British Expats Outraged in Cyprus Island Haven

Cypriots protest outside the parliament building in Nicosia.
Patrick Baz | AFP | Getty Images
Cypriots protest outside the parliament building in Nicosia.

British expats in Cyprus and the British press have reacted angrily at proposals to force depositors to share in the bailout costs for Cyprus banks.

Britain has close ties to the island nation and Cyprus was a crown colony of the British Empire until 1960. Roughly 3,000 personnel from the British Armed Forces are based on the island for strategic reasons.

British expat Jean Stark said: "It was a huge shock. We hadn't expected it all as it hasn't happened in any of the other countries that have been bailed out."

The deposit levy is set to hit 60,000 British expats and around 170 million pounds ($255 million) in their savings.

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John Barton, another Briton in Cyprus, said many were taken by surprise, and one friend of his attempted to take money out on Saturday but had his card retained by the machine.

"To do it on a bank holiday weekend and to close down the internet banking system is scandalous," Barton said. "It's legalized robbery."

Stark spoke of the problems many expats who sold their property on the island in recent years will face.

"What's unfortunate is that older expat couples, who thought a few years ago that they should prepare for one of them dying, decided to sell their property and put it in the bank. Now that money is going to be taxed."

(Read More: Cyprus Revising Plan, Banks Stay Shut: Reports)

Barton agreed with Stark. "What they're proposing for people with over 100,000 euros is going to hit those who sold their properties quite hard. I think it's scandalous."

With British expats voicing their disapproval, minister George Osborne announced on Sunday that the British government would compensate the 3,000 British military personnel and civil servants in the Mediterranean island. However, that news doesn't help the vast majority of British citizens in the country and it also adds to the bill on British taxpayers at a time when government finances are already stretched.

The Daily Mail labeled Osborne's move as "The Great EU Bank Robbery". Furthermore, many were angered at Germany's unwillingness to fund the bailout.

Protestors in Nicosia, Cyprus, held banners on Monday saying "Hands off Cyprus" and "Europe is for its people not for Germany."

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Many British expats expressed anger towards Germany on blogs, and said they were being unfairly punished for the supposed money laundering of others on the island.

Stark, like others, is worried about where to get money from in the next few days, with ATMs running out of money and online transactions canceled, but she's confident she can ride out a few days.

"Well we've got enough food in the freezer! I shouldn't say this, but we do keep some pounds here, so we can always exchange that a good rate!"

According to several reports banks in Cyprus will remain closed on Tuesday and Wednesday as well.

Many expats are now worried of a run on banks similar to the run on British lender Northern Rock in 2007 and some are questioning what happens to the economy next.

"The proposed bailout, if successful, would only pay off the debt for this year. They've got to generate more money for next year. I really don't know what they're going to do," Barton said.

Correction: An earlier version of this story spelt John Barton's name incorrectly as John Varton.