Cypriot President Demetris Christofias said on Thursday he would not follow his cabinet in resigning over a munitions blast that destroyed the island's largest power plant and raised the possibility of an EU bailout, according to Reuters. President Demetris Christofias, facing the worst crisis of his career, said he had no intention of stepping down. "The people elected me, and it is to the people that I am accountable. Not to media," he told journalists after being asked if he would quit. Government spokesman Stefanos Stefanou said Cyprus would not necessarily need help from the European Union to restore its economy. But even before the onset of an 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 seized munitions to be stored near a power station in scorching heat. 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 asked its two ministers on Wednesday 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. ECONOMIC FALLOUT Cyprus, a euro zone minnow with a GDP of 17.4 billion euros ($25 billion), has been left shellshocked by the explosion and any prolonged political wrangling threatens to derail much-needed economic reforms. Preliminary Finance Ministry estimates suggest the blast will wipe out growth forecasts this year and Moody's on Wednesday cut Cyprus to three notches above junk. Last week, the island's central bank governor and European Central Bank governing council member, Athanasios Orphanides, said that without immediate action Cyprus might follow Greece, Ireland and Portugal in asking for an EU handout. The cost of damage from the explosion and subsequent disruption from power cuts has been cited as anything between 1 and 3 billion euros. The Finance Ministry has not given an assessment, but 3 billion euros would represent 17 percent of Cyprus's GDP. Bond yields, under pressure because of Cyprus's exposure to Greece, have risen since the blast. The yield on a 10 year government bond issued to investors last year was bid at around 9.5 percent on Thursday, from 8.9 percent a week ago and 6.20 percent in early May. The munitions, confiscated from a ship sailing from Iran to Syria in 2009, were stored a few hundred metres away from a power station on the south coast in often scorching heat, despite appeals from army officers for their removal. Christofias has said an inquiry into the incident will also scrutinise his own role, though aides have repeatedly said he was unaware of the deteriorating storage conditions.
