Cyprus takes over EU presidency amid bailout concerns

Cyprus has taken over the presidency of the EU Council from Denmark, with responsibility for leading the institution through the second half of 2012.

It is the first time that the island is to run EU business since it joined the Union in 2004.

According to Demetris Christofias (pictured), president of the Republic of Cyprus, its six month presidency will focus on reaching an agreement on the EU’s 2014-2020 budget.

“There is no doubt that the socio-economic consequences of the financial and sovereign-debt crises in the EU have adversely affected the daily lives of Europeans, thus seriously undermining social cohesion,” said Christofias.

He confirmed that one of the priorities will be to finalise negotiations and conclude with a fair and effective EU budget (Multiannual financial framework, 2014-2020 ), creating growth and employment opportunities.

The EU presidency doesn’t come at an easy time for the country, whose politics and economy are tightly linked to Greece.

Last week, Cyprus asked for a eurozone bailout to help its banks, which could reach €10bn. The bailout, the fifth in the euro area, was needed given the high exposure of the country’s banks to the Greek economy, Cyprus said.

Following the bailout, Fitch announced a cut in Cyprus’s credit rating to junk status. The junk rating will make very hard and very expensive for the country to access international money markets, worsening the conditions of its economy.

Finally, Cyprus’ EU presidency will be made more complex by its troubled diplomatic relationship with Turkey.

Turkey, which is in ongoing negotiations for possible access to the Union, does not recognise the Republic of Cyprus and is refusing to talk to the Cyprus EU presidency, preferring instead to deal with the European Commission.

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