Friday

20th Jan 2017

Cyprus bailout in sight as new president elected

  • Fellow EU Conservatives endorsed Anastasiades at a meeting in Cyprus last month (Photo: European People's Party)

EU officials have welcomed the election of conservative leader Nicos Anastasiades in Cyprus, raising hopes of a speedier bailout deal for the troubled euro country.

Anastasiades won 57.5 percent of the vote on Sunday (24 February).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He had already been endorsed by German Chancellor Angela Merkel during a meeting of centre-right leaders last month in Cyprus.

"We want Europe on our side. We will be absolutely consistent and meet our promises. Cyprus belongs to Europe," Anastasiades told supporters when exit polls were announced on Sunday night.

"We will restore the credibility of Cyprus in Europe and internationally. I promise you," he added.

Cyprus formally asked for a eurozone bailout last summer, as its cash-strapped banking sector is struggling with the consequences of a debt restructuring in Greece, part of Greece's own bailout deal in spring last year.

European Commission chief Jose Manuel Barroso, also a member of the centre-right European People's Party, on Sunday night said he personally, and in the name of the whole commission, welcomes Anastasiades' election.

"I spoke to Mr Anastasiades immediately after the result became known and I have assured him that he can count on the continued commitment of the European Commission to assist Cyprus to overcome the challenges it faces," Barroso said in a press release.

Eurogroup chief Jeroen Dijsselbloem, who chairs the meetings of eurozone finance ministers deciding on the Cyprus bailout, was also positive.

"I very much welcome his commitment to full cooperation with the Troika and to the resumption of programme negotiations without delay. It is in the interest of Cyprus as well as the euro area to reach an agreement rapidly," Dijsselbloem said.

"The Eurogroup stands ready to assist Cyprus in its adjustment effort in order to bring the economy to a sustainable growth path with sound public finances," he added.

The finance ministers of Germany and France jointly expressed their confidence for the bailout talks to "resume shortly with a view to reach an agreement before the end of March."

Outgoing Cypriot President Demetris Christofias, the only Communist leader of an EU country, had stalled talks on the €17bn bailout by refusing to allow privatisations to be part of the deal.

But in an interview with the Financial Times before the Sunday elections, Anastasiades also said that privatisations should be postponed for at least three years and warned against a German demand to have banks take losses and reduce the island's bloated financial sector.

He made the comments while still in campaigning mode ahead of negotiations with the troika of international lender on how to reduce the size of a bailout, as the €17bn would create too much debt for the country to pay back - over 140 percent of GDP.

Germany insists that the overall debt should be capped at 100 percent of GDP.

Revenues from privatisations, recently discovered gas reserves and a 'bail-in' contribution of the banking sector should cover the gap, says Berlin.

Concerns about money laundering on the tax-haven island, particularly by Russian and Ukrainian oligarchs, are complicating a bailout deal still further.

Meanwhile, Cypriots face a 15 percent unemployment rate as well as tax hikes and wage cuts, but Anastasiades will have little room for manoeuvre on further austerity measures demanded in return for the bailout.

A clear deadline to avoid bankruptcy is 3 June, when Cyprus has a €1.4 billion bond repayment. Last week, Standard&Poor's ratings agency said the risk of a Cypriot default is "material and rising."

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey

Latest News

  1. 'Be patient,' ECB chief tells Germany
  2. EU cannot copy Australia's offshore asylum model
  3. Brexit men launch anti-EU website
  4. Germany details its 'Marshall Plan' for Africa
  5. IMF predicts 'pain' for UK, as banks prepare London exit
  6. EP deal could help Tusk keep Council job
  7. UN struggles to monitor fate of readmitted Syrians in Turkey
  8. European space chief: Moon village is 'more or less a fact'