Cypriots wary of what’s to come

In the streets and cafes of Nicosia, and on TV chat shows aired in homes across the nation state, Monday's message was the same: "We have been saved but at what cost?"

An agreement had finally been reached, ending days of uncertainty over Cyprus's membership of the eurozone, but like a wounded animal, the country was left bleeding, its people staring into the future with fear.

Interior Minister Socrates Hasikos encapsulated the mood, describing the European Union (EU) and International Monetary Fund-backed (IMF) bailout as the best of a very bad bag of choices.

"We had got to the point where we were discussing a [depositor] haircut of between 50% and 60%," he said, adding that the Cypriot Parliament's rejection of the first accord, with its highly controversial levy on depositors big and small, had been hugely negative for the country's banks. "So this is the best we could get."

After Monday's deal, banks — closed since the outbreak of the crisis last week — will almost certainly reopen early next week, he said. Within hours of the agreement being brokered, it was quite clear that Hasikos's view of the island's quest to keep bankruptcy at bay was not unanimously shared. In averting a potentially disastrous disorderly default, the deal had kept war-partitioned Cyprus in the family of euro nations — long seen as a geopolitical benefit for a nation divided between Greeks in the south and Turks in the north since 1974.

But overnight everything changed. In accepting what was on offer from the EU and the IMF, the Cypriots had also agreed that nothing would be the same again: the €17-billion bailout had come with the price of dismantling their economy as an offshore financial centre and reconstructing it from the bottom up. Unemployment, business closures and recession inevitably loom.

"Illegal and undemocratic"
Across the board, politicians, trade unionists, analysts and business people decried the manner in which the agreement had been sealed. In the confusion of a deal whose details remained elusive, many complained that, once again, democracy had been circumvented — with Nicosia's 56-member Parliament having no say over an agreement that had ultimately been drawn up in Brussels.

"It is illegal and undemocratic," said Christos Tombazos, general secretary of the Pancyprian Federation of Labour. "We're talking about massive changes to the banking system. It should go to referendum for the Cypriot people to decide."

Even worse, said the communist party, Akel — which navigated the crisis until it was ousted from power in elections last month — the bailout had sown the seeds of the island's destruction by enforcing losses not only on wealthy depositors with holdings of more than €100 000, but also by imposing capital controls and closing Laiki, the country's second largest bank.

"A collective punishment has been inflicted on the people of Cyprus and not the bankers whose criminal decisions brought us here," said Giorgos Doulouka, Akel's spokesperson. "Transforming the banking system could have been done in an alternative way, on a long-term basis, and not through shock therapy, which will be disastrous for the economy and the people of Cyprus."

With the backing of Akel, the island's powerful trade unions promised mass protests in the days ahead. "We've lost a lot of sleep," said Panaghiotis Angastiniotis, who has run a factory in Nicosia that has supplied raw materials to the construction sector for nearly 40 years.

"We do all our business through Laiki and I have no idea, now, if we'll be able to maintain our credibility and go on paying suppliers."

As in Greece, Cyprus now seems adrift on a wave of angst with many worrying that austerity demands, also being made by the EU and the IMF, will push the electorate to political extremes. Joblessness, already at a record 15%, is expected to soar as centre-right President Nicos Anastasiades moves ahead with internationally mandated reforms.

"People are becoming increasingly intolerant and turning to the extreme right and left," said Cleopatra Kitti, the main business adviser to government bodies. — © Guardian News & Media 2013

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Helena Smith
Helena Smith works from Athens. Helena Smith is the Guardian's correspondent in Greece, Turkey and Cyprus Helena Smith has over 7053 followers on Twitter.

Related stories

Women are South Africa’s changemakers and they deserve more

The truth is the economy still largely revolves around men, especially white men like me, writes Alef Meulenberg.

Two huge Beirut explosions kill 78, injure thousands

The second blast sent an enormous orange fireball into the sky, immediately followed by a tornado-like shockwave that flattened the port and shattered windows across the city

Covid-19 is taking its toll on people’s state of mind

The future is uncertain, and the number of people suffering from anxiety and depression is rising

A fishy business: How an Icelandic multinational moved profits out of Namibia

Global food companies avoid paying taxes by shifting profits around the world. Finance Uncovered reports on the case of Icelandic fishing giant Samherji’s operations in Namibia

Covid concerns have call centres closing doors — and opening new ones

The sector employs 60 000 people in the Western Cape alone. Whereas some centres have cut staff, others are reskilling and preparing for a different future

More funding, less fashion weeks

Nigeria’s industry needs more support, particularly for new entrants in the business

New education policy on gender violence released

Universities and other higher education institutions have to develop ways of preventing or dealing with rape and other damaging behaviour

Cambridge Food Jozini: Pandemic or not, the price-gouging continues

The Competition Commission has fined Cambridge Food Jozini for hiking the price of its maize meal during April

Sekhukhune’s five-year battle for water back in court

The residents of five villages are calling for the district municipal manager to be arrested

Vaccine trial results due in December

If successful, it will then have to be manufactured and distributed

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday