By Don Melvin and Juergen Baetz, Associated Press
BRUSSELS -- After failing for a week to find a solution at home to a crisis that could force it into bankruptcy, Cypriot politicians were turning to the European Union on Sunday in a last-ditch effort to help the island nation forge a viable plan to secure an international bailout.
Politicians are under pressure to come up with a solution quickly, with the European Central Bank threatening to stop providing emergency funding to Cyprus' banks after Monday if there is no agreement on a way to raise 5.8 billion euros ($7.5 billion) needed to get a 10 billion euro rescue loan package from the International Monetary Fund and the other European countries that use the single currency.
If Cyprus fails to secure a bailout, some of its ailing banks could collapse within days and rapidly drag down the government and possibly force it out of the euro, a huge threat to the stability of the currency used by more than 300 million people in 17 EU nations.
Despite the danger, Europe's biggest economy maintained a hard line. German Finance Minister Wolfgang Schaeuble said "if possible we want to avoid seeing Cyprus sliding into insolvency."
But, he added in an interview with the German newspaper
Welt am Sonntag
published Sunday that Cyprus cannot expect compromise over the threat of bankruptcy and possibility it could leave the eurozone.
"I'm also known for not giving in to blackmail, by nobody and nothing," he said.
The original plan, agreed to in marathon negotiations earlier last week, called for a one-time levy on all bank depositors in Cypriot banks. But the proposal ignited fierce anger among Cypriots and failed to garner a single vote in the Cypriot Parliament.
The idea of some sort of deposit grab has returned to the fore after Cyprus' attempt to gain Russian financial aid failed this week, with deposits above 100,000 euros at the country's troubled largest lender,
Bank of Cyprus
, possibly facing a levy of up to 25%.
Cypriot President Nicos Anastasiades and his finance minister traveled to Brussels for meetings with European Union leaders.