As stressed in the report, the Eurogroup decision will have a series of exceptionally negative developments in the financial sector in Cyprus, leading to the practical isolation and shrinkage of the financial services sector and (ultimately) the island’s economy.

The report states that “the Eurogroup and IMF’s selective use of deposits above EUR 100,000 for the recapitalization of the banks, simply because they are uninsured, weakens (instead of strengthening) the Eurozone as a whole and subverts the European system of bank supervision and resolution of banking crises, which was decided in the midst of the Eurozone crisis. This is a dangerous practice that can even lead to the weakening of the European Union itself, that the enlightened European Leaders of other times spent their lives  creating and regulating”.

Meanwhile, Cypriots queued calmly at banks as they reopened yesterday under tight controls imposed on transactions toprevent a run on deposits after the government was forced to accept a stringent EU rescue package to avert bankruptcy.

According to Reuters, bank staff turned up for work early as cash was delivered by armored trucks, and queues were formed at branches in the capital, with uniformed security guards on duty. Doors opened at noon (6:00 a.m. EDT) but initially at least there was no sign of any major run on the banks, as had been feared.

Authorities say the emergency rules imposed to limit withdrawals and prevent a bank run will be temporary, initially for seven days, but economists say they will be difficult to lift as long as the economy is in crisis.

Stournaras also met with the leaders of the main opposition parties.

According to Kathimerini sources, Stournaras set out three chief risks that Greece must avoid. The largest risk is of a bank run not only on the Greek branches of Cypriot banks, but also on all Greek banking institutions. Averting such a crisis is crucial to safeguard the recapitalization of Greek banks.

The second risky scenario involves the likely blow to the Greek private sector by the haircut on the capital of Greek businesses operating in Cyprus.

The third risk – that of a worsening climate in the Eurozone – is beyond Greece’s control but would have a negative impact on plans to privatize state assets and draw foreign investment and also on the geopolitical level if Turkey decides to exploit the temporary weakness of Greece and Cyprus.

Finance Minister Yannis Stournaras insisted yesterday that there were no plans to bail in depositors in other countries, as was the case in Cyprus. “The Eurozone is not insecure,” Stournaras said in response to a journalist’s question. “In fact, it was stated clearly at the Eurogroup that the solution chosen applies to Cyprus and not any other country,” Stournaras said, according to the media.

Cyprus is finalising capital control measures to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders, accoridng to Al Jazeera.

Banks are due to reopen on Thursday. European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

Samaras called this year’s anniversary a “day of historic memory, in days of national tribulation, for all of Hellenism and today, especially, for Cyprus”.

He added, “it suffices for us to look back at our entire contemporary history to realise how many tribulations we have gone through, always in a painful way, but always with success… we always emerged stronger as a nation, better as a society, and prouder for what we are, more certain of what we can achieve. Provided that we remain united and standing,” Samaras continued, AMNA reports. “The Greeks can accomplish everything if they remain united and standing,” the Premier stressed.

Speaking several hours after the deal was reached in Brussels, Simos Kedikoglou said: “The agreement reached on Cyprus thισ morning is painful but the only way to stop the chaos that would bring about bankruptcy and exit from the Eurozone .”

“The most important thing now is: How will help Cyprus to stand back on its feet. Now we look ahead. Cyprus has made the ‘miracle’ many times and will do it again. And I will not let anyone advantage of the temporary weakness, ” he added.

Cyprus’ conservative government has defended a painful bailout deal with international creditors insisting it had stopped a “disorderly” default and euro exit.

Popular Bank, the island’s second largest bank, also known as Laiki, will be closed and all deposits below 100,000 euros will be shifted to the Bank of Cyprus, the island’s top lender, to create a “good bank”, according to Reuters.

Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki’s debts and recapitalise the Bank of Cyprus, the news agency added.

The agreement came hours before a deadline to avert a meltdown of the banking system in tense negotiations between President Nicos Anastasiades and Troika.

Without a deal, Cyprus’s banking system would have collapsed and the country could have become the first to crash out of the European single currency.

Cyprus is set to begin receiving its bailout installments in May.

Political leaders in Cyprus have agreed that the country should form an investment fund to raise the capital needed to agree a bailout with the Eurozone and the IMF and avert a collapse of its banking system, Kathimerini writes.

Cypriot President Nicos Anastasiades held a cabinet meeting ahead of parliament’s plenary session originally scheduled to start at 7 pm yesterday; MPs postponed crucial debate on three bills and vote in parliament until 10 am today. According to enet.gr, the first bill concerns the movement of capital, the second concerns Laiki Bank and the third is about the Solidarity Fund.

Anastasiades chaired meetings throughout Wednesday with party leaders, ministers and officials from the troika of EU, ECB and International Monetary Fund lenders. The government said a “Plan B” was in the works.

