25 February 2013

Kathimerini: Anastasiades faces bailout talks after victory in Cyprus elections

Cypriot president-elect Nicos Anastasiades faces weeks of difficult talks with foreign lenders on a financial rescue for the island nation, after sweeping to a resounding victory in a run-off election.

Anastasiades pledged to hammer out a quick deal with foreign lenders and bring Cyprus closer to Europe, in a shift from the policies of the outgoing Communist government that first sought aid from Russia before turning to the EU. "We want Europe on our side. We will be absolutely consistent and meet our promises. Cyprus belongs to Europe“, Anastasiades told jubilant supporters blowing horns. "We will restore the credibility of Cyprus in Europe and internationally."

European officials want a bailout agreed by the end of March, but the 66-year-old lawyer will first have to overcome German fears that Cyprus is a hub for Russian money laundering and worries that it will never be able to pay back its debt. Known for his no-nonsense style and impressive access to key European policymakers like German Chancellor Angela Merkel, Anastasiades took 57.5 per cent of the vote, 15 points ahead of his anti-austerity Communist-backed rival Stavros Malas.

Financial markets had been hoping for an Anastasiades victory to speed up a joint rescue by the European Union and International Monetary Fund before the island runs out of cash and derails the fragile confidence returning to the eurozone.

Virtually all rescue options - from a bailout loan to a debt write down or slapping losses on bank depositors - are proving unpalatable because they push Cypriot debt to unmanageable levels or risk hurting investor sentiment elsewhere in the bloc.

German misgivings about Cyprus's commitment to fighting money laundering and its strong financial ties with Russia - which has already extended a €2.5 billion loan to the nation - have further complicated the negotiations.

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© Kathimerini