New Cyprus leader begins forming goverment to clinch bailout

Cyprus president-elect Nicos Anastasiades on Monday began forming a government to secure an international bailout for the financially crippled EU state after romping to victory in a run-off vote. Rightwinger Anastasiades cruised to victory in the Cyprus presidential election on Sunday, vowing to secure an "earliest possible" bailout for the crisis-hit euro state winning support from the European Commission. Replacing the only communist president in the European Union, the leader of the right-wing Disy party won 57.5 percent of the vote in a second round run-off against communist-backed Stavros Malas, who polled 42.5 percent. All eyes are now on whom he will pick for the key cabinet posts of foreign and finance minister, and who will be placed in charge of the island's energy search. Media speculation on Monday hotly tipped MEP Ioannis Kasoulides as the next foreign minister and Michalis Sarris as finance minister while the new president is expected to appoint a deputy minister exclusively for energy matters.Kasoulides formerly served as foreign minister and government spokesman, while Sarris is a former finance minister who worked at the World Bank and was chairman of the Greek-exposed Cyprus Popular Bank, from which he resigned last August. France and Germany on Monday welcomed the election of Anastasiades and urged the new government of the financially crippled EU state to negotiate a bailout quickly. The 66-year-old, who takes over at the end of the month for a five-year term, said during his campaign that he would accept harsh measures required to secure a bailout from the eurozone and IMF. The Pro-Disy Alithia newspaper said Anastasiades has a "titanic job" to lift Cyprus out of the ashes of economic crisis and the "amateur handling of a deficient communist administration".Mass-selling Phileleftheros agreed that the new president was given a "strong mandate" to secure an estimated 17-billion-euro ($23-billion) bailout package, with much of the damage caused by its Greek-exposed banking sector. Anastasiades said he wanted to establish a government of national unity. The crucial election, which drew an 81.5-percent turnout, was closely watched in the other 16 members of the Eurozone, whose finance ministers had deferred a decision on the proposed bailout until negotiations with the new leader. "The Cypriot people have given Mr Anastasiades a strong mandate to implement his programme of reform and to do what it takes to ensure fiscal and financial sustainability," said European Commission chief Jose Manuel Barroso. The vote came against a backdrop of grim economic news, with the European Commission predicting the Cyprus economy will shrink 3.5 percent in 2013 after a 2.3 percent contraction last year. A staunch pro-European, Anastasiades has close ties with Germany's Chancellor Angela Merkel, is seen as someone as Europe can do business with. This will be crucial in talks with international lenders especially as Cyprus' bailout has become an election issue in Germany, economic analyst Fiona Mullen told AFP. "Anastasiades has good relations with Merkel but she faces elections in September and needs to pass the bailout through parliament," Mullen said. "The opposition SPD has indicated that it wants to extract a political price for supporting Cyprus. I think that means a big gesture from Cyprus to address concerns about money-laundering," she added. Nicosia's bailout request has been dogged by allegations -- mainly from Berlin -- that its banks are a haven for ill-gotten gains of Russian oligarchs. The international community will also expect the next Greek Cypriot leader to pick up the pieces of a deadlocked UN push for reconciling both sides of the island. Cyprus has been divided between Greek and Turkish Cypriots since 1974 when Turkish troops invaded and seized its northern third in response to an Athens-inspired coup aimed at uniting the island with Greece.