Cashless Cyprus fights for survival
Mortgaged to hilt, new laws designed to avert disaster
NICOSIA Ever since the credit crunch turned into a Europe-wide currency crisis, the question asked has been: What would things look like when the cash dried up?
Now we know the answer: Cyprus.
Eurogeddon is sweeping the island, with the country’s leaders frantically scrambling to avert catastrophe.
Unlike a Hollywood film, there is no stampede out of town. No one can afford to waste the gas.
The highway that traverses Cyprus — connecting Paphos in the west to Limassol and Larnaca in the east and the capital Nicosia in the north — is nearly deserted. No more than a few dozen cars lit up its entire 161-kilometre length.
To say there was no Friday afternoon bustle would be an understatement. Every shop on Archbishop Makarios Avenue in central Nicosia reported not a single customer all day.
“People just don’t have the money,” said Georgia, a lingerie saleswoman.
She is a living example of the spectre of financial disaster shadowing the continent. She trained as a kindergarten teacher in her home city in Greece, but kindergartens have shut in its austerity drive and she lost her job, before moving to Cyprus.
Now, like most of Nicosia’s residents, she has no idea what will happen next.
“They say the banks will open on Tuesday, and this problem is only because
‘I never expected this would happen. They are trying to take our lives, our money. This is not the Europe that we went into. Germany showed her real face.’ DESPO PAMBAKA Customer services manager
of the banks,” she said, a rather more hopeful analysis than that of economists.
“But who really knows? They have to take a decision right now, in minutes, not days.”
Cyprus lawmakers approved three key bills Friday aiming to secure a broader bailout package and stave off imminent bankruptcy. The bills passed include a key one on restructuring banks, a second on restricting financial transactions in times of crisis, and one setting up a “solidarity fund.”
More bills to meet the total target of $7.7 billion Cyprus needs to raise to secure an international bailout will be brought for a vote over the weekend. They include one that imposes a tax of less than one per cent on all bank deposits, said deputy head of the governing DISY party Averof Neophytou. Unless the 56-member parliament can satisfy the eurozone by Monday, the financial sector in Cyprus will go bankrupt and the island will be forced out of the euro into economic collapse.
The Cypriot government has described the negotiations with the eurozone and IMF over the fate of Cyprus as “hard ... bearing in mind the social misery that a possible rejection of the proposal would cause.”
Events in recent days have left Cypriots dumbfounded with misery.
“I never expected this would happen,” said Despo Pambaka, a customer services manager. “They are trying to take our lives, our money. This is not the Europe that we went into. Germany showed her real face.”
Pambaka shows the intractability of Cyprus’s crisis and why Germany is so reluctant to come to its rescue.
She said she had an outstanding mortgage of $266,000. She is just 28, and her annual salary is $23,900.
That mismatch of income and debt is Cyprus’s problem. Her boss, Nitsa Sarka, a senior manager, who has worked for the bank for 39 years, said she had a mortgage of $305,400 despite a gross salary of just $5,300 a month.
Significantly, her “provident fund” — the pension and social security fund — was held as security against the mortgage. It is hardly surprising that Cypriots are battening down the hatches.
In AJ’s, a fashionable wine bar near the lingerie shops, a sole table was occupied during lunchtime, rather than the usual dozens of Friday revellers. The four young women, secretaries, were eating “while the ship sank,” they said.
“We have to have confidence in the president in the end,” said Christiana Philippou, 28. Maria Ioannou disagreed. “No one can save Cyprus now,” she said, tucking into her salad like a condemned man on the eve of execution.
“No one, not the president, not Merkel, not anybody.”