Italy's Prime Minister Enrico Letta, right, looks on next to Interior minister Angelino Alfano during a vote session at the Senate in Rome in this file photo from July 19, 2013. Italian centre-right leader Silvio Berlusconi pulled his ministers out of the ruling coalition on Saturday, effectively bringing down the government of Prime Minister Enrico Letta and leaving Europe's third-largest economy in chaos.
By Catherine Hornby and Antonella Cinelli, Reuters
Italian center-right leader Silvio Berlusconi pulled his ministers out of the ruling coalition on Saturday, effectively bringing down the government of Prime Minister Enrico Letta and leaving Europe's third-largest economy in chaos.
The announcement, which will likely lead either to new elections or the formation of a new coalition, came a day after Letta challenged Berlusconi's party to support him in a confidence vote in parliament following weeks of tension.
Late on Friday, the cabinet failed to agree vital fiscal measures to bring the budget deficit within European Union limits, leaving the fragile coalition of traditional rivals from the left and right near total breakdown.
Tensions between the two sides had been rising for weeks following moves to expel Berlusconi from parliament after his conviction for tax fraud last month.
"The decision taken by Prime Minister Enrico Letta to freeze government activities ... is a serious violation of the pacts on which this government was formed," Berlusconi said in a statement.
This week PDL lawmakers threatened to walk out of parliament if he is expelled from the Senate over the conviction.
The ministers' resignations will further delay meaningful reforms in Italy, which is struggling with a two-year recession, a 2 trillion euro public debt and youth unemployment of around 40 percent.
The political convulsions have increasingly worried investors, although with the European Central Bank guaranteeing stability in the markets, there has so far been less panic than seen during previous crises.
Italy's borrowing costs hit a three-month high at an auction of 10-year bonds on Friday, while the premium investors demand to hold Italian government debt rather than German paper widened to about 267 basis points from under 250 at the start of the week.
Secretary of State John Kerry made the case to France and the European Union to join the U.S. in military action against Syria. NBC's Andrea Mitchell reports.
By Andrea Mitchell, Jim Miklaszewski, Courtney Kube and Shawna Thomas, NBC News
Secretary of State John Kerry said that a U.S. military intervention would include “no boots on the ground” in Paris on Saturday, after meeting with European Union officials in a bid to drum up support amid international resistance to the plan.
Kerry said that he believes support for a possible attack on Syrian targets is “growing, not receding,” and argued that, in light of alleged chemicals weapons attacks by President Bashar Assad’s regime, this is not the time for the U.S. to be “silent spectators.”
Kerry, who arrived in Lithuania's capital Vilnius on Friday, reasserted his argument that the proposed U.S. strike would be limited and would not change the situation on the ground.
At the conclusion of the EU meeting Kerry had a separate one-on-one with Lithuania's Foreign Minister Audronius Azubalis, and lauded the leader for his support of a military strike against the Assad regime.
"We are very grateful for the strong statement that came out of the meeting on Syria – particularly grateful for the foreign minister's effort to hold the Assad regime accountable for what it has done," Kerry said.
Azubalis said that evidence seems to be mounting against the Assad regime in the alleged chemical weapons attack.
High Representative for Foreign Affairs and Security Policy Catherine Ashton agreed with Kerry that a military strike should be launched, and presented a joint statement strongly condemning the chemical attack. Ashton cast blame on the Assad regime and pressed the UN council to act.
Ashton said that Europeans had agreed that the attack was a blatant violation of international law – "a war crime and a crime against humanity" – and that there is strong evidence that the Syrian regime was responsible for attack on Aug. 21.
"A clear and strong response is crucial to make clear that such crimes are unacceptable and that there can be no impunity," she said. "We must prevent creating a dreadful precedent for the use of chemical weapons in Syria again or elsewhere."
Ashton did not say that they must wait for a UN mandate before a military strike against Syrian targets.
Kerry made phone calls to representatives of at least five countries including Egypt, Mexico and Saudi Arabia on Saturday to garner support for an attack on the Syrian regime, said a senior state department official.
More than 100,000 people gathered in the Vatican’s St. Peter’s Square on Saturday to observe a prayer vigil for Syria, according to the director of the Holy See’s press office.
Military officials told NBC Friday that the White House had asked the Pentagon to prepare an expanded list of potential targets in Syria. President Barack Obama characterized the report as "inaccurate."
"One thing I've got a pretty clear idea about is what I talked with the chairman of the Joint Chiefs of Staff about, and what we have consistently talked about is something limited and proportional that would degrade Mr. Assad's capabilities," he said Friday in St. Petersburg at the Group of 20 summit.
Obama was back in Washington Saturday preparing for an uphill battle to convince members of Congress and a war-weary American public to support military action in Syria. He announced Friday that he would address the nation from the White House on Tuesday.
And on Saturday, the White House announced that the president will tape interviews from the White House with anchors from all three major networks as well as CNN, PBS, and FOX, to be aired on Monday night.
Democratic Leader Nancy Pelosi sent a letter to lawmakers in her party Saturday in which she said she looked "forward to continuing this critical debate" regarding the possibility of military action in Syria.
Democratic Senator Mark Pryor of Arkansas also released a statement Saturday calling on the Obama administration to “prove a compelling national security interest.” Until then, the senator wrote, he will not support any action taken against Assad.
