: because they are not fully fungible, euros in Cyprus are worth less than euros in France or Germany. | Analysts said that as long as the controls remain in place, the measures effectively create two classes of the same money: because they are not fully fungible, euros in Cyprus are worth less than euros in France or Germany. |
| In Akaki, the village president, Giannakis Chatziyannis, said he feared that ‘‘this is just the start of our troubles.’’ The economic crisis, he said, will get far worse as jobs evaporate — including those at a local branch of Laiki Bank due to be shut down. He was supposed to pay his own employees at the end of March but told them they would now have to wait. | |
| ‘‘Everyone knows that the next 10 years are going to be very bleak,’’ Mr. Chatzyiannis said. ‘‘We are in a downward spiral.’’ | ‘‘Everyone knows that the next 10 years are going to be very bleak,’’ Mr. Chatzyiannis said. ‘‘We are in a downward spiral.’’ |
| Under E.U. treaties, restrictions on the free movement of capital like those now in force in Cyprus are normally forbidden. But the European Commission, the Union’s administrative arm, issued a statement Thursday morning that the Cyprus controls were legal — even though it urged that they be rescinded as soon as possible. | Under E.U. treaties, restrictions on the free movement of capital like those now in force in Cyprus are normally forbidden. But the European Commission, the Union’s administrative arm, issued a statement Thursday morning that the Cyprus controls were legal — even though it urged that they be rescinded as soon as possible. |
| Anger at the Union and its most powerful member, Germany, has reached a boiling point in Cyprus. Even in Akaki, a village distant from the political passions of the capital, Chancellor Angela Merkel of Germany has become a hate figure. A handwritten sign by the roadside entrance to the village used a vulgarism to refer to Ms. Merkel, followed by the words ‘‘Cyprus above all.’’ | Anger at the Union and its most powerful member, Germany, has reached a boiling point in Cyprus. Even in Akaki, a village distant from the political passions of the capital, Chancellor Angela Merkel of Germany has become a hate figure. A handwritten sign by the roadside entrance to the village used a vulgarism to refer to Ms. Merkel, followed by the words ‘‘Cyprus above all.’’ |
| ‘‘We are what you call collateral damage,’’ said Chrysanthos Chrysanthou, a goat and chicken farmer who blamed a German-led push to end Cyprus’s status as a banking haven for leaving his animals on ‘‘starvation rations.’’ | ‘‘We are what you call collateral damage,’’ said Chrysanthos Chrysanthou, a goat and chicken farmer who blamed a German-led push to end Cyprus’s status as a banking haven for leaving his animals on ‘‘starvation rations.’’ |
| He, too, went to the bank Thursday and withdrew the limit of 300 euros, far less than he needs to keep his animals fed. | He, too, went to the bank Thursday and withdrew the limit of 300 euros, far less than he needs to keep his animals fed. |
| Germany and other lenders ‘‘say they want to penalize bankers but are just hurting everyone,’’ Mr. Chrysanthou said. ‘‘We are not all bankers. A lot of people here do real work.’’ | Germany and other lenders ‘‘say they want to penalize bankers but are just hurting everyone,’’ Mr. Chrysanthou said. ‘‘We are not all bankers. A lot of people here do real work.’’ |
| Screaming into his mobile phone as a supplier of animal feed called to demand cash, he said he could pay only by check. The supplier rejected the proposal because he uses a different bank. | Screaming into his mobile phone as a supplier of animal feed called to demand cash, he said he could pay only by check. The supplier rejected the proposal because he uses a different bank. |
| Throwing down the phone in fury, Mr. Chrysanthou explained that he had returned to Cyprus in 1994 after years in South Africa, but was now thinking of leaving. ‘‘I left South Africa after I was robbed by thieves. Now I’m being robbed again here.” | Throwing down the phone in fury, Mr. Chrysanthou explained that he had returned to Cyprus in 1994 after years in South Africa, but was now thinking of leaving. ‘‘I left South Africa after I was robbed by thieves. Now I’m being robbed again here.” |
| Liz Alderman reported from Nicosia. Dimitrias Bounias contributed reporting from Akaki, Cyprus, and Andreas Ris from Nicosia. | Liz Alderman reported from Nicosia. Dimitrias Bounias contributed reporting from Akaki, Cyprus, and Andreas Ris from Nicosia. |
This article has been revised to reflect the following correction: | This article has been revised to reflect the following correction: |
| Correction: March 28, 2013 | Correction: March 28, 2013 |
An earlier version of this article referred incorrectly to capital controls in Europe. They have not been applied since the introduction of the euro; it is not the case that they have never been applied. | An earlier version of this article referred incorrectly to capital controls in Europe. They have not been applied since the introduction of the euro; it is not the case that they have never been applied. |
| This article has been revised to reflect the following correction: | |
| Correction: March 28, 2013 | |
An earlier version of this article misstated the surname of the president of the village of Akaki. He is Giannakis Chatziyannis, not Chatzyiannis. |