A leap into the unknown for Cyprus

Themos Demetriou reports from Cyprus on the lead up to the new Euro crisis:

As thousands of demonstrators outside the Cyprus Parliament were chanting ‘It will not pass’, deputies inside voted to reject the Eurogroup bailout package with 36 votes against it and 19 abstentions. Almost a week later, that same Parliament is hurriedly passing bill after bill in an effort to meet the Eurogroup demands and avoid an uncontrolled bankruptcy, after Cypriot overtures to Russia were unceremoniously rejected by Putin and Medvedev.

Demetris Christofias

The disastrous nature of the events for Nicos Anastasiades and his right wing coalition government, which ended a five year rule by AKEL (Communist Party) leader Demetris Christofias, can only be fully grasped against the background of his election campaign and unrelenting attack on the policies of Christofias for the past two years.

The ex-president was portrayed as an incapable politician whose communist prejudices got in the way of a friendly relationship with the European politicians. The way they have treated Anastasiades just two weeks into his presidency has turned the tables in a way no one could have foreseen.

Christofias’ presidency was marked by indecision and sheer bad lack. Elected on the basis of a backlash against Papadopoulos’ nationalistic rejection of the Anan Plan, he proved too timid to reach a solution of the Cyprus problem with Mehmet Ali Talat, then leader of the Turkish Cypriot community and CTP party leader. As CTP is the Turkish Cypriot equivalent to AKEL, this failure was seen as a vindication of nationalist assertions that the Cypriot problem could not be solved.

His worst enemy though was the economy. Just a few months after taking power the world economic crisis was to be unleashed by the collapse of Lehman Brothers and the crash of 2008. As this was preceded by a huge real estate bubble in Cyprus, the Christofias government was seen as responsible for leading Cyprus from prosperity to poverty.

On top of that, an explosion of a confiscated Syrian explosives cargo that killed thirteen people and destroyed the main power station in Cyprus was handled indecisively by Christofias. The opposition launched a protracted attack on the government, accusing it of being responsible for the explosion and of murder.

CyprusRedMeanwhile, the economy was going from bad to worse. The Cypriot banking sector speculated heavily on Greek bonds and practically collapsed when Europe agreed to the ‘haircut’ of Greek debt. One of the big banks was nationalised at the cost of two and a half billion euros and the other was surviving on the brink of bankruptcy. The Troika (the ECB, the IMF and the European Commission) was called in to discuss the terms of a bailout.

It was clear for some time that the Troika was continuously moving the goalposts in these negotiations. With a ‘communist’ in the presidency, however, and vicious attacks from the ‘pro- European’ opposition politicians, this was not apparent to the Cypriot electorate, making possible the easy win of Anastasiades. Incredibly, the European authorities went on shifting the goalposts even more rapidly for the new President. The unprecedented proposal for a consfication of savings, even those supposedly guaranteed under €100, 000, led to a total humiliation of their most loyal ally on the island.

The reason for this reckless decision on the part of the Europeans seems to be their resolve to destroy Cyprus as a safe haven for Russian money. This will probably be achieved whatever the outcome of this crisis. It remains to be seen what the cost for Europe will be. Will Cypriot savings be just the first to be targeted? Will Italy or Spain or Portugal be next? Already markets are shaky and the stability of the euro is undergoing renewed uncertainty.

The Cyprus left is meanwhile living a new experience. AKEL, anxious to turn the page of governmental responsibilities in managing capitalism, is taking the lead in organising protest. For the first time in decades it is trying to unify the left, opening up to cooperation with radical intellectuals and groups. The demonstration outside the Parliament was called by PEO, the AKEL dominated trade union, and attracted a much broader political spectrum. It is early days yet, but this crisis could prove a turning point for left politics in Cyprus, with repercussions in Greece and possibly Europe. A leap into the unknown for Cyprus Themos Demetriou reports from Cyprus on the lead up to the new Euro crisis:

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