The White House believes Syrian President Bashar Assad gassed more than 1,400 people to death, including more than 400 children, in a rebel-controlled neighborhood in late August. Obama has said the world must act to demonstrate that it will not tolerate the use of chemical weapons under any circumstances.
A senior state department official said Saturday the U.S. believes the Syrian opposition is beginning to gain the upper hand, but acknowledged the rebels are not happy with the limited scope of the proposed military action.
At home, prospects of congressional approval are uncertain, with both conservative Republicans and liberal Democrats expressing opposition. Abroad, Obama has faced opposition from Russia and China at the U.N., and by British lawmakers in parliament who voted against military action.
Sen. John McCain, R-Ariz., was among lawmakers who at first expressed disapproval that the American attack plan would not do enough to help the Syrian rebels. He voted for a resolution authorizing force that passed a Senate committee earlier this week.
But McCain was also confronted at a town-hall-style meeting in his district by hostile constituents opposed to any U.S. involvement in Syria.
Marian Smith, Mary Murray, Alastair Jamieson, Peter Alexander, Simon Moya-Smith and Erin McClam of NBC News and Reuters contributed to this report.
Mayhem spilled into the streets of Cairo as the interim government equated Islamist supporters of former President Mohammed Morsi with "terrorists." NBC's Ayman Mohyeldin reports.
By M. Alex Johnson, Staff Writer, NBC News
The European Union's senior diplomat returned to Cairo on Monday in a last-ditch attempt to keep Egypt from descending into civil war after the ouster of Islamist President Mohammed Morsi.
Catherine Ashton, the E.U.'s high representative for foreign affairs and security policy, was meeting with leaders of the government of interim President Adly Mansour and of the Muslim Brotherhood, the Islamist Party that came to power last year with Morsi's election.
More than 300 people have been killed in protests since the army overthrew Morsi on July 3. At least 80 Morsi supporters were killed Saturday when security forces opened fire on a Muslim Brotherhood-led march on the army's intelligence headquarters, the Health Ministry reported Monday.
In a statement, Ashton said she would try to negotiate a "fully inclusive transition process, taking in all political groups, including the Muslim Brotherhood."
But the two sides may be too deeply entrenched for Ashton to succeed. Her visit — her second in less than two weeks — came a day after the interim government further stoked fears that the violence could explode into a full war by equating Islamist supporters of Morsi with terrorists.
NBC's Ayman Mohyeldin reports on Egypt's violent crackdown on protesters that killed scores over the weekend. Then Michael O'Hanlon of the Brookings Institution examines how the unrest could complicate peace negotiations between the Israelis and the Palestinians.
In comments that were seen as foreshadowing an imminent military crackdown on the protests, Hegazy said, "The state does not accept shedding blood of any Egyptian, and anyone who commits violence will be held accountable."
The Muslim Brotherhood insists it is conducting a peaceful protest and accused security forces of attacking them with live ammunition.
Gehad el-Haddad, a spokesman for the Brotherhood, said in an interview with the BBC that the only people being violent were "badly dressed thugs, police in three types of uniform and plain-clothed police."
"It may take weeks, months, more than a year — we will still hold our ground," el-Haddad said.
The government denied that its forces fired live rounds Saturday, saying they used only tear gas. It didn't explain how several dozen people died from tear gas.
The Salafist Nour Party — which swept parliamentary elections with the Muslim Brotherhood after the Arab Spring uprising in 2001 but initially accepted the interim government earlier this month — issued its strongest criticism yet on Monday, saying security forces were revisiting what it called "the 'Hitlerite' and fascist practices" of the past.
Galal al-Morra, the party's secretary general, told reporters that the new government appeared intent on "persecuting" and "marginalizing" Islamists, the Middle East News Agency reported.
"The people who have gained their freedom will not let go of it," he said.
Washington also officially registered its concern with the Egyptian government over the weekend, the White House said Monday
Secretary of State John Kerry and Defense Secretary Chuck Hagel both spoke to their counterparts in Cairo "to convey our concern about the violence and bloodshed that we saw," said Josh Earnest, the deputy White House press secretary.
"It's the view of the United States that Egyptian authorities have a moral and legal obligation to respect the right of peaceful assembly and freedom of expression," Earnest said.
Ayman Mohyeldin of NBC News contributed to this report.
A combination picture shows the old town of Mali Ston, Croatia, in 1991 and the same area, rebuilt, in 2012. The city of Dubrovnik was severely damaged due to shelling by Serb-dominated Yugoslav troops during Croatia's 1991-95 war of independence.
By Alastair Jamieson, Staff writer, NBC News
Only 18 years after a peace deal ended violence that left the former Yugoslavia bloodsoaked and gave birth to the term "ethnic cleansing," Croatia is to join the European Union at midnight on Sunday.
It is a major milestone for Balkan countries trying to close the door on decades of Communist rule and the horrors of civil wars that tore apart communities along ethnic and religious lines.
But while European leaders trumpet the latest expansion of the economic bloc, celebrations may be muted in austerity-weary Croatia.
With its thousands of miles of glistening Adriatic coastline, modern highways and sidewalk cafes, Croatia looks as prosperous as its new cousins in western Europe.
