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Cyprus Ditches Communists, Bailout Back on Track

Voters in troubled Cyprus are turning their backs decisively on the communists. In the first round of presidential elections on Sunday, the incumbent communist AKEL Party made an extremely poor showing, while the candidate of the center-right won nearly 50 percent of the vote. A run-off election will still be needed to determine the final winner, but the center-right Nicos Anastasiades is the prohibitive favorite. As the FT notes, this is raising hopes that bailout negotiations will be a success, as Anastasiades is looking to take the steps the former communist President was often reluctant to take:

Mr Anastasiades is seeking to resume stalled talks on a €17bn bailout for Cyprus following months of delay while the communist government tried to secure more funds from Moscow on top of a €2.5bn emergency handout last year. […]

Cyprus has already adopted some measures demanded by the EU and International Monetary Fund, including modest wage cuts for civil servants. But Demetris Christofias, the outgoing president, balked at implementing structural measures, including a €10bn restructuring of the troubled banking sector.

This is a step in the right direction, but we have one suggestion to make to the negotiators. If the Greek Cypriots would give some ground on the question of their relations with the Turks on the island they could help liquidate one of Europe’s most troubling disputes and ease relations with Turkey to boot. Cyprus and Greece have often used their power in EU institutions to block measures concerning Turkey and the Turkish Cypriots that they don’t like, and the Cypriots have rejected appeals from the UN, the U.S., and the EU to give some ground. (At their most intransigent, Greek Cypriots can make Israeli Likudniks look like Neville Chamberlain.)

Getting to a deal on this issue would be worth a lot of money to many countries. We hope that those involved will at least explore the possibilities; so far it’s hard to think of anything positive that has come from Europe’s horribly botched currency policy. A settlement on Cyprus would at least be something.

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