EU finance ministers approve Cyprus bailout deal

BRUSSELS (AP) — Cyprus avoided bankruptcy, and potential turmoil across the eurozone, by securing a last-minute 10 billion euro ($13 billion) bailout with promises to sharply cut back its oversized banking sector and make large bank account holders take losses to help pay much of the bill.

Negotiations into early Monday ended with approval of the deal by the 17-nation eurozone's finance ministers. The European Central Bank had threatened to cut off crucial emergency assistance to the country's banks by Tuesday if no agreement was reached.

Without a bailout deal by Monday night, the tiny Mediterranean nation would have faced the prospect of bankruptcy, which could have forced it to become the first country to abandon the euro currency. That would have sent the region's markets spinning.

"It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone," said Cyprus' Finance Minister Michalis Sarris.

The eurozone finance ministers accepted the plan after hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors — the International Monetary Fund, the European Commission and the ECB.

"We believe that this will form a lasting, durable and fully financed solution," said IMF chief Christine Lagarde.

To secure the rescue loan package, the Cypriot government had to find ways to raise 5.8 billion euros ($7.5 billion) on its own. The bulk of that money is now being raised by forcing losses on large bank deposit holders, with the remainder coming from tax increases and privatizations.

Cyprus must drastically shrink its banking sector, cut its budget, implement structural reforms and privatize state assets, said Jeroen Dijsselbloem, who chairs the meetings of the eurozone's finance ministers. The country's second-largest bank, Laiki, will be restructured, with all bond holders and people with more than 100,000 euros in their bank accounts there facing significant losses.

The measures are likely to deepen the recession in Cyprus.

The cash-strapped island nation has been shut out of international markets for almost two years. It first applied for a bailout to recapitalize its ailing lenders and keep the government afloat last June, but the political negotiations stalled. After a botched agreement last week, the European Central Bank threatened to cut off emergency assistance to the country's banks.

"We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," Dijsselbloem said.

That uncertainty around the tiny nation of about 800,000 had shaken the entire eurozone of 300 million people, even though Cyprus only makes up less than 0.2 percent of the eurozone's economy.

Several national parliaments in eurozone countries such as Germany must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole program to be approved by mid-April.

The country's second-largest bank, Laiki, will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation's biggest lender, Bank of Cyprus.

Dijsselbloem said it was not yet clear how severe the losses would be to Laiki's large bank deposit holders, but he noted that it is expected to yield 4.2 billion euros overall — or much of the money that Cyprus needed to raise to secure the bailout. Analysts have estimated investors might lose up to 40 percent of their money.

Large deposits with Bank of Cyprus above the insured level will be frozen until it becomes clear whether or to what extent they will also be forced to take losses, the Eurogroup of finance ministers said in a statement.

Dijsselbloem defended the creditors' approach of making deposit holders take heavy losses, saying the measures "will be concentrated where the problems are, in the large banks."

The international creditors, led by the IMF, were seeking a fundamental restructuring of the country's outsized financial system, which is worth up to eight times the Cypriot gross domestic product of about 18 billion euros. They said the country's business model of attracting foreign investors, among them many Russians, with low taxes and lax financial regulation had backfired and needed to be upended.

The drastic shrinking of the financial sector, the wiping out of wealth through the losses on deposits, the loss of confidence with the recent turmoil and the upcoming austerity measures all mean that Cyprus is facing tough times.

"The near future will be very difficult for the country and its people," acknowledged the EU Commission's top economic official, Olli Rehn. "But (the measures) will be necessary for the Cypriot people to rebuild their economy on a new basis."

Cypriot banks have been closed this past week while officials worked on a rescue plan, and they are not due to reopen until Tuesday. Cash has been available through ATMs, but long lines formed and many machines have quickly run out of cash.

Amid fears of a banking collapse, Cyprus' central bank on Sunday imposed a daily withdrawal limit of 100 euros ($130) from ATMs of the country's two largest banks to prevent a bank run by depositors worried about their savings.

The Cypriot government also approved a set of laws over the past week to introduce capital controls, in order to avoid a huge depositor flight once banks reopen.

Creditors had insisted that Cyprus couldn't receive more loans because that would make its debt burden unsustainably high. The IMF's Lagarde said Cyprus would now reach a debt level of about 100 percent of GDP by 2020.