That masks an economy crippled by soaring national debt, an unemployment rate of 18.1 percent and an economy heavily dependent upon tourism.
“I fear that we will become another Greece, another Cyprus,” said Vesna Mitrovic, who runs a vacation apartment near Dubrovnik – the historic city that became trapped in a six-month siege in 1991 and is now home to the Museum of Croatia’s War of Independence.
“I signed the petition against EU membership," she said. "I think we will become a small fish in a big pond.”
However Igor Nicolic, 84, of Sibenik, a town north of Split, said he was pleased to see his country join the EU.
Yves Herman / Reuters
A miniature reproduction of Saint Mark's Church of Zagreb is inaugurated at Mini-Europe park in Brussels, Belgium, on Monday. Croatia, which applied for European Union membership in 2003, is set to become the bloc's 28th member.
“I have seen World War II, the Iron Curtain and the breakup of Yugoslavia,” he said. “We always thought of ourselves as part of central Europe, so it is really good that we can now join the union. I think it will help with the corruption here and in the long run it will benefit all of us economically.”
He appears to be in the minority. In a poll this month by Ipsos Puls, only 7 percent of Croatians said they would be watching a fireworks display marking Monday’s occasion, Reuters reported. Forty-two percent said such a ceremony was unnecessary.
Croatia is not the first country to join the EU from behind the “Iron Curtain,” the Cold War divide that separated the West from the Communist countries of the Soviet Bloc. Poland and Hungary, for example, joined in 2004.
Nor is Croatia the first part of the Socialist Federal Republic of Yugoslavia to join: Slovenia, whose 1991 struggle for independence lasted a few weeks and claimed only 70 lives, was admitted in 2004.
Serbia could join the EU next year, it was announced Tuesday, with Montenegro next in line - once monitoring teams approve efforts to eradicate corruption and weak public governance. Bosnia-Herzegovina and Kosovo have yet to be formally adopted as candidates.
As well as passing economic tests to join the EU, these western Balkan countries were required to comply with efforts by the International Criminal Court in The Hague to bring war criminals on all sides to justice.
Croatia’s first post-independence ruler, autocratic nationalist President Franjo Tudjman, was facing investigation over his possible role in war crimes when he died in 1999. In 2005, Croatia took a significant step, handing over suspected war criminal Ante Gotovina – although he was cleared at the The Hague seven years later.
Antonio Bronic / Reuters
Fisherman Danilo Latin fears Croatia's accession to the European Union on July 1, and strict new laws and regulations that come with it, may drive the last nail into his industry's coffin.
“Croatia’s membership is part of the political agenda to normalize the Balkan countries,” said Professor Iain Begg, research fellow at the European Institute of the London School of Economics.
Former U.S. Ambassador to Bosnia-Herzegovina Richard Kauzlarich called Croatia’s entrance into the EU a “positive step” for both the country and the region as a whole.
“I can remember the bad old days,” he said. “Croatia experienced a great deal of loss during the war, but the West, the U.S., the EU supported Croatia’s evolution and did everything we could to encourage the kind of leadership that would be necessary to undertake the EU process.”
Now a fellow at the Brookings public policy organization, Kauzlarich said that the country had resolved a lot of issues in order to join.
“I think if there is … a negative element out there it is that Croatia still has a significant corruption problem and they’re not going to be able to drop that because they’ve achieved this very important objective,” he added.
Croatia’s size means its accession will make more of a difference at home than across the rest of the EU. It is slightly smaller than West Virginia, and its 4.4 million citizens will represent less than one percent of the EU total.
Membership means it will qualify for Europe’s generous regional assistance programs – equivalent to federal aid in the United States – in which public money is spent on infrastructure projects that reduce the inequalities compared to wealthier members.
Not all EU citizens are happy. Germany’s Bild magazine labelled Croatia "the new graveyard for our taxpayers' money,” a reference to the Berlin-led economic bailouts necessary to prevent the total collapse of other southern European nations including Greece, Spain and Portugal.
ARCHIVAL VIDEO: TODAY's Matt Lauer profiles Croatia's past in this video which originally aired on Nov. 11, 2005.
"I'm happy we'll be able to seek jobs abroad and make more money," Zagreb computer science student Marko Jakic told Reuters. "But I'm also sad we can't do that in Croatia because our economy is bad and there are no jobs, even for us."
NBC News' Henry Austin and Reuters contributed to this report.
This story was originally published on Fri Jun 28, 2013 10:12 AM EDT
UKIP leader Nigel Farage in the Marquis of Granby pub near Britain's Westminster parliament.
By Alastair Jamieson, Staff writer, NBC News
LONDON — With a pint of beer in one hand and a cigarette in the other, he is not a politician in the sleek, marketed mold.
But Nigel Farage and his UK Independence Party — once dismissed as "fruitcakes, loonies and closet racists" — have seen their popularity soar, putting Britain's possible exit from the European Union at the top of the political agenda.
The former commodities trader left a well-rewarded career in London’s financial district to lead a party that had been widely seen a single-issue fringe movement since it was founded in 1993.
Suddenly the "fruitcakes" jibe — made by Prime Minister David Cameron — looks out of step with the prevailing political mood.
