- Associated Press - Sunday, February 17, 2013

NICOSIA, Cyprus (AP) — Cyprus heads into a runoff presidential election next weekend, with voters called on to select who will lead the country through a severe financial crisis after no candidate won an outright majority in Sunday’s vote.

Nicos Anastasiades, a right-winger who presented himself as the most capable to negotiate a bailout with Cyprus‘ European partners and who went into the election a strong favorite, won the first round with just more than 45 percent of the vote. But he fell short of the 50 percent plus one vote needed for an outright victory.

He will face Stavros Malas, a left-winger who has advocated being more assertive in bailout negotiations so his country can win better conditions in return for rescue loans, in the Feb. 24 runoff.

Final results Sunday night showed Mr. Anastasiades winning 45.46 percent, well ahead of Mr. Malas’ 26.91. Independent Giorgos Lallikas was a close third with 24.93 percent and was eliminated from the running.

The change in leadership, after unpopular outgoing communist-rooted President Dimitris Christofias said he would not seek re-election, comes at a crucial juncture for Cyprus. The other 16 countries that use the euro are expected to decide next month on a financial lifeline for the tiny country of less than a million people.

Cyprus is fast running out of cash to pay its bills, and the new president faces the difficult task of overcoming skepticism from some bailout-weary eurozone countries to secure help.

Cyprus got into trouble after its banks, the assets of which are bigger than the country’s entire economy, took huge losses when Greece restructured its debt. The country, with a shrinking economy and jobless rate at almost 15 percent, already has reached a preliminary bailout agreement with its eurozone partners and the International Monetary Fund, and it has enacted a raft of spending cuts and tax increases.

But Cyprus‘ help request is meeting resistance from some quarters, especially Germany, which says that the country’s banks serves as money-laundering hubs for Russian oligarchs, or that the country is too small to matter since it contributes about 0.15 percent to the eurozone economy.

The size of the bailout, estimated to be up to 17 billion euros ($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,” Mr. 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, Mr. Asmussen said.

Asked about the election, Mr. 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.”

As he cast his ballot, Mr. Anastasiades, who leads the Democratic Rally party, urged voters to look beyond partisan lines when choosing whom to back.

“Above all else, we must all unite forces to counter this economic crisis which unfortunately our homeland has never experienced before,” he said.

Mr. Malas, who is backed by the communist-rooted AKEL party, urged voters not to turn their backs to what he called the most crucial election in the country’s history.

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 Mr. 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.

• Geir Moulson in Berlin and Elena Becatoros in Athens contributed to this article.

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