Today's Coming Crisis Movie

Friday, July 29, 2011

Cyprus cabinet quits as fiscal woes deepen

The Cypriot cabinet resigned on Thursday to try to damp down public fury over a fatal munitions blast that destroyed the island’s largest power plant and compounded its economic woes, possibly forcing an EU bailout.

Government spokesman Stefanos Stefanou said it would not necessarily need the help, but even before the energy crisis caused by the July 11 blast, borrowing costs had risen steadily because of Cyprus’s exposure to Greek debt.

“Until now, Cyprus has managed to satisfy its financing needs until the end of the year. So don’t take it as a given that Cyprus will be admitted into a support mechanism,” Stefanou told reporters.

Thousands of Cypriots have protested over the blast, blaming state incompetence for allowing the seized munitions to be stored near the power station in scorching heat.

Facing probably the biggest challenge of his political career, President Demetris Christofias, elected for a five year term in 2008, has also been under pressure from coalition partners DIKO to create a broad-based unity government to tackle the crisis.

When he did not immediately heed the call last week, DIKO on Wednesday asked its two ministers to resign. Christofias responded by asking all of the ministers to quit.

“The president of the republic briefed ministers of his intention to proceed with a broad reshuffle of the government and asked they place their resignations at his disposal,” Stefanou said.

Christofias wields executive power, and his own resignation is seen as very unlikely. (more)