Polls suggest 1 in 5 voters might support UKIP in Britain’s 2015 parliamentary election. That is unlikely to translate into seats under Westminster’s first-past-the-post system, but by splitting the vote in individual constituencies it could tip the balance against Cameron’s Conservative Party, which is seeking an outright majority over the Liberal Democrats and Labour.
Under Farage, UKIP has broadened from its primary objective of an "amicable divorce" from Europe, adopting a series of populist causes including a freeze on immigration, opposition to gay marriage and an end to wind turbines, high-speed rail projects and "political correctness."
Its success comes chiefly, but not exclusively, at the expense of the Conservative Party, whose progressive social policies and 2010 coalition with the Liberal Democrats have left many traditional conservatives feeling disenfranchised.
As an outlet for anger not just at policies but at politics itself, UKIP’s rise faintly echoes that of the Tea Party movement in the United States.
“Voters are dissatisfied with the three main parties, so with nowhere to turn they see UKIP as a way of getting their message across,” said Colin Rallings, polling expert and professor of politics at the University of Plymouth. "Farage is the only leader left who can portray himself as untainted. He can say, 'I’m not to blame for the way things are.'"
Britain might be close to continental Europe — the English Channel separating France from Dover’s chalk-white cliffs is 26 miles across at its narrowest point — but politically it remains far adrift from its neighbors on the issue of deepening ties with the European Union.
A ComRes poll for the Open Europe think tank, published last Tuesday, found that 41 percent of British voters favor withdrawal from the European Union, compared with 37 percent who want to remain inside and 22 percent who don’t know or wouldn’t vote [PDF link here].
But it is not just concern about Europe that has forced UKIP onto the main stage, but also Farage himself.
Olivia Harris / Reuters, file
Farage's party made big gains in May.
Educated, but not patrician — he likes to host impromptu news conferences in pubs — he shuns the manufactured style of the career politician and is fond of cricket, pinstripe suits and purple socks featuring the symbol for the British pound.
He is the embodiment of UKIP’s predominantly middle-class, white, professional support base: standing at the bar holding an after-work beer, putting the world to rights as the exasperated voice of those who feel overtaxed and overgoverned and that Britain has lost its collective common sense.
"If you asked people which party leader they would rather have a drink with, most would say Nigel," said Roger Helmer, a British lawmaker in the European Parliament who defected from the Conservatives to UKIP last year. “He is charismatic, and says the sort of things that people on the street are thinking.”
“They’re angry at the slow pace of reform coming from the Coalition, its prioritizing of social liberalism over social justice, its failure to cut taxes for the middle class, its ring-fenced foreign aid budget and its poor economic record. The perpetually furious could have turned to Labour, but memories are long of how they spent all the money in the Noughties, and contempt is deep for [Labour Party leader Ed] Miliband’s student union style of politics. Many voters have reached the conclusion that the philosophical division between the parties is so narrow, that incompetence is so ubiquitous, that the personalities are so uniformly unreal that there really is no difference between the three main parties. Under those circumstances, why not vote for the anarchist fringe?
Above all, Farage exhibits a very British trait of refusing to take himself, or anything, particularly seriously — putting himself even further at odds with the gray, managerial world of European politics.
In 2012, he was rebuked by the speaker of the European Parliament after addressing EU President Herman Van Rompuy in a speech with the words: “I don’t want to be rude, but, you know, really, you have the charisma of a damp rag and the appearance of a low-grade bank clerk.”
On the defensive, Britain’s Conservatives have been forced into promising to hold an outright referendum in 2017 on whether Britain should remain in Europe, and Cameron has pledged to negotiate better terms for Britain’s membership of the EU.
Perhaps the biggest effect of UKIP's surge in popularity has been the divisions that have been exposed within the Conservative party.
UKIP via YouTube
A clip, uploaded to YouTube by UKIP, showing Nigel Farage comparing EU President Herman van Rompuy to a low-grade bank clerk.
Farage believes many more Conservatives privately sympathize with UKIP, deriding them as “three-pint Euroskeptics” — lawmakers who give the official party line in public but, after three drinks, admit UKIP is right about the EU.
Indeed, Thatcher-era finance minister and Conservative party grandee Nigel Lawson has publicly called on the U.K. to quit the EU, saying Britain was being “marginalized” by members of the Euro currency zone and held back by over-regulation.
Then two serving British cabinet ministers — Education Secretary Michael Gove and Defense Secretary Philip Hammond — said publicly that they would vote to leave the EU unless Britain's current relationship with the bloc changed.
Farage's talent as a saloon-bar crowd-pleaser has its drawbacks, however. Despite insisting it is not a party for racists and xenophobes — Farage’s second wife is German — UKIP’s tough message on immigration has attracted unwelcome support.
"There is no doubt that UKIP is riding high on the back of the economic problems Europe is experiencing, but UKIP is more of a pressure group than a party," said Charles Moore, former Sunday Telegraph editor and official biographer of Margaret Thatcher.
"The next election will be interesting, but I don’t see UKIP permanently reshaping British party politics."
There is also still substantial support for Cameron’s policy of staying in the EU but on better terms and with a transfer of some powers back to London from Brussels.
The Open Europe/ComRes poll found that, if there were a significant return of powers to Westminster followed by a referendum, 47 percent of all voters would want to stay in the EU, against one-third of all voters (32 percent) who would still want to leave.
