From your link: "The 10bn-euro ($13bn; £8.6bn) bailout agreed with the EU and IMF had demanded that all bank customers pay a one-off levy and led to heavy cash withdrawals."
The EU were happy to sign off on a proposal which would see deposits under 100,000 EUR being hit. Maybe it was their idea, maybe it wasn't, but they were okay with it. Ultimately it was the Cypriot parliament who rejected the proposal.
"Cyprus President Nicos Anastasiades says he is battling against eurozone demands that all bank customers pay a one-off levy in return for a bailout.
Mr Anastasiades said he shared people's unhappiness with the terms, whereby all bank customers would pay a levy of 6.75% or 10% on their bank deposits.
The EU and IMF have demanded the levy in return for a 10bn-euro ($13bn; £8.6bn) bank bailout."[1]
My understanding of this article is that the EU told him he would have to come up with ~5bn, which they wanted him to do by imposing a tax on large deposits over 100,000. The comment by Schaeuble is pretty clear in this regard. Instead, the president opted to impose an additional tax on lower deposits in order to decrease the burden on large ones and keep Cyprus attractive as a tax haven. The EU wasn't happy with this but let him do it since it still fulfilled the requirements of raising 5bn.
So yes, the EU demanded that SOME customers have to pay SOME levy and I am sure he "shared people's unhappiness" with those terms. But the one who decided to put the burden on the small deposit holders was the Cypriot government.
The EU were happy to sign off on a proposal which would see deposits under 100,000 EUR being hit. Maybe it was their idea, maybe it wasn't, but they were okay with it. Ultimately it was the Cypriot parliament who rejected the proposal.
"Cyprus President Nicos Anastasiades says he is battling against eurozone demands that all bank customers pay a one-off levy in return for a bailout.
Mr Anastasiades said he shared people's unhappiness with the terms, whereby all bank customers would pay a levy of 6.75% or 10% on their bank deposits.
The EU and IMF have demanded the levy in return for a 10bn-euro ($13bn; £8.6bn) bank bailout."[1]
[1] http://www.bbc.co.uk/news/world-europe-21824495