Politi­cians ver­sus the Troika

Financial Mirror (Cyprus) - - FRONT PAGE -

After many years of deal­ing with the “Kypri­ako” (Cyprus Prob­lem) our po­lit­i­cal lead­ers have be­come ac­cus­tomed to end­less dis­cus­sions end­ing with no re­sult. Pop­ulist state­ments and cater­ing to the wishes of the is­land’s many pres­sure groups have ap­par­ently proved suf­fi­cient to jus­tify their of­fices and lim­ou­sines. But re­cently, a new player has ar­rived on the scene. The Troika, with its power over our fi­nances, con­fronting them with some­thing they are not used to and de­mands for changes, many of which are un­pop­u­lar.

The Troika has two dis­tinct roles in Cyprus. First, is its role in re­view­ing our macro- eco­nomic per­for­mance and par­tic­u­larly the com­pli­ance with gov­ern­ment poli­cies in re­duc­ing na­tional deficits and pay­ing back the na­tional debt, even dur­ing times of re­ces­sion. Th­ese are at the heart of the Eu­ro­zone’s “aus­ter­ity” strat­egy which has been so un­suc­cess­ful. Such poli­cies are to be fol­lowed by all Eu­ro­zone coun­tries whether or not they are vis­ited by the Troika.

The Troika’s more ac­tive role has to do with per­suad­ing gov­ern­ments to im­ple­ment mea­sures aimed at re­struc­tur­ing their economies, mak­ing them more com­pet­i­tive. Th­ese in­clude mea­sures di­rected at elim­i­nat­ing col­lu­sion, mo­nop­o­lis­tic prac­tices and in­ef­fi­cien­cies. In prac­tice, this trans­lates into the pri­vati­sa­tion of na­tional in­dus­tries, im­prov­ing bank reg­u­la­tions, labour flex­i­bil­ity and not least, the civil ser­vice.

The more de­vel­oped Euro­pean coun­tries have long ago adopted such mea­sures. They rep­re­sent a type of change which has en­coun­tered ma­jor po­lit­i­cal op­po­si­tion on the is­land, much of it from the same par­ties which led the coun­try into its fi­nan­cial cri­sis. Im­ple­ment­ing th­ese mea­sures of­ten re­quires the Troika to prod na­tional gov­ern­ments into ac­tions they re­sist. To over­come re­sis­tance the Troika re­lies on its power to with­hold much needed fi­nan­cial aid. Even then it has proved dif­fi­cult.

The Troika has suc­ceeded in bring­ing about the type of change which many vested in­ter­ests in Cyprus have his­tor­i­cally op­posed. Would the lower elec­tric­ity prices, steps to­ward pri­vati­sa­tion, and greater gov­ern­ment ef­fi­ciency have hap­pened with­out the Troika? Th­ese have re­quired hard and painful de­ci­sions. But when a house­hold, company or coun­try is bank­rupt, hard de­ci­sions are re­quired if it does not wish to re­peat the ex­pe­ri­ence. Of course, it is much eas­ier to avoid them, to cater to the many vested in­ter­ests and sim­ply pump in more tax­pay­ers’ money.

The gov­ern­ment-re­lated com­pa­nies and the pub­lic sec­tor which have been tar­geted by the Troika are po­lit­i­cally sen­si­tive. They have his­tor­i­cally pro­vided jobs which have served as a source of pa­tron­age for po­lit­i­cal par­ties. Th­ese are now at risk. A good part of Cypriot in­dus­try and par­tic­u­larly those parts most closely con­nected to our po­lit­i­cal par­ties are now sub­ject to over­sight and su­per­vi­sion by the Troika. It is un­der­stand­able that our po­lit­i­cal lead­ers might feel dis­en­fran­chised, re­duced to fol­low­ing the dic­tates of an ex­ter­nal power. But whose fault is that?

The limited suc­cess of the cur­rent gov­ern­ment in im­ple­ment­ing in­dus­try re­struc­tur­ing has been wel­come, although it has been achieved against much op­po­si­tion. The threat by the Troika of with­hold­ing fi­nan­cial aid from the Eu­ro­zone has been a pow­er­ful aide. What hap­pens when the time comes for the Troika to leave? Will our po­lit­i­cal es­tab­lish­ment go back to mea­sures aimed pre­dom­i­nantly at ap­peas­ing spe­cial in­ter­est groups at the ex­pense of the gen­eral pub­lic? It is worth not­ing that the long silent Cypriot gen­eral pub­lic is now show­ing signs of rest­less­ness and dis­sat­is­fac­tion with our po­lit­i­cal es­tab­lish­ment.

The low turnouts at elec­tions as well as re­cent pub­lic sur­veys in­di­cate that pub­lic es­teem for the po­lit­i­cal par­ties on the is­land has reached new lows.

Per­haps, once again, Cyprus is fol­low­ing in the foot­steps of Greece. It is no se­cret that one of the forces pro­pel­ling the rise of new po­lit­i­cal par­ties in Greece and across South­ern Europe in gen­eral has been dis­en­chant­ment with es­tab­lished par­ties. The par­ties which once com­prised the Greek po­lit­i­cal elite have been pushed aside to make way for the rise of new po­lit­i­cal groups of­fer­ing change from past prac­tices.

The once dom­i­nant Pa­sok party of Greece is now lucky if it can count on 5% of the vote. Will such po­lit­i­cal change hap­pen in Cyprus?

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