"If you give people a binary choice of ‘in or out’ they will choose 'out,'" said Stephen Booth, research director of Open Europe. "But if you ask them what they would do if Britain negotiated a better deal, they would support EU membership. It is a very complex issue."
A senior Israeli defense official warned on Tuesday that Russia’s plan to send sophisticated anti-aircraft weapons systems to Syria’s President Bashar Assad was a “threat” and signaled Israel could take some form of unspecified action in response.
Russia on Tuesday reiterated its intention to go ahead with the arms deal. Russian Deputy Foreign Minister Sergey Ryabkov said it would “restrain some hotheads from escalating the conflict to the international scale," according to Russia Today.
John McCain crossed into Syria from Turkey to meet with Salim Idris, the general commander of the Free Syrian Army. McCain wants the U.S. to support the Free Syrian Army with arms and a no-fly zone. NBC's Richard Engel reports and NBC's David Gregory discusses the visit.
His comments came after the European Union agreed to lift an arms embargo that prevented weapons from being sent to the rebels fighting Assad’s forces.
French foreign ministry spokesman Philippe Lalliot said France could potentially send arms to the opposition before the embargo expires on Aug. 1, but said it had no immediate plans to do so, Reuters reported.
The U.K.’s Foreign Secretary William Hague said in a statement that the lifting of the embargo was “important … to send a clear signal to the Assad regime that it has to negotiate seriously, and that all options remain on the table if it refuses to do so.”
Ryabkov defended the deal with Syria. “Those systems by definition cannot be used by militant groups on the battlefield,” he said, according to Russia Today. “We consider this delivery a factor of stabilization. We believe that moves like this one to a great degree restrain some hotheads from escalating the conflict to the international scale, from involving external forces.”
Fawaz A. Gerges, professor of Middle East politics and international relations at the London School of Economics, told BBC Radio 4 on Tuesday that Britain was looking to fill the “leadership vacuum” that exists because of U.S. reluctance to become more directly involved in the civil war in Syria.
“There is no military solution to the conflict. Even if the opposition is armed, I doubt very much whether they would have the capacity to deliver a decisive blow against Assad and Hezbollah and Iran,” he told the station.
“It’s not just Assad now. You have Hezbollah, one of the most potent military organizations in the Middle East, and Iran. And that’s why the Russians and the Americans have intensified their diplomacy,” he added.
“They are trying to basically prevent the escalation of the Syrian conflict not only into neighboring countries, but also into a region-wide conflict. This is what we’re talking about today: Is the fire in Syria devouring and consuming other countries in the region?”
A rebel fighter from the Al-Ezz bin Abdul Salam Brigade takes part in a training exercise at an undisclosed location near Jabal Turkmen in Syria on April 24.
By Justyna Pawlak and Adrian Croft, Reuters
BRUSSELS -- Britain and France are free to supply weapons to Syrian rebels fighting President Bashar Assad from August, after attempts to renew an EU arms embargo on Syria failed on Monday.
After a marathon negotiating session in Brussels, EU governments failed to bridge their differences and let a ban on arming the opposition expire, with France and Britain scoring a victory at the expense of EU unity.
Britain and France have made a commitment not to deliver arms to the Syrian opposition "at this stage," an EU declaration said. But EU officials said the commitment effectively expires on Aug. 1.
The refusal of London and Paris to go along with the arms embargo could have caused the collapse of all EU sanctions against Syria, embarrassing the EU and handing a victory to Assad.
However, EU ministers managed to avert that by agreeing to reinstate all of the restrictions except for the arms embargo on the rebels.
EU sanctions on Syria that will remain in place include asset freezes and travel bans on Assad and senior Syrian officials, as well as curbs on trade, infrastructure projects and the transport sector.
London and Paris have argued for months that Europe must send a strong signal of support for rebels fighting Assad by allowing EU arms deliveries, even though they say they have not decided yet to actually supply arms.
But they ran into strong opposition from other EU governments, led by Austria and Sweden, which argued that sending more weapons to the region would increase violence and spread instability.
British Foreign Secretary William Hague said the EU meeting had effectively ended the EU's arms embargo on the Syrian opposition.
"While we have no immediate plans to send arms to Syria, it gives us the flexibility to respond in the future if the situation continues to deteriorate," Hague told reporters.
London and Paris were seeking to increase the opposition's leverage in planned U.S. and Russian co-sponsored peace talks expected next month by raising the prospect they could supply arms to the rebels if the political process made no headway.
NICOSIA, Cyprus -- Cyprus plans to lift a ban on casinos and offer firms tax exemptions on profits reinvested on the island under a package of reforms to kick-start its ailing economy, its president said on Monday.
Cyprus's euro zone partners agreed on a 10 billion euro ($12.8 billion) rescue package last Monday following weeks of tense negotiations, but its tough terms look set to deepen the island's recession, shrink the banking sector and cost thousands of jobs.
President Nicos Anastasiades, who briefed ministers on the economy during an informal meeting, said the 12-point growth plan would be put to the cabinet for approval within the next 15 days.
The program includes measures to attract foreign investment to the island -- a hub for offshore finance -- as well as tax exemptions on business profits reinvested there, and the easing of payment terms and interest rates on loans.
