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Runoff called in Cyprus' presidential election

Published on NewsOK Modified: February 17, 2013 at 3:35 pm •  Published: February 17, 2013
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Cypriot officials strongly reject the money laundering label and say allowing Cyprus to fall could set back the euro area's fragile recovery.

The size of the bailout, estimated to be up to €17 billion ($22.65 billion), is tiny compared to the hundreds of billions given as rescue loans to other troubled European countries such as Greece, Ireland and Portugal. But it is equivalent to Cyprus' entire economic output, putting into question whether the country would ever be able to pay it back.

"Cyprus needs an adjustment program, a comprehensive one," Joerg Asmussen, a member of the European Central Bank's executive board, told Germany's ARD television Sunday.

It will have to focus on shrinking the banking sector in an orderly way and "financial help will be needed for that, but in order that there can be such a program Cyprus must make efforts in advance — this is not a one-way street," Asmussen said in the interview, which was broadcast before Sunday's election results became clear.

Cyprus will need to improve the transparency of its financial sector and taxation system, Asmussen said.

Asked about the election, Asmussen said the ECB needs "an interlocutor with whom we can negotiate on an adjustment program."

"In order to secure debt sustainability, we will, for example, need far-reaching privatization — the current president had rejected that. Now we will see whether we can negotiate such a program sensibly by the end of March."

Malas rejects selling state-owned companies.

Anastasiades said he would resist outright privatizations, opting instead for selling a minority stake to a strategic investor.

Both candidates have said they would utilize the prospect of the natural gas riches from newfound offshore deposits to jumpstart the economy, but such potential revenue is still years away.

The financial crisis has overtaken the country's ethnic division as the primary campaign issue in some 40 years. Cyprus was split into an internationally recognized Greek Cypriot south and a breakaway Turkish Cypriot north in 1974, when Turkish invaded after a coup by supporters of union with Greece. The latest round of reunification talks between Christofias and Turkish Cypriot leader Dervis Eroglu resulted in deadlock.

Turnout in Sunday's vote stood at 83.14 percent of the 545,491 eligible voters.

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Geir Moulson in Berlin and Elena Becatoros in Athens contributed.