Cyprus: Bailout Likely After Presidential Elections; + Liechtenstein Election Sees Gains By Independents
Despite strong skepticism in Germany over a bailout for Cyprus, we expect a deal to be forthcoming after the latter country’s presidential election on February 17. The likely win by opposition Democratic Rally (DISY) party candidate Nicos Anastasiades would go some way towards removing policy uncertainty and the island reaching an agreement with the troika of the European Commission, European Central Bank (ECB) and the IMF over a bailout. Even with the extension of a previously provided loan facility from Russia, Cyprus will not be able to wait for formal financial assistance after the general election in Germany in September. In Business Monitor Online today, we discuss Cyprus’ financial position in the context of the wider eurozone crisis.
Liechtenstein’s Independents Make Gains
Meanwhile, even Liechtenstein isn’t immune to the anti-incumbent sentiment pervading large parts of Europe at this time. In elections held on February 1 and 3, Prime Minister Klaus Tschuetscher’s liberal-conservative Patriotic Union party saw its popularity fall by 14.1 percentage points from the 2009 election to 33.5%, giving it only eight seats in the 25-member parliament. The conservative Progressive Citizens’ party (FBP) won 40.0% of the vote, down 3.5 pps from 2009, but enough to make it the biggest party with 10 seats, albeit short of a majority. Perhaps the most significant development was the strong performance of a new group of Independents, which won 15.3% of the vote and took four seats, pushing the centre-left Free List into fourth place with 11.1% and three seats. Although Liechtenstein is one of the most prosperous places on earth, the microstate has been suffering from falling government revenues, as tighter financial regulations adopted as a result of international pressure have reduced the principality’s appeal as a tax haven. The 2013 budget envisages a record budget deficit of CHF210mn (US$231mn), implying that local taxes would have to rise to plug the gap.