All eyes on Cyprus: Cyprus is making a difficult choice for the future

The Sunday president election has failed to produce a clear winner. The right-wing candidate Mr Anastasiades has emerged as the winner but failed to secure a victory in the first round. He will now face Mr Malas who is supported by the outgoing president. It is widely anticipated that Mr Anastasiades will emerge as the next president of Cyprus. Mr Anastasiades has support from the German Chancellor Angela Merkel who came to Mr Anastasiades’s party conference held in Cyprus several weeks ago.

The biggest challenge for the new president will be the securing of Troika’s bailout. The outgoing Cyprus government applied for this approximately  8 months ago but has so far failed to secure it. The previous Communist led government has deliberately delayed negotiation with the Troika which had substantially weakened the negotiation position of Cyprus. The Communist led government has refused to discuss privatisation of semi-government organisations like CYTA, (a telecommunications company) or EAC (a power supply company). The delays in negotiation have given a chance for some European parliamentarians to bring up their concerns of Cyprus having close ties with Russia.

The Cyprus economy relies on the property market, service and financial industry and tourism. Currently the property market is down with no sign of recovery. It is interesting that about 70% of Cyprus property have no title deeds. This is detrimental for the chance of the property markets recovering as overseas property buyers are very concerned about having no title deeds for a property they purchase. The service and financial industry is also under attack for allegations of loose anti-money laundering procedures. The Russian market is a major market for Cyprus banks and service providers. Tourism was especially heavily hit by the decreasing number of British holidaymakers. Many tourists are commenting that Cyprus is overpriced and there is not much to do.

Meanwhile, Troika experts have been asked to calculate the risk of a Cyprus default and its impact on other Eurozone countries. According to the report, the most affected EU country will be Greece as Cyprus based branches of Greek banks are holding about 10% of Greek savings. Ollie Rehn has called Russia to step in and help Cyprus.