Feb. 17 (Bloomberg) -- Cypriots are voting for a new president today in a ballot where, for the first time since the Turkish invasion in 1974, the economy is the main issue rather than reunification of the divided island.
The country, which became the fifth euro-area member to request international financial aid in June 2012, has been shut out of debt markets for nearly two years with lenders including Bank of Cyprus Plc and Cyprus Popular Bank Plc losing 4.5 billion euros ($6 billion) in Greece’s debt restructuring last year.
“The economy is by far more important than the Cyprus problem,” said Yiannis Trimithiotis, 31, an officer for a youth-related non-governmental organization. “I am interested to have a job, pay my rent and keep my life going. We have to rescue our economy.”
Cyprus has been negotiating for eight months with the so-called troika of the European Commission, European Central Bank and International Monetary Fund over terms of a bailout, which could equal the size of its 18 billion euro-economy. Completing an agreement on the rescue and preventing financial collapse will fall to the winner of today’s election.
With the exception of Greece, the Cypriot bailout is set to be the highest proportional to gross domestic product. As much as 10 billion euros may be required to rescue the banks and 7.5 billion euros will be needed by the government, with the total about the same as the nation’s GDP in 2011. As with other bailout recipients, Cyprus will have to adhere to strict austerity measures, which could exacerbate economic weakness.
More than 7O percent of Cypriots said their main criteria for choosing a president will be the ability to manage the economy, a Jan. 27 poll published in Kathimerini Cyprus newspaper showed.
There are 11 candidates in today’s election and pre-ballot polls signaled that Nicos Anastasiades, 66, leader of the main opposition Disy Party, Stavros Malas, a 45-year-old former health minister backed by outgoing President Demetris Christofias’s communist Akel party and independent George Lillikas, 52, are frontrunners.
Polls showed Anastasiades coming first in today’s vote, without winning the necessary support to be elected president outright. If no candidate gets more than 50 percent of the poll today, the two with the most votes will contend a second round on Feb. 24. Anastasiades is also seen winning that race, regardless of his opponent.
“The result of the election will determine whether we will be able to tackle the economic crisis, whether we can move beyond an impasse, whether we can put our economy on a path to growth,” Anastasiades said at his final election rally Feb. 13. A new government “must negotiate with assertiveness and persuasiveness and send a message to Europe that the necessary reforms will be made to get our economy back to growth,” he said.
German Chancellor Angela Merkel endorsed Anastasiades on Jan. 11, a move that may help him clinch a bailout amid growing dissatisfaction among euro-area countries over funding rescue programs. Merkel and Anastasiades are both members of the European People’s Party.
“Today is when the Cypriot people will decide, in the most critical elections, if a national salvation government with a strong mandate can immediately start to work on confronting the economy’s problems,” Anastasiades said after voting in his home city of Limassol in comments broadcast live on state-run RIK TV. Cyprus has never known such an economic crisis and the survival of the country is at stake, he said.
“Today’s election will perhaps be recorded as the most important chapter in the history of the Cypriot people,” Malas said after he cast his vote in the capital Nicosia.
Malas said he expressed concern about money laundering allegations against Cyprus and efforts to find a private firm to investigate implementation of anti-laundering laws in a phone conversation with European parliament president Martin Schulz yesterday.
“Cyprus is facing critical problems and this is the most important election of the last decades,” Lillikas said after voting in Nicosia. Cypriots “will decide if we return to the practices of the past that led us into this economic crisis,” or choose “to take Cyprus forward.”
All three of the main candidates agree on the need for Cyprus to sign an international aid deal, saying there is no alternative, and also agreeing that there is room for re-negotiation within already determined parameters.
The independent candidate Lillikas pledged to pre-sell part of Cyprus’s natural gas deposits to repay rescue loans. “We will immediately use our natural gas to free Cyprus from the memorandum within 2013,” he said in a Feb. 14 speech. “We will not accept assigning our state sovereignty to the troika.”
Noble Energy Inc. said in 2011 it found reserves of as much as 8 trillion feet of natural gas. Since then, Cyprus has also given gas exploration licenses to Total SA and a venture of Eni Spa and Korea Gas Corp.
Anastasiades and Malas both say some of the revenue from gas sales can be used to cut the country’s debt, while the remainder should be used for growth initiatives and investing for future generations.
One issue dividing candidates is the demand that Cyprus consider a privatization program for state-owned companies to restore debt sustainability.
While politically against such a move, Anastasiades said the current government agreed to such sales if required. Malas ruled out selling the country’s ports, the Electricity Authority of Cyprus and the Cyprus Telecommunications Authority in a Bloomberg interview on Feb. 13 citing ‘security’ concerns.
More than 500,000 voters, including 604 eligible Turkish-Cypriots, can cast their ballot today at 1,139 voting centers from 7 a.m. local time until 6 p.m, when the first exit polls are expected. An initial estimate of the final result will be published at about 8:30 p.m. with the final outcome due at 9 p.m..
For the first time in presidential elections, Cypriots resident abroad, who account for 3 percent of the total electorate, are able to cast their ballot at 40 voting centers in countries including Greece, the U.S. and the U.K., RIK reported today.
By midday local time, when voting centers closed for a break of one hour, 38.9 percent of the registered electorate had voted compared with 48 percent at the same time in the 2008 presidential elections, according to a statement on the Cyprus government’s press website.
Cyprus has been divided since 1974 when Turkey invaded the northern third of the island following a coup by supporters of the country’s union with Greece. Only Turkey recognizes the Turkish-Cypriot administration established in the north of the island.
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