With about 68 billion euros ($87.16 billion) in its banks, Cyprus has a vastly outsized financial system that has attracted deposits from abroad, especially Russia.
In a bid to attract more tourists to the south of the island, it also hopes to lift a ban on casinos, which so far operate legally only on Turkish-controlled northern Cyprus.
Speaking to reporters after a memorial service to commemorate the 1955 armed campaign against British rule, Anastasiades said the government would focus on "growth and incentives for growth."
Banks reopened on Thursday after a nearly two-week hiatus to avert a bank run, but the ripple effect of their closure is likely to strangle business on the island for a long time to come.
Anastadiades has defended the rescue deal as painful but essential, saying that without it, Cyprus had faced certain banking collapse and risked becoming the first country to be pushed out of the European single currency.
Protesters in Cyprus gather outside parliament as government officials try to strike a bailout deal with the European Union. NBCNews.com's Dara Brown reports.
By Michele Kambas and Lidia Kelly, Reuters
A solution to Cyprus' bailout crisis within the framework set down by the European Union may be possible within "the next few hours," the deputy leader of the island's ruling Democratic Rally party said on Friday.
"There is cautious optimism that in the next few hours we may be able to reach an agreed platform so parliament can approve these specific measures which will be consistent with the approach, the framework and the targets agreed at the last Eurogroup," Averof Neophytou told reporters.
The lines at bank cash machines in Cyprus are growing longer and in some cases angrier. The European Central Bank has given the island's government until Monday to find its six billion euro share of the bailout or - it says - it'll pull the plug on the rest of the cash and banks will face collapse. The banks themselves remain closed. Faisal Islam of Channel Four Europe reports.
The news came hours after the Cypriot finance minister left Moscow empty-handed when Russia turned down appeals for aid, leaving the island to strike a bailout deal with the EU before Tuesday or face the collapse of its financial system.
The rebuff left Cyprus looking increasingly isolated, with the deadline looming to find billions of euros demanded by the EU in return for a 10 billion euro ($12.93 billion) bailout.
Without it, the European Central Bank said on Wednesday it would cut off emergency funds to the country's teetering banks, potentially pushing Cyprus out of Europe's single currency.
"The talks have ended as far as the Russian side is concerned," Russian Finance Minister Anton Siluanov told reporters after two days of crisis talks with his Cypriot counterpart, Michael Sarris.
Wealthy Russians have billions of euros at stake in Cyprus's outsized and now crippled banking sector.
Banks are closed on Cyprus but the ATM's are still dispensing cash as the government tries to avert a financial crisis. NBCNews.com's Dara Brown reports.
But Siluanov said Russian investors were not interested in Cypriot gas and that the talks had ended without result.
Sarris was due to fly home, where lawmakers were preparing to debate measures proposed by the government to raise at least some of the 5.8 billion euros ($7.48 billion) required to clinch the EU bailout.
They included a "solidarity fund" bundling state assets, including future gas revenues and nationalized pension funds, as the basis for an emergency bond issue and likened by JP Morgan to "a national fire sale".
They were also considering a bank restructuring bill that officials said would see the country's second largest lender, Cyprus Popular Bank, split into good and bad assets, and a government call for the power to impose capital controls to stem a flood of funds leaving the island when banks reopen on Tuesday after a week-long shutdown.
'Playing with fire' There was no silver bullet, however, and Cyprus's partners in the 17-nation currency bloc were growing increasingly unimpressed.
To help pay for the $13 billion European bailout, the government plans to take up to 10 percent from all savings accounts, angering those who say they aren't responsible for the economic crisis. CNBC's Sue Herera reports.
"I still believe we will get a settlement, but Cyprus is playing with fire," Volker Kauder, a leading conservative ally of German Chancellor Angela Merkel, told public television ARD.
There were long lines at ATMs on Thursday and angry scenes outside parliament, where hundreds of demonstrators gathered after rumors spread that Popular Bank would be closed down and its staff laid off.
"We have children studying abroad, and next month we need to send them money," protester Stalou Christodoulido said through tears. "We'll lose what money we had and saved for so many years if the bank goes down."
Cypriots have been stunned by the pace of the unfolding drama, having elected conservative President Nicos Anastasiades barely a month ago on a mandate to secure a bailout. News that the deal would involve a levy on bank deposits, even for smaller savers, outraged Cypriots, who raided cash machines last weekend.
Workers cover 2,000-year-old graffiti in Pompeii with Plexiglas on Tuesday.
By Claudio Lavanga, Correspondent, NBC News
Published at 8:23 a.m. ET: POMPEII, Italy -- On Tuesday evening, the sound of a pneumatic drill broke the silence that has been part of Pompeii's character since the eruption of Mount Vesuvius buried the city in 79 A.D.
Three workers cut holes in one of the city's historic walls, attached mounts with concrete and fixed a Plexiglas cover to protect 2,000-year-old graffiti.
"Sorry we don't have hard hats on," the men said, as if not following safety standards was the only thing wrong with their supposed preservation work. In fact, according to experts, the workmen were defacing priceless antiquities.
"Oh my god, look at them. Do you see an archaeologist around?" said Dario Sautto, a member of Italy's Cultural Heritage Observatory who witnessed the work.
