NICOSIA - Angry MPs on Tuesday unanimously rejected a divisive levy on bank accounts as part of a bailout aimed at saving Cyprus from bankruptcy, decrying as "blackmail" the EU-IMF deal that now lies in tatters.
Speaker Yiannakis Omirou said 36 MPs voted against the bill, 19 abstained and none were in favour, prompting an explosion of joy outside the parliament among thousands of protesters who were demanding the house spurn the onerous measures.
President Nicos Anastasiades' office said he "fully respects" the decision and that he had a "constructive" phone conversation with his Russian counterpart Vladimir Putin, amid reports Cyprus was seeking alternative financing.
Under the bailout deal reached at the weekend, the troika of the European Union, European Central Bank and International Monetary Fund were to provide Cyprus with 10 billion euros ($13 billion) on condition the island raises another 5.8 billion euros.
It called for a levy of up to 9.9 percent to be slapped on all Cyprus bank deposits, an unprecedented move that triggered outrage among savers and raised fears other financially crippled EU states like Italy and Spain could be next.
The Cypriot government backtracked, and on Tuesday dropped the proposed tax on savings below 20,000, while keeping it at 6.75 percent for deposits of 20,000-100,000 euros and 9.9 percent for those above 100,000.
But that too was heavily criticised by the speaker as amounting to "blackmail" before it was flatly rejected in parliament, in a vote that plunges the eurozone into uncertainly and leaves Cyprus scrambling for other sources of financing.
Outside the parliament, equally angry crowds had called for a "No" vote before breaking out into applause after the news of the vote emerged.
"We're happy because the vote is what the people wanted. We are still very anxious but we hope we are going to find an alternative and a solution because it's clear that Europe is not the solution," said historian Maria Gnatiou, 27.