NICOSIA Cypriot President Demetris Christofias, the European Union's only Communist head of state, said on Monday he would not seek re-election next year, citing lack of progress towards the island's reunification.
Elected in 2008, Christofias is lagging in opinion polls over a faltering economy and unpopular concessions in peace talks. The presidential election is due in February 2013.
"Taking as a fact that the Cyprus problem has not been solved, and it does not appear that there can be definitive progress in the next few months ... I will not seek re-election," he said in a televised address.
Christofias, 66, represents the Greek Cypriot side in talks with estranged Turkish Cypriots to reunify the island, split asunder in 1974. He was elected on a platform of being more conciliatory in trying to broker a deal with Turkish Cypriots.
But he has alienated his own allies by taking steps regarded as concessionary, at a time when the economy is struggling after heavy exposure of its banks to debt-crippled Greece.
An opinion poll published in the daily Simerini on Monday suggested that support for Christofias was waning among supporters of AKEL, the Communist party he led before his election. Only 15 percent of AKEL voters would have backed Christofias again, it said.
"He did the right thing," said political analyst Hubert Faustmann. "He was so discredited domestically he would have surely lost the election."
Christofias faced unprecedented street protests last year when a rotting cargo of confiscated Iranian-made munitions exploded, destroying the island's largest power station. When bond yields soared, speculation was rife Cyprus would be fourth euro zone member requiring a bailout.
That was averted when Cyprus turned to Russia for funding instead, but economic woes have deepened from banks heavily exposed to Greece, with the island's second-largest bank racing to find private investors to raise cash. Christofias and his government have blamed the banks and cited regulatory oversights of a previous central bank governor for the exposure.
"This government has produced a rich body of work in internal governance. We had to deal with the biggest systemic, capitalist crisis which ever existed," Christofias said.
The head of the opposition Democratic Rally party, Nicos Anastassiades, is now a prime contender in the vote.
"Its a policy which Mr Christofias faithfully served, and which led the country to unprecedented economic and political deadlocks," Rally party spokesman Haris Georgiades said.
Cyprus was split in a Turkish invasion in 1974 after a brief Greek-inspired coup, and fresh reunification talks between the two sides were launched after Christofias' election.
Before his election, Christofias had said he would be a one-term president, unless a solution to the conflict was in sight.
"I am honoring a pledge I made before my election," Christofias said. "The situation in negotiations today is unfortunately not encouraging."
Talks have been overshadowed by a public hostile to his offer of rotating presidency with Turkish Cypriots, complications in getting the position accepted in talks, and difficulties in settling property claims of thousands of internally displaced people.
The United Nations, which oversees negotiations, has said it would not host further meetings between Christofias and Turkish Cypriot leader Dervis Eroglu unless there were signs they could make clear progress on issues holding up a breakthrough.
The conflict is harming Turkey's bid to join the European Union. Cyprus has been an EU member since 2004, and will assume the bloc's rotating presidency on July 1.
(Editing by Maria Golovnina)