Tuesday

27th Sep 2016

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."

Investigation

Diesel cars still dirty, despite huge EU loans

The European Investment Bank lent billions to carmakers, in part to clean up diesel cars. But diesel cars are still dirty, prompting questions if the money was well spent.

EU redoubles attack on roaming charges

After an embarrassing U-turn last week, the EU commission has proposed to abolish roaming charges by June next year. Only "abusive" clients to pay.

Stakeholders' Highlights

  1. GoogleDid You Know Europe's Largest Dinosaur Gallery Is in Brussels? Check It Out Now
  2. IPHRHuman Rights in Uzbekistan After Karimov - Joint Statement
  3. CISPECloud Infrastructure Providers Unveil Data Protection Code of Conduct
  4. EFAMessages of Hope From the Basque Country and Galicia
  5. Access NowDigital Rights Heroes and Villains. See Who Protects Your Rights, Who Wants to Take Them Away
  6. Martens CentreQuo Vadis Georgia? What to Expect From the Parliamentary Elections. Debate on 29 September
  7. EJCAppalled by Recommendation to Remove Hamas From EU Terrorism Watch List
  8. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  9. HuaweiAn Industry-leading ICT Solution Provider and Building a Better World
  10. World VisionUN Refugees Meeting a Wasted Opportunity to Improve the Lives of Millions of Children
  11. Belgrade Security ForumCan Democracy Survive Global Disorder?
  12. GoogleTrimming the Waste-Line: Weaving Circular Economy Principles Into Our Operations