Cyprus on the edge

One of the most crucial elections in southern Cyprus was held Feb. 17 under the shadow of economic crisis rather than the traditional focus on the “Cyprus issue.” Nicos Anastasiades, head of the center-right Democratic Rally Party (DISY), won 45.4 percent of the votes while his main challenger, Stavros Malas, backed by the communist AKEL, got 26.9 percent. Giorgos Lillikas, supported by socialist EDEK, came in third with 24.9 percent. Since nobody passed the 50 percent threshold, the two leading candidates will go for a runoff vote on Feb. 24. Anastasiades is the favorite. His credible stance on economic issues with the international community helps. Yet, he might need to compromise somewhat, especially from his stance on relations with the Turkish Cypriots, as he has to make a deal with EDEK to top up his votes to the 50 percent necessary to become the next president of the Republic of Cyprus.

The successor of incumbent President Demetris Christofias, who is mainly blamed for the current economic situation, would not have a honeymoon period as the country is on the edge, waiting for financial rescue. The results of the elections clearly showed the Greek Cypriots’ preference for new leadership to take the country out of the crisis. Anastasiades could be the best option on that point as he promised to resume the stalled negotiations with the Troika – the European Commission, European Central Bank and International Monetary Fund (IMF) – on a rescue package that includes the 17 billion euros of financial assistance needed. The negotiations regarding the package started in July 2012, but the reluctance of Christofias to accept the austerity measures paralyzed the process.

The Troika, too, prefers to wait for the results before offering the terms of the bailout. The moderate views of Anastasiades and German Chancellor Angela Merkel’s support during her visit to Cyprus in January would ease the process. His ability to reach a bailout agreement despite the strong opposition might give him enough credibility and clout to start dealing with other important issues, such as relations with the Turkish Cypriots, finding a solution to the Cyprus problem and the looming crisis with Turkey over natural gas in the Eastern Mediterranean.

The talk of natural gas exploration in the Eastern Mediterranean has become part of a wider problem with Turkey over the exclusive economic zones in the region. The looming crisis will become even more serious if and when the elected president decides to capitalize on the natural gas and looks for ways to transfer it to markets.

Although the best route for such a transfer to European countries, where the ready market could be found, would be through Turkey, the non-recognition of the Cyprus Republic and unresolved Cyprus problem would definitely prevent even a suggestion of it. Yet, the energy could be the key to open the gates for a dialogue between the parties. Undoubtedly, Eastern Mediterranean gas riches could become enough incentive to restart the negotiations and would help build confidence. However, Turkish Cypriots would have to be part of any discussion and deal, which is harder to sell to the Greek Cypriots as they seem to have been living for a long time in a kind of delusional world where everything would in one day be arrayed according to their wildest dreams.

Anastasiades’ positive stance on the Annan Plan, which was rejected by Greek Cypriots in 2004, raised hopes about the possibility of a comprehensive solution on the island, though there has been no progress in the U.N.-facilitated talks between the Greek and Turkish Cypriot sides since 2008. I hope that Anastasiades will not have to bargain on his position about relations with the Turks in order to be elected. The economic crisis might in fact help him on this ground.