Cyprus held the vote on Sunday in crucial presidential elections amid rumors of money laundering that could imperil the bailout needed to keep the crisis-hit island's economy afloat.
For the first time since the 1974 Turkish invasion, the vote is about the economy and not the perennial efforts to reunite feuding Greeks and Turks on the isle. It is an election that takes place in an atmosphere of fear, and the uncertainty that has come with the shock of violent change.
From her flower shop in the heart of the divided capital, Nicosia, Avgousta Neophytou has had a front-seat view of that change. "Custom is down by 50%," she said. "This week was an exception because it was Valentine's Day and I did surprisingly well, but usually people walk through those doors and moan about how they have lost work, how their shares have been wiped out, how from being rich, they suddenly feel very poor."
Until last year, Europe's most easterly member seemed insulated from the economic crisis savaging Greece. But, say officials, a tempest took hold when Nicosia, in the name of EU solidarity, stood by debt-stricken Athens, agreeing to participate in a "haircut" that saw the value of privately-held Greek bonds drop by over 70%. Instantly, the island's banks lost 4.5bn euro. "Overnight Cyprus lost 25% of its GDP," said George Sklavos, a senior official at the finance ministry.
Reckless exposure to Greece plunged its banking sector the key of the economy, led to the financial crisis and brought the island to the brink of penury.
"When the banks got into trouble it underscored how bad the fiscal situation was and our failure to take necessary measures earlier," the former finance minister Michalis Sarris said.
In a replay of the scenario that has haunted Greece, officials now speak of public coffers running dry. With Nicosia cut out of international markets since May 2011, help is imperative if bankruptcy is to be kept at bay. "At the beginning of June we will face a big debt repayment of €1.6 bn and if we are not given financial assistance, it will be a make-or-break situation," said Sklavos.
"It is vital that a rescue program is agreed with the EU and IMF," he said dismissing concerns that public debt would likely reach 140% of the island's GDP. "We are not asking for a gift but a loan that will be paid back." guardian.co.uk
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