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New leader pledges to end Cyprus debt woes

New leader pledges to end Cyprus debt woes
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Winning the election was the easy part – now Cyprus’ president-elect faces weeks of difficult talks with foreign lenders on a bailout to avoid his country’s financial meltdown.

The vote means a change of approach from that of the outgoing Communist government that first sought aid from Russia before turning to the European Union.

Nicos Anastasiades said he wants a quick bailout deal: “My first priority is to reinstate Cyprus’ credibility. I am determined to work together with my EU partners and at the same time fulfil to the utmost our responsibilities. I am committed to all the necessary measures to steer the country out of the economic crisis.”

The Cypriot government’s coffers are empty and the banks need rescuing after losing billions in last year’s restructuring of Greek debt.

EU bailout talks have dragged on for eight months. One reason for that is that Germany insists Moscow contribute and that Cyprus do more to prevent Russian money laundering through the island.

The Mediterranean nation has strong financial ties with Russia – which has already extended a 2.5 billion euro loan.

Berlin is also worried that Cyprus will never be able to pay back its debt.

Big headache

Tiny Cyprus threatens to turn into a big headache for the euro zone, triggering fears of a financial collapse that could reignite the bloc’s debt crisis.

It is expected to need up to 17 billion euros in aid – about the size of its entire economy.

Cyprus has been shut out of international capital markets for almost two years, with the outgoing administration resorting to heavy borrowing from state-owned corporations to pay public sector salaries.

Clear mandate

Known for his no-nonsense style and impressive access to important European policymakers like German Chancellor Angela Merkel, Anastasiades took 57.5 percent of the vote in the run-off election, 15 points ahead of his anti-austerity Communist-backed rival Stavros Malas.

The decisive outcome showed a clear mandate from Cypriots for an aggressive, pro-bailout approach to resolving the nation’s financial quagmire, despite growing despondency over austerity measures that will have to accompany any such rescue.

Anastasiades’ most immediate task was to appoint a finance minister who could convince Europeans to agree a swift bailout. On Monday evening he appointed Michael Sarris, who held the post previously and is a respected former World Bank economist.

Anastasiades has stressed his pro-EU credentials make him more likely to seal a bailout deal than the outgoing president, who was the EU’s only Communist leader.