Bailout plan: try­ing to rea­son with the un­rea­son­able

Financial Mirror (Cyprus) - - FRONT PAGE -

Stu­pid­ity is alive and well in Cyprus and it seems most of us are catch­ing the dis­ease. Can any­one add sub­stance to the terms “pro-mem­o­ran­dum” and “anti-mem­o­ran­dum”? Why on earth do po­lit­i­cal par­ties try so hard to split us into th­ese two groups? Why are the com­mu­nists and labour unions an­timem­o­ran­dum? It is un­der­stand­able for peo­ple to be split into those wish­ing a loan (from the Troika of the Euro­pean Com­mis­sion, Euro­pean Cen­tral Bank and the In­ter­na­tional Mon­e­tary Fund), and those op­posed to such fi­nanc­ing. This is a clear choice. An­other clear-cut op­tion is to keep or aban­don the euro as our cur­rency or to re­turn to the Cyprus pound (CYP).

For bet­ter or worse, our coun­try de­cided to get a loan from the Troika and stick to the euro. The mem­o­ran­dum is sim­ply the agree­ment we co-signed with our lenders and in­cludes the terms of the in­ter­est rate, the re­pay­ment pe­riod and many other con­di­tions, which we have to ob­serve so that we can re­pay our debt. Th­ese “other con­di­tions” have been set be­cause Cyprus, as well as our lenders, be­lieve that we did not keep our fi­nances in or­der, wast­ing money left and right (public sec­tor in­ef­fi­ciency, tax eva­sion, etc).

Also, th­ese “other con­di­tions” are in place in the mem­o­ran­dum to of­fer so­lu­tions to var­i­ous struc­tural prob­lems in the econ­omy and sta­bilise state fi­nances so that when the bail-out is over and done with, we can func­tion once again as an in­de­pen­dent, demo­cratic econ­omy with­out the need for more lend­ing schemes from the Troika. Un­til that hap­pens, we have to stick to the mem­o­ran­dum not be­cause the Troika ex­pects us to, but be­cause it is the right thing to do for our econ­omy and peo­ple.

Many will ar­gue that the mem­o­ran­dum/bailout plan en­forces strict aus­ter­ity mea­sures and pro­hibits growth. On the con­trary, it pro­vides for so­cial jus­tice by cut­ting down on tax eva­sion and waste of funds which can be di­rected to­wards help­ing those in need in the form of pen­sions or other forms of help to the public.

Money saved by a more com­pe­tent state can be used to pro­mote the growth of the econ­omy. It is true that up to now the gov­ern­ment has not taken tough mea­sures to put its house in or­der and has not prop­erly in­vested in tools and sec­tors that will lead to real growth. A lot re­mains to be done to en­sure a health­ier, more pro­duc­tive econ­omy.

Th­ese are mainly the seg­ment of peo­ple who stand to gain from money wasted and the in­ef­fi­ciency of the public sec­tor.

Deep down, they know that their pay­check and pen­sions do not re­flect their con­tri­bu­tion or the state’s abil­i­ties to pay in, but are not will­ing to part with their su­per priv­i­leges. I am not re­fer­ring to civil ser­vants with low in­comes, but to the priv­i­leged ones who do not wish to give any­thing up. It is quite ab­surd that they are falsely sug­gest­ing that the ex­ist­ing in­ef­fi­cient and waste­ful sys­tem is pro­mot­ing so­cial jus­tice – just to se­cure the con­tin­u­a­tion of the op­po­site – so­cial injustice.

We have to re­mem­ber that in March 2013 we were de­clared bank­rupt. Only Cypri­ots can be blamed for this bank­ruptcy – gov­ern­ments, po­lit­i­cal par­ties, priv­i­leged in­di­vid­u­als, vot­ers – and we all know it. No­body was will­ing to give us a loan at the time ex­cept the Troika, giv­ing us a last chance to put a short leash on over­spend­ing and put our house in or­der.

It ap­pears that we’ve learned lit­tle from mis­takes of the past. Do the op­po­nents of the mem­o­ran­dum pro­pose that the state should fol­low the bad ex­am­ple of the over-sub­sidised Cyprus Air­ways? In other words, not to take the much re­quired cor­rec­tive mea­sures and al­low our coun­try to go bust?

Can we not agree, even at this late stage, on a for­mula and start func­tion­ing in a ra­tio­nal way? We only have to copy the ex­am­ples of other Euro­pean na­tions which em­ploy bet­ter man­age­ment prac­tices re­sult­ing in fewer prob­lems.

And why are com­mu­nists and labour unions the most vo­cal in the anti-bailout camp? The main rea­son is that they seek to pro­tect ab­surd and un­just vested in­ter­ests which are bound to suf­fer if the right mea­sures to curb the waste of money are adopted.

Once again, we are not pro­po­nents of cut­ting wages and benefits for the mid­dle to low in­come strata. Have you ever heard the unions for ex­am­ple, to sug­gest the re­duc­tion of spe­cific benefits of the priv­i­leged? Or spe­cific mea­sures to im­prove the ef­fi­ciency of the civil ser­vice? Hardly.

Some of the suc­cess­ful mea­sures adopted by other coun­tries have been in­cluded in the mem­o­ran­dum. In­stead of recog­nis­ing the need to adopt th­ese mea­sures we are seek­ing to make a speedy exit. I agree that some con­di­tions of the plan can be ad­justed. For ex­am­ple, I would sug­gest a longer re­pay­ment pe­riod at a lower in­ter­est rate, some­thing which we need to dis­cuss again with the Troika.

What is ab­surd is try­ing to rid our­selves of the con­di­tions of the res­cue plan which aim to im­prove our econ­omy, just to pro­tect cer­tain in­di­vid­u­als who stand to profit from non­im­ple­men­ta­tion and main­tain­ing the sta­tus quo.

Un­for­tu­nately, it seems that the priv­i­leged have the power to get their way with po­lit­i­cal par­ties, labour unions and the me­dia. They try to con­vince us it’s bright and sunny while it’s pitch dark and we’re on the brink of agree­ing with them. What we are wit­ness­ing is the theatre of the ab­surd. Some­thing needs to change in the Cypriot so­ci­ety be­fore it is too late.

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