Islanders fear business will slash jobs

While an agreement on a bailout may stave off immediate disaster, many Cypriots said the measures will shatter confidence in the island's hugely profitable banking and financial services industry and lead to a massive exodus of investors, among them Russian tycoons and British retirees.

While an agreement on a bailout may stave off immediate disaster, many Cypriots said the measures will shatter confidence in the island's hugely profitable banking and financial services industry and lead to a massive exodus of investors, among them Russian tycoons and British retirees.

Islanders also fear that as the bank levies bite for savings of more than €100,000 ($124,400), businesses and big investors will have to start laying off staff, heralding high levels of unemployment.

About 70 per cent of Cypriots are employed in the financial services and banking sector, dwarfing the 20 per cent working in tourism.

"I think a lot of people will be out of work soon and looking for jobs. The young people, especially, will go abroad because you can't live with this level of uncertainty," said Ioanna Constantinou, who works in the financial services industry in the capital, Nicosia.

"The banking sector is finished. We have lost all credibility; who is going to want to bring their money to Cyprus now?"

Restaurants in the city's picturesque old town are normally jammed but at the weekend many were all but empty.

Outside parliament, protesters had stuck placards to a fence. "Europe You Failed Me", said one. Another read: "Draghi is Dragging Us Down", a reference to Mario Draghi, the head of the European Central Bank.

"The lesson from what has happened is 'get your money out of Cyprus"', lawyer Simos Angelides said.

"We had the Turkish invasion in 1974. This now feels like the German invasion of 2013.

"This is going to be a second 1974. People will leave the country. There's no future here."

Anti-German sentiment is running at an all-time high, with many Cypriots accusing Berlin of making an example of Cyprus as a warning to much larger debt-laden Mediterranean economies, including Italy and Spain, that German taxpayers will no longer stomach bailing out ailing economies in southern Europe.

"We are the guinea pigs. They are testing the 'bail-in' model here before applying it to other countries.

"They are punishing us and making sure the rest of Europe sees. It's a public whipping. The only question is, who's next?" Mr Angelides said.

As Cypriots went to church on Sunday, dark conspiracy theories were swirling. Many people accused Germany of deliberately trying to bring the country to its knees in order to win a stake in the billions of dollars of natural gas believed to be offshore.

"The talk among a lot of locals is that Germany has engineered this deliberately to scare off the Russians and so that they can get their hands on the LNG deposits," reporter John Leonidou of Cyprus Weekly said.

"That way we will be forced to turn to Germany as our next sugar daddy. We have been forced to slap the Russians in the face, even though we didn't want to.

"We have always been important strategically. The gas reserves makes us even more important. But as a commercial centre, we have been destroyed.

"We will have to pull off a miracle to bring back our credibility."