Cyprus faces re-run after election stalemate

A woman with her child votes in the the Cypriot port city of Limassol. Picture: AP
A woman with her child votes in the the Cypriot port city of Limassol. Picture: AP
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CYPRUS will hold a runoff presidential election next weekend, with voters called on to select who will lead the country through a severe financial crisis after no candidate won an outright majority in yesterday’s vote.

Nicos Anastasiades, a right-winger who presented himself as the most capable to negotiate a bailout with Cyprus’ European partners and who went into the election a strong favourite, won the first round with just over 45 per cent of the vote. But he fell short of the 50 per cent plus one vote needed for an outright win.

He will face Stavros Malas, the left-wing candidate who has advocated being more assertive in bailout negotiations, in the runoff next Sunday.

Final results last night showed Mr Anastasiades winning 45.46 per cent, well ahead of Mr Malas’ 26.91. Independent Giorgos Lallikas was a close third with 24.93 per cent, and was eliminated from the running.

The change in leadership, after unpopular outgoing communist-rooted president Dimitris Christofias said he would not seek re-election, comes at a crucial juncture for Cyprus. The other 16 countries that use the euro are expected to decide next month on a financial lifeline for the country of less than a million people.

Cyprus is fast running out of cash to pay its bills, and the new president faces the difficult task of overcoming scepticism from some bailout-weary euro-area countries to secure help.

Cyprus got into trouble after its banks, whose assets are bigger than the country’s entire economy, took huge losses when Greece restructured its debt. The country, with a shrinking economy and jobless rate at almost 15 per cent, has already reached a preliminary bailout agreement with its eurozone partners and the International Monetary Fund, and has enacted a raft of spending cuts and tax increases.

But Cyprus’ request for help is meeting resistance from some quarters, especially Germany, which says the country’s banks serve as money laundering hubs for Russian oligarchs, or that it is too small to matter since it contributes about 0.15 per cent to the euro area economy.

The size of the bailout, estimated to be up to €17 billion, is tiny compared to the hundreds of billions given as rescue loans to other troubled European countries such as Greece, Ireland and Portugal. But it is equivalent to Cyprus’ entire economic output, putting into question whether the country would ever be able to pay it back.

“Cyprus needs an adjustment program, a comprehensive one,” Joerg Asmussen, a member of the European Central Bank’s executive board, said yesterday.

It will have to focus on shrinking the banking sector in an orderly way and “financial help will be needed for that, but in order that there can be such a program Cyprus must make efforts in advance – this is not a one-way street,” Mr Asmussen said.

“Above all else, we must all unite forces, to counter this economic crisis which unfortunately our homeland has never experienced before,” he said.

Mr Malas urged voters not to turn their backs on what he called the most crucial election in the country’s history.

The financial crisis has overtaken the country’s ethnic division as the primary campaign issue in some 40 years. Cyprus was split into an internationally recognized Greek Cypriot south and a breakaway Turkish Cypriot north in 1974.