Friday

14th Dec 2018

Cyprus government resigns amid economic woes

Cypriot President Demetris Christofias on Thursday (28 July) dissolved his cabinet amid growing public anger over the handling of Iran-bound ammunition that exploded earlier this month and wiped out the country's main energy plant, triggering market fears that the island nation may be the next in line for a eurozone bailout.

The new 11-member cabinet will be appointed "soon" after consultations with all parties so as to gain "wider acceptance to achieve consensus on economic measures and restore public trust," government spokesman Stefanos Stefanou said Thursday in a press conference.

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  • The island has been divided since a Turkish military invasion of the northern part in 1974 and is still guarded by UN troops (Photo: UN)

He insisted the country will not need an EU bailout, noting that its financing needs for the year are already covered.

But credit ratings agency Moody's on Wednesday downgraded Cyprus' bond ratings by two notches, saying there was a "material risk" that Cyprus' will seek a bailout "over the next few years", due to exposure to Greek debt and the 11 July explosion which wiped out any chances for economic growth.

The explosion killed 13 people, knocked out the country's main power plant - responsible for over half of national energy production - and is likely to dent the country's GDP by 14-17 percent.

Meanwhile, Cypriot residents have been asked not to switch on their air conditioners and put up with daily power cuts at a time when temperatures can reach 40 degrees.

Public anger has regularly seen thousands take to the streets since the blast occurred, blaming the government for "negligence" and asking for it and the president to step down. So far Christofias, the only Communist president in the EU, has resisted calls to resign.

"I am responsible to the people and I am not going to resign," he told Cypriot television on Thursday afternoon.

The geopolitical choices of the small island, closer to Turkey and the Middle East than Western Europe, are also being questioned as the Iran-bound ammunition seized in 2009 was on a Russian-owned ship flying a Cypriot flag.

According to US diplomatic cables published by WikiLeaks, the US put pressure on the Cypriot authorities to recall the suspicious vessel to port and search for its contents after Israeli officials suspected that the weapons and ammunition was destined for Iran.

Ignoring an offer from the British government to help with the disposal of the ammunition, the Cypriot leaders decided to store the seizure in an open field, despite soaring temperatures in the summer.

Cypriot government documents leaked to local media revealed that military officials had for two years been warning about the risks posed by the stored munitions, but that for "political reasons" nothing was done. Just six days before the blast, a meeting was held to discuss the matter after it was noticed that one of the containers was warped.

Protestors on the streets of Cyprus after the blast at navy base.
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