A plan agreed to in marathon negotiations earlier this month called for a one-time levy on all bank depositors in Cypriot banks. But the proposal ignited fierce anger because it also targeted small savers. It failed to win a single vote in the Cypriot Parliament.

Cyprus' bid to secure more financial aid from its long-time ally, Russia, then failed, forcing it to turn again to its European partners. Russia was expected, however, to extend a 2.5 billion euro emergency loan granted last year, also lowering the interest rate due and extending then repayment schedule.

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Associated Press writers Elena Becatoros and Menelaos Hadjicostis in Nicosia, Cyprus, contributed to this story.

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Juergen Baetz can be reached at http://www.twitter.com/jbaetz

Don Melvin can be reached at https://twitter.com/Don_Melvin

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U.S. lawmakers push bills to approve Keystone pipeline

By Timothy Gardner and Roberta Rampton

WASHINGTON/LEMONT, Illinois (Reuters) - U.S. lawmakers in both chambers of Congress said Friday they are moving forward with bills introduced this week to pluck the power of approving the Keystone XL pipeline, which would run from Canada's oil sands to Texas, from the hands of the Obama administration.

Republican Representative Lee Terry from Nebraska introduced a bipartisan bill on Friday to approve TransCanada Corp's 800,000 barrels per day pipeline, which has been held up in the review process for more than four years.

Fred Upton, chairman of the House Energy and Commerce committee, said he expects the House will vote on the bill by the end of May.

The House measure is a companion to a bipartisan bill introduced on Thursday by Senators John Hoeven, a North Dakota Republican, and Max Baucus, a Montana Democrat.

Hoeven said he believes the Senate bill currently has more than 50 votes of the 60 needed for passage in the 100-seat chamber, and said he expected the bill would easily get more supporters.

If lawmakers don't force Obama's hand early, the president is expected to make a decision around August or later, after the State Department finalizes an environmental assessment of the project.

The Keystone decision is one of the first big tests for Obama in his second term on energy and environmental issues.

Proponents say the decision will show whether Obama supports the North American energy boom and the jobs it creates.

Opponents from environmental groups say it will show whether Obama is sincere in his promises to take steps to curb climate change.

The pipeline will carry crude oil from Canada's oil sands, a type of oil production environmental groups argue could accelerate climate change.

About 20 people holding soggy protest signs stood in the rain outside the compound housing the research laboratory near Chicago where Obama gave his first energy speech of his second term on Friday.

The White House has steadfastly declined to comment on the approval process, but on Friday a spokesman sought to downplay the importance of the decision.

"There have been thousands of miles of pipelines that have been built while President Obama has been in office, and I think the point is, is that it hasn't necessarily had a significant impact one way or the other on addressing climate change," spokesman Josh Earnest told reporters.

Earnest said there was "no question" that targeted investments to spur production of green energy or cut oil consumption would be more meaningful in the long term to cutting climate-changing greenhouse gases.

Obama on Friday proposed a $2 billion, 10-year research fund for cars and trucks that run on fuel other than gasoline.

"It's going to require some significant investments like the investments that we're talking about today for us to make progress on this," he said.

(Reporting by Timothy Gardner and Roberta Rampton; Editing by Gerald E. McCormick, Peter Galloway and Leslie Adler)

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Colorado lawmakers approve sweeping gun-control measures

By Keith Coffman

DENVER (Reuters) - Both chambers of the majority Democratic Colorado legislature approved a package of four gun-control measures on Wednesday, capping months of debate in a state that has experienced two of the deadliest mass shootings in U.S. history.

The most controversial of the bills that are now headed to the desk of Democratic Governor John Hickenlooper is a ban on ammunition magazines with more than 15 rounds, which the governor said he will sign into law.

The passage of the bills could push Colorado to the forefront of a national gun control debate reignited by several mass shootings last year, including the December massacre of 20 children and six adults at a school in Newtown, Connecticut.

The sponsor of the Colorado magazine-limit bills, state House Representative Rhonda Fields, told fellow lawmakers in a floor debate on Wednesday the proposal was about "saving lives."

