Coming European Presidency Spotlights Problems in Cyprus Cyprus has been dealing with many domestic problems, including a Turkish-occupied north and a potential $12.5 billion bailout. NICOSIA, Cyprus - When the Republic of Cyprus takes over the European Union's rotating presidency on Sunday, it will have one qualification that could help endear it to the crisis-weary bloc and its 495 million citizens: it, too, is nearly broke. What was supposed to be a proud moment for this tiny island nation of nearly 800,000 people is turning out to be an awkward embarrassment. The country, whose banks are heavily exposed to Greece's problems, was forced Monday to request a bailout for its ailing banking sector from the very group of nations it is supposed to lead. Economists estimate that Cyprus needs as much as $12.5 billion to shore up its public sector and banks. Only hours before, its Communist president, Demetris Christofias - the self-described "red sheep of Europe" - had attacked the European Union, saying that the European Commission, the European Central Bank and the International Monetary Fund had operated like a "colonial force" by demanding cost-cutting measures of distressed countries, a pointed reference to its big brother, Greece. Mr. Christofias, whose party faces general elections next year, is so determined to avoid the harsh austerity measures that aides say he is also aggressively lobbying for a loan from China and Russia, so far without notable success. While his antiausterity mantra resonates with many Europeans, others fret that Mr. Christofias, an ardent supporter of President Vladimir V. Putin of Russia and the only Communist leader in the 27-member bloc, could use his position as a bully pulpit, helping to unsettle an already divided union further. "Christofias has always had an ambivalent attitude toward the E.U.," said Fiona Mullen, a leading analyst here. He comes from a party that has often looked east instead of west. It is not just his stance against austerity that concerns European leaders. A confidential 2009 cable from the United States Embassy in Cyprus to Washington leaked by WikiLeaks noted that Mr. Christofias had praised Fidel Castro, welcomed a new Venezuelan Embassy in Nicosia, lauded Iran and vilified NATO. Such views could complicate delicate foreign policy negotiations, though senior Cypriot diplomats insist the country is determined to be an honest broker. Above all, the presidency may be overshadowed by Cyprus's long-simmering feud with Turkey, further undermining already frayed relations between Europe and Turkey, whose talks on joining the union are in a perpetual state of disrepair. Turkey has said it will boycott the presidency. Cyprus is an anomaly in the European Union, in that it has been divided between a Greek part and a smaller Turkish part since 1974, when Turkey invaded in response to a Greek-inspired coup. Turkey, which keeps about 30,000 troops in the north, is the only country that recognizes Northern Cyprus as a state. The division remains a preoccupation for both Greek and Turkish Cypriots, thousands of whom were forced to flee their homes as a result of the invasion. High above this divided city, painted on the face of a mountain overlooking the Greek Cypriot side, is a giant flag of the Turkish Republic of Northern Cyprus, its star and crescent a constant reminder of one of Europe's most enduring frozen conflicts. "Happy is the man who can say he is a Turk," reads a slogan next to the flag, which lights up provocatively at night. While most of the world shuns Northern Cyprus, the north ensures that the south cannot forget. Turkey's European Union membership talks have been stalled as a result of the seemingly intractable dispute; a resolution is viewed as a prerequisite for Turkey before it can join the union. The signs are not encouraging. Europe wants Turkey to open its ports and airports to Cyprus in return for unfreezing part of Turkey's blocked entry negotiations. But Turkey insists that the European Union should end its embargo of the north. In a March interview with the Turkish Cypriot newspaper Kibris, Turkey's minister for European Union affairs, Egemen Bagis, said that one option was for Turkey to annex northern Cyprus if the current round of peace talks failed. "We are in a state of deadlock, as neither side has a stake in changing the status quo," said Erol Kaymak, a professor of international relations at Eastern Mediterranean University in northern Cyprus. United Nations-sponsored peace talks have faltered since they were restarted in 2008, four years after Greek Cypriots voted no in a referendum on reunification of the island. The smaller Turkish Cypriot population voted yes, which Turkey often cites as proof that Greek Cypriots do not want peace. Andreas D. Mavroyiannis, Cyprus's deputy minister for European affairs, said in an interview that Turkey's intransigence was impeding progress. "If they could sink us and make us disappear from the map, they would have done it," he said. Adding to the tensions is Cyprus's growing outreach to Israel, whose relations with Turkey have been frayed since Israel's deadly raid on a Turkish flotilla to Gaza in 2010. Israel, viewed by Cypriots as a potential bulwark against Turkey, has denied reports that it is considering stationing war planes on Cyprus. But Prime Minister Benjamin Netanyahu of Israel recently visited Nicosia, and the countries have been in talks on developing natural gas fields in the eastern Mediterranean. Cyprus has been pleased since the recent discovery of large reserves of natural gas in its territorial waters. But Turkey was incensed last year when the country, which has licensed exploration of a block of natural gas to Texas-based Noble Energy, began to drill. Turkey sent naval ships to accompany its own exploration crew just six miles from the Cyprus drill site. Yet Neoklis Sylikiotis, Cyprus's minister of commerce and energy, was cautiously optimistic that "energy can be a catalyst for reunification." He added, "The income from the gas is for all Cypriots, Turkish Cypriots included."