FEW have described the massive economic changes that Cyprus has experienced in the last 50 years as evocatively as Costas Sophocles, the veteran politician and author who passed away a month ago.
“We lived in times when the vast majority of people wore boots in the winter and walked barefoot in the summer, in times when their vrakas and dresses were completely patched up. We have also experienced times in which all people throw away their shoes, their trousers and their dresses long before they need mending,” he wrote in the first volume of his book Struggle for Freedom: Internal Disputes.
“No other generation … will ever have a similar privilege of experiencing such extensive changes and contrasts,” said Sophocles who was born in 1925.
That sense of wonder over how a small, impoverished island came so far is shared by Renos Solomides, the second person to serve Cyprus as finance minister. But he is also far more aware than most just how much planning and effort it all took.
“The economy has infrastructure today. Every household is connected to the water supply network, to the power grid. We all travel on roads and highways. We did not have all these in the early years after independence,” Solomides told the Sunday Mail.
He was appointed finance minister by President Archbishop Makarios and served from July 1962 to June 1968, replacing Riginos Theocharis who took over the office of the governor of the Central Bank of Cyprus, established in 1963.
“We lacked a lot back then. The economic policy of the British was not aimed at boosting economic development. Their overall policy was law and order. But our policy was aiming at promoting development. And we knew that there was a lot we had to do to make the island prosper,” he said.
The most important challenge was to find the required funds to spend on development projects. “We had to secure funds either through taxation or borrowing. Access to both was restricted as there was not much to tax. At the same time, there were not many lenders willing to give loans to a small and unknown country.”
Therefore, Cyprus had to use whatever funds it had wisely. “We could not afford wasting funds like other countries did. We did not succumb to the temptation of constructing grandiose government buildings. At the beginning, we in the public service were all squeezed in shacks,” Solomides said.
His description of labour relations within the public sector in those early days of the republic are enough to make the present government green with envy, “Civil servant union PASYDY had a sense of mission back then,” he said. “Though we did not ask them to do so, they insisted on working overtime. They were very co-operative and we did not have disputes, strikes and threats.”
Cyprus’ economy could develop in its early years as the budget allowed more expenditure on infrastructure projects compared to today.
“While everyone wanted to have his people appointed as a civil servant, the cost of the civil service was not a burden to the state.”
Such projects were helped by the World Bank lending 7.5 million Cyprus pounds to invest in electrification. The German government provided development aid and the United States gave wheat and barley. “They all knew that our country could indeed make good use of their aid and would not waste it.”
The international support the Republic received in its first three years was decisive in reforming the Cypriot economy.
The lack of skilled labour, know-how and expertise was soon identified and one of Solomides’ first initiatives was to secure scholarships so that people could go abroad and learn how to design, plan and execute projects. “One of the most important decisions we took was to establish on my initiative the Planning Bureau”, a government body to promote economic and social growth in Cyprus.
“Without the Planning Bureau, we wouldn’t have made it. It allowed us to identify priorities which helped avoid waste,” Solomides said.
Expanding the telephone network as well as enabling access to the electricity grid and water supply network for people in the country side was soon identified as priorities. “Mainly people in towns had access to electricity or a telephone connection. In villages they had to go to the public faucet and carry water back to their homes.”
Another challenge was the continuous flow of emigrants, mainly to the United Kingdom, Australia and Canada. The only remedy was to help people find better paying jobs, as poverty was the main driving force behind emigration. “Our per capital income was below 180 Cyprus pounds per year,” he said.
Political stability in the very first years of the infant republic was a factor that contributed to economic development. “We did not have internecine fights. There was a unanimous decision to allow Cyprus to develop. We worked until late at night. The Turkish ministers in the cabinet were very cooperative. They were not undermining the Republic of Cyprus.”
From the outset, the republic had to take serious decisions regarding the future of its economy as dictated by global markets. Potatoes, grapes and citrus fruits were the main export commodities but its mining industry was to die out on depleting deposits and falling prices.
“This meant we had no raw materials that would allow us to build up our industrial capacity to provide income to the country with the exception of the wineries,” he said. Cyprus began its switch to the services sector with tourism as a major focus.
“We paid special attention to the construction of water dams which serve us until these days. In just three years, we could boast of an economy we did not have during British rule,” he added.
After independence, the republic did not sever its ties to the British economy. It sought alternative ways to reduce economic dependence instead as Cyprus continued to remain sensitive to Britain’s economic performance. As members of the British Commonwealth Cyprus did not have an independent currency and the pound was pegged to the sterling. When the British pound was devaluated in 1967, Cyprus had to follow suit. The island’s main partner for imports and exports and its main source of tourists was also the UK.
“We created a scholarship department and sent hundreds of promising Cypriots abroad for studies in east and west. As 20 per cent of the population, if not more, was employed then in agricultural, when these graduates returned to Cyprus, they were able to seek employment in areas other than agriculture”.
The entrepreneurial spirit and the economic policy of the government enabled the early success of the young republic, according to Solomides. “It was clear that the government would stay out of the economy, unless the private sector failed. This encouraged businesses to invest. We established industrial estates, built factories and rented them to companies.”
The bicommunal clashes of 1963-64, then the coup and invasion of 1974 meant that the initial dream of a prosperous Cyprus could not be realised in the way it had been envisioned in the early days.
“After the 1963-64 events we had to take measures to boost confidence. But then we had other incidents again. And then came EOKA B. One had to think twice before taking the decision to put money in a project,” Solomides said.
“When I resigned in 1968, I told the parliament that I wanted to see Cyprus prosper and become the Switzerland of the Mediterranean. The coup and the invasion killed the dream the government and the people had when they started building up the Republic of Cyprus.”
Tables:
Year Per capita income in euros
1960 280
1961 306
1962 345
1963 357
1964 327
1965 407
1973 919
1975 923
1980 2641
1990 7653
2000 13312
2009 20855
Literacy 1960 2001
Literated 69% 97%
Illiterated 31% 3%
University
education 1% 30%