Cypriot officials told Reuters a ‘Plan B’ was in the works that could include: an option to nationalize pension funds of semi-government corporations, which hold between EUR 2 billion and 3 billion; issuing an emergency bond linked to future natural gas revenues; and possibly reviving the levy on bank deposits, though at a lower level than originally planned and maybe excluding savers with less than EUR 100,000.

“We will find a solution,” said conservative DISY party Averof Neofytou.

“We have no other choice. We are making a united effort to avoid our country’s bankruptcy and I think we will succeed.”

Meanwhile in Greece, after participating in an emergency teleconference of the Eurogroup yesterday night, Finance Minister Yannis Stournaras said that “there is no risk for deposits of Cyprus banks in Greece.”

Earlier, Stournaras had a meeting with the heads of the Bank of Greece and the Hellenic Financial Stability Fund (HFSF) to assess the situation in Cyprus.

Meanwhile, the near-bankrupt member of the eurozone has closed its banks until Tuesday.

Talks between President Nicos Anastasiades and the troika of lenders in Nicosia proved inconclusive yesterday as Cyprus’s overtures to Russia for financing also failed to yield results.

According to Financial Times, Russian prime minister Dmitry Medvedev did not rule out possible support for Cyprus but said talks would continue with European Commission officials, including president José Manuel Barroso, in a pre-planned meeting today in Moscow.

In the most detailed comments yet from Moscow on the bailout plan voted down by the Cyprus parliament on Tuesday, Medvedev said the EU and Cyprus had acted “like an elephant in a China shop”.

The cabinet meeting of Cyprus under the President of the Republic, Nikos Anastasiadis will meet again today, as the process for the approval of several bills, were not completed yesterday.

Troika rejected the alternative plan of Cyprus, which provided for the finding of EUR 5.8 billion that would come from the haircut of deposits, from internal sources, media have suggested. The various solutions include the use of reserves from Cypriot insurance funds and the imposition of an emergency “assistance fee” to Cypriot taxpayers.

However, latest reports coming from the island earlier this morning suggest that an agreement is close, since the Cypriot government has agreed with the troika representatives on a viable Plan B.

More specifically, according to tovima.gr, Laiki Bank will close replaced by a new ‘good bank’ to save EUR 2 billion. Cash reserves of insurance funds of public sector employees will provide another EUR 2.8 billion, whilst the remaining EUR 1 billion could come from a small haircut of deposits, around 1-1.5%, that corresponds to interest gained in the last few years.

Samaras expressed the Greek government’s support to Cyprus, while his discussion with Anastasiades focused on possible solutions, after the rejection of Eurogroup’s plan.

Earlier Samaras met with coalition party leaders Evangelos Venizelos and Fotis Kouvelis to discuss developments in Cyprus and how they affect the Greek economy.

Exiting the Maximos Mansion, Finance Minister Yannis Stournaras told reporters that “Greece is shielded” and Cyprus “will not default”, Kathimerini writes.

“The eurozone made a historic mistake which needs to be fixed now”, PASOK leader Venizelos said after the meeting.

Democratic Left leader Kouvelis told reporters that European partners “must reconsider their decision”, stressing that Cyprus’s problems cannot be solved with measures of this kind.

The Cypriot parliament said “no” to Eurogroup plan of cutting the Cypriot deposit. 36 MPs voted against the bills and 19 abstained, while there was no vote in favor, according to protothema.gr.

The communist AKEL, the socialist EDEK, the Greens, the European Party and the centrist DIKO, which is in the co-governing coalition, voted against the measure. The ruling Democratic Rally abstained from voting, enet.gr informs.

“We live the criticality of developments and historical circumstances. The decisions we take today will not be forgotten quickly, but will write history. The country is under an unjust and unprovoked attack. We will not give anyone the right to turn us into a guinea pig,” Democratic Party chairman Marios Karoyian said.

“We are at a decisive turn in our history. Developments in Cyprus will seal the political developments in the EU. This time Cyprus becomes the guinea pig for the haircut in deposits. Behind the decision of the Eurogroup hide political expediencies. I propose to withdraw the request for assistance from troika,” AKEL secretary Andros Kyprianou said.

Protests were underway outside the parliament in Nicosia since the parliamentary debate started at 6pm. Crowds outside parliament broke into applause, chanting: “Cyprus belongs to its people.”

Meanwhile, Cypriot Finance Minister Michalis Sarris, arrived in Russia for talks with officials there. Cyprus will attempt to strike a deal with Moscow for the sale of troubled Popular Bank of Cyprus, known as Laiki, with Russians most likely seeking some form of compensation for such an investment, Kathimerini writes.