In Pompeii, it's a race against time to preserve what's left of this ancient site, before it becomes history. NBC News Correspondent Claudio Lavanga reports.
As is so often the case with the preservation of Pompeii, the cure appears to be worse than the disease, he said.
"Those men are bricklayers, without a qualified supervisor in sight," he added. "They are just patching things up ahead of the visit of the [European Union] commissioner."
Indeed, on Wednesday, Johannes Hahn, regional affairs commissioner for the European Union (EU), was surveying Pompeii and discussing the start of the Great Pompeii Project, a multimillion-dollar plan to revamp and secure the decaying archaeological site -- and stop patch-up jobs like the one Sautto had just witnessed.
Pompeii, an ancient city blanketed by 20 feet of volcanic ash and pumice after Vesuvius erupted almost 2,000 years ago, is just one of thousands of Italian sites that have attracted tourists and archaeologists alike for hundreds of years. And for decades it has symbolized the failings of the Italian state in preserving its rich historical, cultural and archaeological heritage.
In 2010, one stone too many crumbled -- the famous House of Gladiators, used for training before fights in the nearby amphitheater, collapsed into a pile of rubble. The world's archaeological community cringed, and so did the EU.
So the EU pledged to spend 105 million euros (about $142 million) to make sure that interventions like the one witnessed Tuesday become a thing of the past.
The project consists of "using some of the most sophisticated and up-to-date technology to preserve the ruins of the site, which has been badly damaged in recent years," the EU said Tuesday.
Franco Origlia / Getty Images, file
The House of the Gladiators was cordoned off after its collapse in 2010, drawing attention to the fragile state of Pompeii.
Despite 2.3 million tourists visiting the ruins of Pompeii every year, the site has slowly been falling into decay due to mismanagement, corruption and the influence of the "Camorra," the local mafia.
Millions of dollars have been spent in the past to try to prevent the UNESCO World Heritage Site falling into disarray, but every attempt to turn the ancient site into a truly modern tourist attraction has gone up in smoke.
On Tuesday, Annamaria Caccavo, a businesswoman who won a multimillion-dollar restoration tender to work on Pompeii, was placed under house arrest on charges of aiding abuse of office, corrupting a public official and fraud.
"The problem with Pompeii is that they always treat its preservation like an emergency," Sautto said. "But the emergency started in 79 A.D., not today. And still they can't figure out how to save it."
Caccavo's arrest, which came a day before the EU officially stepped in to straighten up the ruins' management, sent a signal that legality and transparency will play a major role in the new regime.
Pompeii has never been famous for its preservation, and pieces fall off its ruins regularly. Only 30 percent of the site is open to the public, with restoration works frozen in time, just like the casts of its citizens who died when Vesuvius erupted. Guards around the site are outnumbered by stray dogs, and public toilets are a lucky find in the maze of ruins.
The EU's Hahn said he took more than a professional interest in helping ensure the protection of Pompeii's treasures.
"I have taken a great personal interest in getting this project off the ground ever since I heard about the collapse of the House of the Gladiators in November 2010, when I happened to be in Rome," he said. "Here is a chance not just to help save something which is part of Europe's cultural identity but to revitalize (the regional) economy by attracting more visitors and creating new jobs."
In Pompeii, it's a race against time to preserve what's left of this ancient site, before it becomes history.
Britain's Prime Minister David Cameron makes a long-awaited speech on the UK's place in the European Union in London on Wednesday.
By Ian Johnston, Staff Writer, NBC News
U.K. Prime Minister David Cameron on Wednesday announced Britain would hold a referendum on whether it should leave the European Union if his Conservative Party wins the next election.
His comments prompted a largely angry reaction from European politicians, who condemned Cameron for "playing with fire" and trying to bend the 27-nation bloc to his will.
France’s Foreign Minister Laurent Fabius revealed he had recently told a group of British businessmen that "if Britain wants to leave Europe, we will roll out the red carpet for you," Reuters reported Wednesday.
“People ... resent the interference in our national life by what they see as unnecessary rules and regulation. And they wonder what the point of it all is,” he said.
“It is time for the British people to have their say. It is time to settle this European question in British politics. I say to the British people: this will be your decision,” Cameron added. “And when that choice comes, you will have an important choice to make about our country’s destiny.”
'Charting our own course' He said that he understood “the appeal of going it alone, of charting our own course.”
“Of course Britain could make her own way in the world, outside the EU, if we chose to do so … But the question we will have to ask ourselves is this: is that the very best future for our country?” Cameron said.
Cameron has talked about renegotiating the U.K.’s relationship with Brussels and told parliament later Wednesday he would campaign to stay in the EU -- if he was successful in reforming it.
But he repeatedly refused to answer questions from Labour Party leader Ed Miliband on how he would vote in the referendum if he was unsuccessful.
Guy Verhofstadt, leader of the Liberal Democrat group in the European Parliament, said Cameron was “playing with fire” by saying he would renegotiate Britain’s membership and hold a referendum, according to ITV News. “He ... is raising false expectations that can never be met,” he said.
And European Parliament President Martin Schulz said the speech was “one of the worst I heard in a long time,” ITV News reported.
Schulz said Cameron was in favor of the single European market but also was also complaining about the regulations that govern it. “So, what does he want -- the internal market or the regulations? … I find what Mr. Cameron is doing very implausible,” he added.
