Politicians versus the Troika
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?