Nicos Anastasiades must rebuild trust with the international community as a first step to put the island on the road to stability
Cyprus, the country now seen as the eurozone's next flashpoint, has a new president. Fifty-three years after winning independence from Britain, 39 after being invaded and partitioned and barely a decade since it joined the EU, the island nation has elevated Nicos Anastasiades, leader of the conservative Democratic Rally party (Disy), to the most powerful post in the land. Romping home with 57.48% of the vote – a presidential all-time high – will make victory sweeter. Stavros Malas, his communist-backed opponent, came in with 42.52%.
Anastasiades has craved this job longer and more ardently than anyone else in the Byzantine world that is Cyprus's political scene. And yet the saying "be careful what you wish for" comes to mind. The 66-year-old chain-smoking lawyer will replace Antonis Samaras, his equally ambitious colleague in Athens, in holding the eurozone's most unenviable brief when he finally assumes office this week.
Cyprus, like Greece, its closest eurozone partner, is in economic freefall – teetering on the brink of bankruptcy, trapped in recession and, with 50,000 people out of work, mired in record rates of joblessness and despair. Unlike Greece, it doesn't even have a lifeline to make light of the fall. Not since Greek Cypriots were forced to reboot their economy – and lifestyles – in the wake of the Turkish army's incursion in 1974 have they faced such a challenge. And the telltale signs of deprivation and depression – the angry graffiti, soup kitchens and empty shops – are there for all to see.
Anastasiades knows that the hard work begins now. And, with the slightly impatient air of the British-trained barrister that he is, he has been quick to say all the right things in his hour of victory. With one eye to Greece – whose own destiny within the family of eurozone nations is still far from assured – he has announced that his top priority will be clawing back the credibility lost through prevarication and foot-dragging by Demetris Christofias, the communist he replaces.
His second will be stabilising the economy by finally concluding the painstaking negotiations that have held up a rescue programme since June last year. It will be a race against time. Cyprus is shut out of international capital markets and only has enough funds to keep going until April.
In a replay of the Greek scenario, debt repayments loom. An estimated €200m in licence fees – paid by energy companies to conduct exploratory drills for natural gas and oil reserves in the seabed off the island – has helped the economy but not for long. To keep bankruptcy at bay a real lifeline will have to be found. If, as expected, it is in the region of €17bn, the equivalent of the island's annual economic output, it is likely to come with particularly onerous conditions.
That Greece has been largely to blame for Cyprus's plight is an open secret much discussed – and regretted – in the corridors of Nicosia's finance ministry. In private, Greek Cypriots will tell you there is little love lost between them and their cousins in Athens. After all, they say, had they not stood by Greece "in the name of solidarity" when it restructured its debt, Cypriot banks would not have incurred the gargantuan losses – which at €4.5bn are roughly 25% of GDP – that tipped the island into crisis almost overnight.
But Greece can also offer important lessons. And the first is the need to rebuild trust with an international community that until now has been far from convinced that Cyprus will actually do what it says. Indicative of that lack of trust are the accusations – made mostly by Germany – that the island is a haven for Russian oligarchs bent on hiding their ill-gotten gains.
But such charges are overblown. Precisely because the financial services sector is the engine that keeps the Cypriot economy going, Nicosia has actually gone out of its way to crack down on money-laundering since admission to the eurozone in 2008.
Like much of the ill-humour that has sporadically emerged among partners throughout the eurozone crisis, it points to a wider picture – in this case infighting in Berlin ahead of elections in September and the desire to keep German voters happy by piling the pressure on Russia to contribute to a bailout.
Both Berlin and Paris – reflecting creditors at the EU, ECB and IMF – have already made clear, in a statement, that they want Anastasiades to implement painful reforms. He has the mandate to do it. And the clout. Just as in 2004 when he went against the grain supporting the infamous Annan peace plan to reunite the island – and in so doing put his own political career at stake – Anastasiades must now take on the anti-austerity warmongers who will doubtless oppose change.
It is the only way to ensure that Cyprus does not become the eurozone's next flashpoint. And in putting Aphrodite's isle back on the road to normality, it will assure him a much bigger place in history that most leaders would crave.
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