Greek Cypriots elect Anastasiades to presidency

Nicos Anastasiades, a conservative, was yesterday (24 February) elected president of Cyprus, beating his left-wing opponent by 15 percentage points and ending five years of left-wing rule over the divided island's ethnic-Greek community.  

Anastasiades, who has led the Democratic Rally (DISY) party for the past 15 years, won 46% of the votes cast in the first round on 17 February, and he boosted that figure to 57.5% yesterday to beat off the challenge of Stavros Malas, an independent backed by the Communist Party of outgoing president Demetris Christofias. Support for Malas rose from 27% in the first round, suggesting that he secured the backing of most of those who had voted in the first round for George Lillikas, an independent candidate backed by a small left-wing party.  

The new president, who will also serve as the head of government, has said that he will resume talks immediately with a troika of international creditors – the International Monetary Fund, the European Commission and the European Central Bank – on a €17 billion bail-out package.  

On Friday (22 February), the European Commission revised its economic forecasts for Cyprus downwards and believes a prolonged recession is on the cards. It expects Cyprus's economy to contract by 3.5% this year, owing to the EU's economic problems and austerity measures taken to secure a bail-out. It forecasts unemployment to be 13.7% at the end of the year. Cyprus's problems stem from Cypriot banks' heavy exposure to Greece.  

Cyprus has been talking with the troika about a bail-out since June. In the meantime, it has received a €2.5 billion loan from Russia, with which Cyprus has strong ties, and has taken loans from state-owned companies.  
The troika believes that the Cypriot economy is overly dependent on the financial sector and is demanding that the banking sector be restructured. That could entail losses for customers and could unsettle investors in other EU countries with financial difficulties. The focus on the banking system has also raised the prominence of long-standing claims that Cypriot banks are frequently used to launder money. The outgoing Cypriot government has insisted that its record stands up well in international comparisons.  

Joseph Daul, the leader of the conservative European People's Party in the European Parliament, highlighted one of a number of advantages that Anastasiades is seen as having over his predecessor: support from abroad. “I am convinced that Nicos Anastasiades long-standing experience and strong international network, together with his new coalition government, will succeed in implementing the necessary reforms towards the reconstruction of a new European future for the island,” he said. Anastasiades has forged close ties with centre-right leaders across Europe and was endorsed by Angela Merkel, Germany's chancellor. By contrast, Christofias – the EU's only Communist leader – was often isolated.  

José Manuel Barroso, president of the European Commission, interpreted Anastasiades's victory as “a strong mandate to implement his programme of reform and do what it takes to ensure fiscal and financial stability”.  

It remains unclear, however, whether Anastasiades will be prepared to accept a large privatisation programme, amounting possibly to €2bn, that is being advocated by the troika.  

In Cyprus's political system, the president is head of the government and Anastasiades, whose party is the largest in parliament, will spend much of the coming week forming a new cabinet. Early reports from Cyprus suggest that Michael Sarris, who has worked with the World Bank, is likely to return to the post of finance minister, a position he held in 2005-08. The new foreign minister is widely expected to be Ioannis Kasoulides, a member of the European Parliament who was the candidate of Anastasiades's party in presidential elections in 2008 and served as foreign minister in 1997-2003.  

Cyprus's financial difficulties have overtaken the division of the island as the main political issue in Cyprus. But there are hopes that stalled reunification talks with the Turkish-occupied north of the island could get a boost from the election of Anastasiades, who supported a United Nations reunification plan that was rejected by the Greek Cypriots in 2004.

Anastasiades has already indicated one significant change of tack in foreign policy, saying that Cyprus will apply to join NATO's Partnership for Peace.