Cypriots head to the polls Sunday to elect a new president who will be tasked with unblocking an increasingly thorny, multibillion-euro bailout needed to rescue the island’s teetering banking system and a cash-strapped government reeling from Greece’s economic crash. Public-opinion polls show conservative leader Nicos Anastasiades, head of the center-right Democratic Rally, or Disy, party, is expected to top a three-way race for president with about 40% of Sunday’s vote. If no candidate gets 50%, a runoff would take place a week later. Mr. Anastasiades’s closest rival is Stavros Malas, backed by the Cypriot communist party AKEL, with the support of 23% of respondents. Giorgos Lillikas, supported by socialists EDEK, has about 20% backing. Even with his election likely, Mr. Anastasiades will have little time to celebrate his victory. A 66-year-old lawyer by profession, he is seen as able to get the Cypriot economy, now in its second year of recession, back on its feet. He is also a stalwart of Europe’s conservative party caucus and close to German Chancellor Angela Merkel, who publicly supported his bid during a visit to Cyprus in January. He will need those skills to help mend relations with Europe, which were sorely tested by his predecessor’s unyielding stance on austerity measures and privatizations that Europe and the IMF have demanded.
“Mr. Anastasiades needs to improve Cyprus’s ties with Europe, but this will be easy for him. He is the kind of political leader the West likes,” said Hubert Faustmann, associate professor of history and political science at the University of Nicosia. “His first task is to save Cyprus from bankruptcy.”
The vote for a successor to Demetris Christofias, Cyprus’s deeply unpopular Communist leader, will mark yet another changing of the guard in Europe, and comes as time for Cyprus to fix its economy is running out.
Despite its small size—Cyprus accounts for about 0.2% of the euro-zone economy—the country’s debt and banking woes threaten to turn the island into the next flash point in the currency union’s crisis. Months of bickering among the country’s European partners, the International Monetary Fund and Mr. Christofias over how to address the country’s debt burden—and who should pay for it—have brought negotiations on the loan deal to a standstill.
The delays have forced the government to borrow from state-owned companies to remain afloat, even as it faces a €1.4 billion ($1.9 billion) bond redemption in early June. Meanwhile, the country’s banking system—which needed its own bailout last June—has drawn attention to the island’s reputation as a money-laundering center for Russian money, something that has made Germany, Europe’s de facto paymaster, and others reluctant to offer cash for a bailout. On Wednesday, Washington-based Global Financial Integrity—a nonprofit group studying illicit financial flows—said in the context of a new report on Russian money flows that Cyprus was “a laundry machine for dirty Russian money.”
Cypriot authorities vigorously deny these allegations, saying that they are compliant with international rules and regulations.
Full Article: Cyprus Vote Looms as Clock Ticks – WSJ.com.