Anastasiades is also thought to be examining the option of making use of social security funds’ reserves, which amount to EUR 5 billion, and offering depositors with more than EUR 100,000 a voluntary haircut in return for natural gas-indexed bonds, the paper reports.

He added: “Greece is also experiencing a tough time over the past three years. But you must remember: Prosperity and growth will return soon. In both Cyprus and Greece.”

Samaras said “the ability of Hellenism to withstand difficulties and achieve progress has been proved many times. It will be proven again. Provided that we do not lose faith in ourselves and stand on our feet. We shall emerge stronger and more united from the crisis.”

Meanwhile, Finance Minister Yannis Stournaras offered full reassurances that deposits in Cypriot banks’ branches in Greece were not at risk and said that a plan was examined to transfer all assets by Cypriot banks operating in Greece to an existing Greek financial institution, AMNA reports.

Speaking to reporters, after a meeting of the Council of Systemic Stability on Saturday evening, Stournaras said the council unanimously agreed on the plan along with a mandate to the Bank of Greece to examine the interest of Greek commercial banks on the plan.

Stournaras said: “The Council of Systemic Stability convened to discuss a decision reached by the Eurogroup over a political agreement between Eurozone finance ministers and Cyprus authorities over developments in the Cypriot banking system. The agreement fully safeguards depositors in Cypriot banks operating in Greece, safeguards Greek state interest and financial stability and does not burden the management of Greek public debt.

In the framework of the agreement, the Council unanimously recommends the transfer of all Cypriot banks’ assets in Greece [Cyprus Bank, Laiki Bank and Hellenic Bank] to an existing Greek financial institution.

The Bank of Greece will examine the interest of Greek banks in buying these assets”

Developing an economic, energy in this case, investment presupposes geopolitical stability and security. In the case of Cyprus, in order to sustain its economic collaboration with Israel Nicosia needs to address the role of the Arabs in this volatile region. In the case of the Syrian civil war, given that there is nothing particular to win or lose, Cyprus must pursue a neutral policy.

Along with the Cyprus issue, the case of Palestine remains for more than a century the top theme in the security agenda of the region. In particular the Palestinian case is an issue of Pan-Islamic dimensions, well-interwoven with Arab nationalism. Given the rise of Islam in Turkey and the Arab states, such as Egypt, Jordan, Lebanon and Syria, Nicosia needs to develop a new policy scheme toward the Arabs in order to contribute to the stability of the region, aiming to facilitate further dialogue between Israel and the Palestinians. For instance President Christofias and Foreign Minister Marcoulli’s recent visits to Jordan and Egypt respectively are of particular importance.

Besides the solid outcome that such a Cypriot initiative may have in terms of diplomacy and security, it is also expected that Nicosia will win hearts and minds in the Arab world and Israel in a very delicate moment for Arab and Israeli politics. In short the current Cypriot-Israeli economic collaboration is a first class opportunity for Nicosia to amplify its political role in the region by working to bring together friends and foes. Cyprus is able to undertake such a task and carry it out effectively for the interests of Nicosia and the region as a whole.

Dr. Evangelos Venetis (The Middle East Research Project, ELIAMEP) is currently a Senior Research Associate in Islamic and Iranian studies at the School of Asian, African and Amerindian Studies, the University of Leiden, the Netherlands. He holds a PhD in Islamic and Middle Eastern Studies from the Department of Islamic and Middle Eastern Studies, the University of Edinburgh, UK.

According to the head of Noble Energy on Cyprus, John Tomic, , Field 12 of the Cyprus Exclusive Economic Zone might contain more than 7 trillion cubic feet (tcf) of natural gas which had been previously detected.

“We made that nice discovery of 7 tcf but we think there is a lot more potentially there and we will be looking for additional gas fields,” said Noble Energy’s Cyprus manager John Tomich in a press conference.

He said an appraisal well would be drilled within the next eight months which would help make an exact estimate of the gas reserves according to Forbes.

An Eastern Mediterranean Gas Conference would be held in Cyprus on October 26-28, 2013, to discuss the energy potentials of the area, according to Tomich.

Meanwhile, Cyprus announced a new working partnership with Egypt meant to promote the sharing of expertise and experience between the two countries. According to comments from Egyptian Minister of Petroleum and Mineral Resources, Ossama Kamal, Cyprus made an appeal for guidance on how best to approach its new found oil and gas in the region, Forbes reported.

A Cypriot technical delegation is set to travel to Egypt next month, according to the Egypt Daily News.

Cyprus will soon launch the second licensing round for the remaining 12 offshore gas exploration blocks in its Exclusive Economic Zone, according to Xinhua new agency.  It is said that 15 companies and joint ventures have bid for 9 of the 12 exploration blocks and their bids are now under evaluation.