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Germany’s lower house of parliament has overwhelmingly agreed to Cyprus getting a 10 billion euro bailout so that it does not go bankrupt and stays in the eurozone.
Of the 602 lawmakers 487 voted in favour of the deal under which Cyprus has agreed to impose major losses on depositors, close down its second largest bank and raise its corporate tax rate.
Before the vote, Finance Minister Wolfgang Schaeuble had warned: “If Cyprus were to go bankrupt, there would be a high risk of contagion for Greece, but also for other countries that are in bailout programmes, and those that the financial markets are nervous about.”
“Step by step we are winning back confidence. If you look at the markets, there is still nervousness and uncertainty. But it is considerably less than three years, two years or one year ago,” Schaeuble said in a speech.
“The aid for Cyprus secures the successes we’ve already achieved in the eurozone. We must prevent the problems in Cyprus from unleashing new problems in other eurozone countries.”
Approval in Berlin was not in doubt, however the surprise news this week that the fractious Cypriot parliament is also likely to vote on the deal stoked new uncertainty over the fate of the rescue.
Separately, German parliamentarians also backed seven-year loan extensions for bailout recipients Portugal and Ireland to pay back that money.