March 19 (Bloomberg) -- The U.K.’s Royal Air Force is flying 1 million euros ($1.3 million) to Cyprus for military personnel stationed on the island to ensure they don’t run out of cash.
The move came after Chancellor of the Exchequer George Osborne said two days ago that the U.K. will compensate military and civilian personnel in Cyprus who lose out as a result of the European Union’s levy on deposits in Cypriot banks to fund a rescue package for the indebted nation.
“An RAF flight left for Cyprus this afternoon with 1 million euros on board as a contingency measure to provide military personnel and their families with emergency loans in the event that cash machines and debit cards stop working completely,” the Ministry of Defence in London said in an e-mailed statement today. “We will keep this under review and consider further shipments if required.”
The Mediterranean island nation’s banks will remain closed at least until March 21. Cypriot lawmakers are due to vote later today on the 5.8 billion-euro levy on bank accounts, intended to cut the cost of the rescue package to 10 billion euros.
Personnel are being offered the choice of having their salaries paid into U.K. instead of Cypriot bank accounts, the MoD said. The British Army maintains two sovereign bases in Cyprus, with two resident infantry battalions along with supporting forces. Some British troops serve with the United Nations peacekeeping operation on the island.
Osborne said March 17 that all British government and military personnel whose bank accounts in Cyprus may be affected by the bailout levy will be compensated. “For people serving in our military, for people serving our government out in Cyprus -- because we have military bases there -- we are going to compensate anyone who is affected by this bank tax,” he told BBC television. “People who are doing their duty for our country in Cyprus will be protected.”
Osborne confirmed to ministers at a meeting of the Cabinet today that U.K. employees in Cyprus, including troops and diplomats, would be compensated for any losses, Prime Minister David Cameron’s spokesman, Jean-Christophe Gray, told reporters.
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