Fabius, the French official, said it was as if Britain had joined a soccer club and then suddenly said "let's play rugby," Reuters reported. And German Foreign Minister Guido Westerwelle said “cherry-picking” what the U.K. liked about the EU and leaving the rest was “not an option.”
“He is gambling that his referendum promise will calm rather than stir the fury of Eurosceptics both inside and outside his party, that he can persuade 26 other European leaders to give the UK the deal he wants and that voters will then choose to back it,” he said.
“If he pulls it off he will restore [Conservative] Party unity, see off the threat of UKIP, put Labour on the back foot and secure a relationship with the EU which is no longer a political nightmare for him and his party,” he added. “If he doesn't the name Cameron will be added to those of [Harold] Wilson, [Margaret] Thatcher and [John] Major - those whose premierships were destroyed by that most toxic issue in politics - Europe.”
Britain's Prime Minister David Cameron (right) faces some tough negotiations with the likes of Germany's Chancellor Angela Merkel (left).
By Peter Jeary, Foreign Desk Editor, NBC News
Updated at 8:55 p.m. ET: British Prime Minister David Cameron has cancelled a major speech, originally scheduled for Friday, because of the uncertain outcome of the hostage-taking crisis at an Algerian gas plant that started Wednesday, the Telegraph reported.
An unknown number of the hostages — which included dozens of foreign nationals and Algerians — were killed as Algerian forces attempted a rescue mission that reportedly went awry late Thursday. One Briton was reported dead in the hostage crisis, and Cameron warned that the country should be prepared for "further bad news."
LONDON — It says a lot about Britain's ambivalent attitude toward its membership of the European Union that the UK Independence Party (UKIP), which wants the country to leave the bloc, has 12 seats in the European Parliament.
Britain is so close to continental Europe — the English Channel is just 26 miles across at its narrowest point — that people sometimes swim to France. But, politically, the country has arguably not been further away for decades.
The right-leaning Telegraph newspaper reported Thursday that "Cameron is expected to pledge to renegotiate Britain’s [EU] membership, if he is re-elected in 2015, after which the revised relationship will be the subject of a referendum."
Reuters described Cameron's looming speech as "one of the most closely watched Europe addresses by a British leader since World War Two."
Political and business leaders have voiced concerns over the risk of calling a referendum that could see Britain leaving the EU, which offers a market of 500 million people on its doorstep.
The EU has been awarded the Nobel Prize for its role in uniting the continent after two World Wars. ITV's James Mates reports.
And Reuters noted that "international partners from the United States to Germany and Ireland have made it clear they oppose a British EU exit and believe that such a move would isolate and damage Britain itself."
Europe's common currency, the euro, is mired in turmoil, leaving most Britons glad the U.K. kept the pound.
John Curtice, electoral analyst and professor of politics at Strathclyde University, said UKIP’s poll surge was a major factor in pushing Britain’s relationship with the rest of Europe to the center of the political agenda.
"There is no doubt that recent electoral success for UKIP has made Europe an issue for Conservatives," he said.
"There is enormous pressure on David Cameron from within his party," he added. "Many Conservative members of parliament are looking ahead to the next election and thinking, 'I'll be damned if I lose because my party cannot come up with a coherent policy on Europe that voters can support.'"
Yves Herman / Reuters, file
The rising star of British politics? UK Independence Party leader Nigel Farage stands near a coffin symbolizing "the death of the Euro" during a demonstration in 2011 urging the European Union to stop extending help to Greece.
Curtice said UKIP’s poll ratings appeared to be driven by mid-term protest votes that traditionally went to Liberal Democrats, but which were up for grabs now that the party has joined the Conservatives in the ruling coalition.
"However, regardless of why UKIP is getting attention, its presence is making Europe a problem for the Conservative party and its supporters, many of whom are instinctively wary of Europe," Curtice added.
One key challenge for Cameron is that getting the EU to change has proved notoriously difficult for successive British prime ministers. Cameron has also often been left isolated at EU summits due to his opposition to various proposals.
Professor Iain Begg, of the European Institute at the London School of Economics, said a hard-line stance by Cameron could potentially result in "amendments to some of the [EU] directives that Britain finds unpalatable."
However, he said that a total renegotiation of the treaties that bind the EU together was unlikely.
Cameron will need to reconcile demands from so-called Euroskeptics within his own party for the repatriation of powers from Brussels with calls from other parts of his coalition government for closer European integration.
And he'll need to do so while not offending his political peers and allies in Europe and beyond.
Speaking to Reuters, one unnamed EU diplomat wondered how Cameron could walk that tightrope:
"Britain's Europe policy has been confusing for a long time. He's going to have to sort out a lot of misunderstandings before he can convince people of what he's doing," said the official, underlining that uncertainty would not go away overnight.
"The risk remains of an exit by mistake. It shouldn't happen, but other things that shouldn't have happened did."
Finland's prime minister signaled he was worried about what Cameron might announce during Friday's speech.
"The EU without Britain is pretty much the same as fish without chips," Jyrki Katainen told reporters in Brussels on Wednesday. "It's not a meal any more."
NBC News' Alastair Jamieson and Reuters contributed to this report.