February 12, 2013 10:26 pm

Recession and banks colour Cyprus poll

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Ahead of the Cyprus presidential election this weekend, Loukia is in no doubt about who is to blame for the threat of bankruptcy hanging over her island.

“Our politicians and bankers blindly followed the Greeks – I’d like to see them go to jail,” says the 48-year-old civil servant and resident of Nicosia, the capital, declining to to give her surname.

Her son Andreas, a business student, says he has no intention of voting. “What’s the point?” he shrugs. “I won’t be able to get a real job in Nicosia. There is no alternative to going abroad.”

For both Cypriots, their communist president Demetris Christofias, who is not running for re-election, bears the bulk of responsibility for the island’s woes – three years of recession, surging unemployment, and the collapse of a banking system swollen by billions of euros in foreign deposits, including dubious transfers by Russian “investors”.

“It’s the worst situation we’ve been in since the Turks invaded,” says Loukia, recalling the island’s violent division in 1974 into separate Greek and Turkish Cypriot zones following a coup plotted in Athens.

Most Greek Cypriots would agree. A mounting sense of frustration has gripped the island as Mr Christofias delayed signing a bailout deal with the EU and International Monetary Fund in the final months of his administration, in the hope that Russia would provide additional rescue funds.

A fierce backlash against Mr Christofias’s Akel (Cyprus communist) party is set to propel Nicos Anastasiades, leader of the rightwing Democratic Rally party (DYSY), into the presidency, opening the way for Cyprus to wrap up details of the bailout in March.

Two opinion polls published at the weekend gave Mr Anastasiades an overwhelming lead over both his rivals, former health minister Stavros Malas of Akel and George Lillikas, a former foreign minister who is backed by the socialist party Edek.

“Mr Anastasiades is considered the man who can get the mildest conditions possible for the bailout,” says Hubert Faustmann, a political scientist at Nicosia University. “He is seen as well-connected, having been endorsed by [German Chancellor Angela] Merkel” at a meeting of European conservatives held in Nicosia in December.

The 66-year-old lawyer could even squeeze an outright victory in the first round of voting on Sunday, according to some analysts.

“He has got well over 40 per cent support already and is gaining momentum, so it’s possible a run-off vote can be avoided,” says a Nicosia pollster who declined to be identified. Mr Malas and Mr Lillikas were polling around 24 per cent and 22 per cent respectively, he said.

A draft bailout memorandum circulated last November calls for harsh structural reforms: reducing the size of the banking sector, overhauling the pension system and privatising state-owned utilities used by Cypriot governments to help finance the budget and find jobs for political clients.

The island’s 10 per cent corporate tax rate, among the lowest in the EU, may be raised as a condition of a bailout that could reach €17bn, equivalent to 100 per cent of annual output.

Yet for Cypriot voters the overriding concerns are “their personal indebtedness, unemployment and closures of small family companies”, Mr Faustmann says.

Mr Anastasiades has backed many proposed fiscal and structural measures, though he sounds vague about privatisation – opposed by an overwhelming majority of Cypriots – saying his government would consider floating state entities on the stock exchange or finding strategic partners.

Because of DYSY’s election alliance with the centrist Democratic party (DIKO), Mr Anastasiades takes a more nationalist line than previously towards the impoverished Turkish Cypriot state in the north of the island.

Hardline voters have threatened to break ranks because of Mr Anastasiades’ support in 2004 for the UN-backed “Annan plan” plan to reunify the Greek and Turkish halves of the island under a federal umbrella, even though he has pledged during television debates that he would never again back a similar plan.

The Annan peace plan was backed by Turkish Cypriots but overwhelmingly rejected by Greek Cypriots in separate referendums, cementing the island’s division over the past decade. Despite Akel’s traditional policy of backing reunification, Mr Christofias declined to make concessions in a fresh round of bi-communal talks sponsored by the UN.

Yet the campaign has lacked the mutual recriminations of previous elections over the politicians’ failure to reunify Cyprus and win compensation for the “lost” territories in the north.

“It is the first Cyprus election in which the ‘national issue’ has been pushed into second place,” says Philippos Savvides, an Athens-based analyst. “That shows how tough the economic situation has become.”

 

PRESIDENTIAL POLLS

 

Nicos Anastasiades, DYSY (Democratic Rally) – 43

Stavros Malas, Akel (Cyprus communist) – 23

George Lillikas, Edek (Socialist) – 20

Average of three recent polls

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