"These are weapons that should be used in a theater of war and not in our local theaters," said Fields, a Democrat whose district includes the suburban Denver movie theater where a gunman killed 12 people in a shooting rampage last July.

Colorado was also the site of the 1999 massacre at Columbine High School, where two teenagers shot dead a teacher and 12 other students before committing suicide.

Other bills included in the package of gun-control laws approved by Colorado lawmakers included a measure to make firearm buyers pay for their own background checks and a ban on online certification for concealed-carry permits, both of which Hickenlooper has said he supports.

Another measure would bar gun purchases by people convicted of domestic violence crimes. Hickenlooper had previously said he was undecided about that until he could see the final version.

One remaining gun-control measure to require background checks for all firearms transfers was sent to a conference committee on Wednesday, so that both chambers could hash out differences between the Senate and House versions.

The proposals that won final approval on Wednesday had received little Republican support.

Republican House minority leader Mark Waller issued a statement after the bills' passage, calling Democrats "out of touch" with their constituents.

"More than 200,000 Coloradans are out of work but Democrats are more concerned with passing legislation that will send hundreds of jobs out of our state without any increase in public safety to show for it," Waller said in a statement.

Waller was referring to Magpul, a Colorado-based manufacturer of ammunition magazines that has vowed to leave the state and take away its hundreds of jobs if the magazine-limits bill becomes law.

The Colorado legislature's action follows the passage in New York state in January of a sweeping gun-control law that bans assault weapons and magazines that hold more than seven rounds of ammunition, requires gun owners to register most guns with the states and requires universal background checks.

President Barack Obama has put forward a number of federal gun-control proposals in the wake of the Newtown killings.

On Tuesday, a divided U.S. Senate Judiciary Committee advanced to the full Senate a measure endorsed by Obama that would require criminal background checks for all gun buyers.

(Editing by Alex Dobuzinskis and Eric Walsh)

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U.N. hopes to approve Congo force by end of March: Russian envoy

UNITED NATIONS (Reuters) - The U.N. Security Council hopes to approve by the end of March a special force to combat rebels in the Democratic Republic of Congo, but some members have concerns that need to be addressed first, Russia's U.N. envoy Vitaly Churkin said on Tuesday.

While Churkin did not divulge these concerns, some diplomats worry the creation of the intervention force within the existing peacekeeping operation, known as MONUSCO, could lead to two competing units. They want more detail on the new unit's command structure.

"We think it's very important that the intervention force is fully integrated into MONUSCO," said one senior council envoy, speaking on the condition of anonymity. "I don't see opposition" to the proposal, he said, "but we need a lot of clarification."

South Africa, Tanzania and Mozambique are the most likely candidates to supply the several thousand soldiers needed for the intervention force, but diplomats have questions about the ability of those troops to take on the rebel groups, including the M23, which have taken parts of eastern Congo.

"A lot of hard work is ahead of us in the next few weeks," Churkin told reporters after U.N. Secretary-General Ban Ki-moon briefed the 15-member council on his proposal to strengthen and define MONUSCO's mandate and create the intervention force.

"There are some issues to be sorted out ... Hopefully by the end of the month we will be able to adopt that mandate" resolution, said Churkin.

M23 began taking parts of eastern Congo early last year, accusing the government of failing to honor a 2009 peace deal. That deal ended a previous rebellion and led to the rebels' integration into the army, but they have since deserted.

"The intervention brigade will be tasked with containing the expansion of both Congolese and foreign armed groups, neutralizing these groups, and disarming them," Ban told the Security Council on Tuesday.

In practical terms, U.N. diplomats say, troops in the brigade will have more freedom to open fire without being required to wait until they are attacked first, a limitation that is standard for U.N. peacekeepers deployed around the world.

African leaders signed a U.N .-mediated deal late last month aimed at ending two decades of conflict in Congo's east and paving the way for the intervention force.

At least 70 people were killed and thousands more fled their homes after days of fighting between rebels and government forces in eastern Congo, aid agencies said on Tuesday.

The clashes that began last week underline the complex nature of the conflict in eastern Congo, where personal and local grievances fuel a wider battle between armed groups and the ill-disciplined army for control of land and the region's rich mineral deposits.

(Editing by Philip Barbara)

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