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| Cyprus government resigns amid bailout rumours |
| Larnaca, 28.07.2011 |
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| Cyprus's cabinet tendered its resignation today (28 July) bowing to political and public pressure for a broad reshuffle after a massive munitions blast that has threatened to force the island into asking for an EU bailout.
President Demetris Christofias asked for the resignations at a session of cabinet, government spokesman Stefanos Stefanou said. The 11 member cabinet will stay on until a reshuffle, expected in the next few days, he said.
"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 told reporters.
Christofias's centre-left administration has faced unprecedented public fury from the blast, caused when a cargo of confiscated Iranian munitions exploded next to the island's largest power plant, killing 13 people.
Cypriots have taken to the streets in their thousands to demand the resignation of Christofias and his government.
On Wednesday, Moody's downgraded Cyprus to three notches above junk status due to the fiscal fallout from the blast, adding to the strain on the economy from its exposure to Greek debt (see background).
Since the blast, markets have trained their sights on the east Mediterranean nation as a possible fourth recipient of a euro zone emergency rescue after Greece, Ireland and Portugal, and political wrangling now risks derailing much-needed economic reforms.
The island's central banker Athanasios Orphanides has warned that without urgent action, Cyprus could be forced into seeking a bailout.
There have been calls for Christofias, a Communist whose term expires in 2013, to step down, but that appears unlikely. As leader of Cyprus's dominant Greek Cypriot community, he leads reunification talks with estranged Turkish Cypriots to clinch a peace deal to end decades of conflict. The absence of such a deal is harming Turkey's bid to join the EU.
EurActiv with Reuters
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