President Nicos Anastasiades said Sunday that a controversial bank levy on private depositors in Cyprus banks as part of an EU bailout deal was the "least painful" option for the recession-hit island.
Anastasiades in a televised address to the shell-shocked nation also vowed to continue to try to persuade the eurogroup which imposed the harsh conditions to "limit the impact on small depositors".
"I chose the least painful option, and I bear the political cost for this, in order to limit as much as possible the consequences for the economy and for our fellow Cypriots," Anastasiades said.
As a condition for a desperately-needed 10-billion-euro bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island's banks.
Deposits of more than 100,000 euros will be hit with a 9.9 per cent charge, while under that threshold the levy drops to 6.75 per cent.
Cyprus bank customers have voiced dismay and anger that they alone of the five eurozone member countries forced to seek bailouts so far were being expected to help foot the bill.
"Many countries have economic problems more than Cyprus. Why are they doing this only in Cyprus?" lamented dentist Andreas Hadgigeorghiou.
There was also anger that the president had signed up to the levy after months of assurances that it was a red line he would never cross.
"I feel betrayed," a public sector employee who gave her name only as Elpida told AFP.
Anastasiades sought to calm small-time depositors, who were seen lining up outside ATMs making whatever limited withdrawals of their savings they were allowed amid reports all Internet banking transactions had been frozen.
"I fully share the unhappiness caused by a difficult and painful decision. That's why I continue to fight with the eurogroup to amend their decisions in the coming hours to limit the impact on small depositors," the president said in a televised address to the nation.
Anastasiades, in a blunt assessment, said that rejecting the EU demands would have seen Cyprus exit the eurozone and bankruptcy.
"The first choice would have led to a disorderly default as a result of the ECB (European Central Bank) cutting emergency funding to maintain liquidity in the two largest banks," he said.
"The second choice was very difficult but controlling and managing the situation leading to economic stability of the economy."
Anastasiades urged all political parties to ratify the terms of the EU deal when parliament meets on Monday.
Local media said he is struggling to secure even a simple majority for the terms of the bailout in the 56-member parliament in which his conservative DISY parliament holds just 20 seats.
Anastasiades needs to get the legislation ratifying the deal through parliament before banks reopen Tuesday after a long three-day weekend or face a run on accounts.
But Cyprus media reported that the scale of revolt against the agreement among MPs has thrown into disarray his efforts to do so over the weekend, and he may have to declare an additional bank holiday on Tuesday.
He was to meet his cabinet at 9.30 am (0730 GMT) Monday before briefing lawmakers later in the morning. Parliament was to begin debate on the bailout around 4.00 pm (1400 GMT).
The tax will hit everyone with money in Cyprus banks from pensioners to Russian oligarchs, and even the president of the European parliament Martin Schulz expressed concern about the hit being imposed on small depositors.
"The solution must be socially acceptable," Schulz warned.
Experts estimate that Russian deposits in Cypriot banks amount to at least US$20 billion, leading to allegation that the island had become a haven for money launderers -- accusations Nicosia vehemently denies.
"Confidence in Cyprus as a safe place to deposit money is going to be reduced to zero," Anatoly Aksakov of the Russian association of regional banks told Interfax news agency.
"Russians have lost up to 3.5 billion euros in one day," an editorial on the website of the Russian edition of Forbes magazine read. "The news of a 10 per cent tax on deposits in Cypriot banks has sown panic among the richest Russian businessmen."
Despite the public statements of opposition, many Cypriots said they expected MPs would eventually be forced to approve the deal.
"I am not happy, but they have to sign," said Irini Makrides, who owns a shoe shop chain.
Nicosia-based political analyst Hubert Faustmann said ultimately MPs had little choice.
"Parliament will have to vote it through because the alternative is bankruptcy. They cannot amend it, as far as I know, it is a 'yes' or 'no' vote -- and a 'no' means bankruptcy."