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In Cyprus today, banks reopened after being closed for nearly two weeks. Customers could see the limits on cash withdrawals last for months, as leaders of the island-nation try to prevent a bank-run. Lots of people there are nervous about an EU bailout agreed to this week. The terms of that deal are a shocking outcome for a country which built its wealth on its banking industry.
Joanna Kakissis begins today's Bottom-Line in Business with this report.
JOANNA KAKISSIS, BYLINE: In July 1974, Katerina Goushapp and her husband woke to the sound of Turkish soldiers attacking their village of Lysi in northern Cyprus.
KATERINA GOUSHAPP: (Through Translator) We ran away with just our two babies in our arms. We ran until we reached the woodshed of a stranger's house. I remember wondering, what are we going to do now?
KAKISSIS: Katerina and her family where among 200,000 Greek Cypriots who were forced to flee to the south of the island, after Turkey invaded the country. They had to start from scratch. Because the best agricultural land was in the north, the new nation based its economy on financial services which now makes up about 80 percent of the economy.
An early success stories was Laiki Bank
MICHALIS XANTHOS: Actually, when the new Cyprus republic was formed, it was actually the first registered company of the island,
KAKISSIS: That's long-time Laiki employee Michalis Xanthos.
XANTHOS: I have been in the Laiki Bank family for 19 years. I can't really think myself working for another employer, but I'm forced to now.
KAKISSIS: Xanthos is one of 2,300 people who will likely lose their jobs at Laiki, which is being closed as part of a bailout deal with the EU and IMF. This deal also forces depositors with more than $130,000 to pay up to 40 percent in taxes.
Before the Laiki went bust, Xanthos watched it grow.
XANTHOS: We bought bank in Serbia, bank in Romania, bank in Ukraine, in Russia.
KAKISSIS: Cypriot banks also grew by attracting foreign investors with low corporate tax rates. They especially benefited from the emerging Russian market after the fall of the Soviet Union in 1991. But Laiki also invested in Greek bonds that soured after the 2010 debt crisis.
Now that Laiki is doomed, it has panicked employees at other banks, like Andys Miltiades who works at Alpha Bank.
ANDYS MILTIADES: Probably we'll go tomorrow and they'll tell us that we have reductions in our salary from tomorrow. Who knows where it starts and where it ends?
UNIDENTIFIED GROUP: Resign, paraitisou...
KAKISSIS: Hundreds of bank employees protested outside the Central Bank of Cyprus earlier this week. They said Laiki should have never been allowed to fail and that the Central Bank governor should resign.
UNIDENTIFIED MAN: We have now come to the end of the road. There is no going back.
KAKISSIS: And there's no turning back for the Laiki employees. They comfort each other over milky Nescafe. Anna Papaioannou recalls when she started at Laiki, 22 years ago.
ANNA PAPAIOANNOU: It was considered the most secure job in Cyprus.
(SOUNDBITE OF BABY CRYING)
KAKISSIS: Co-worker Angela Panagiotou says she and her husband both work at Laiki. They have a mortgage and five children. She's holding the youngest, Nikolas, who's 11 months old.
ANGELA PANAGIOTOU: It's almost like a war. It's a war without weapons. Our lives is destroyed.
KAKISSIS: She's angry at the EU, especially Germany, which provides most of the eurozone loans.
PANAGIOTOU: We are not Germany who has the heavy industry and maybe the agriculture, and many other sources of income. We only had the financial sector and the tourism. What we have now? How are we going to pay all these billions of loans? It's like you're giving a loan to your customer and, at the same time, you cut his source of income.
KAKISSIS: It's a move she says she will never understand. And it means her country may have to start from scratch again just like it did in 1974.
For NPR News, I'm Joanna Kakissis in Nicosia, Cyprus. Transcript provided by NPR, Copyright NPR.