THE DEPRESSION we are in, according to the most optimistic forecasts, is set to continue for at least another year and half. No light can be seen at the end of the tunnel, with capital controls set to stay for the foreseeable future, credit remaining unobtainable and unemployment continuing its upward path. There is just nothing to offer a glimmer of hope.
The political parties have been calling for more state spending on development, maintaining that this would spark a recovery while ignoring the fact that the funds do not exist. A cash-strapped, debt-ridden state being propped up by foreign lenders does not have money to spend on development. Calls for securing foreign investment are equally unrealistic given the situation of the banking sector and general uncertainty surrounding the economy.
The government has undertaken some modest initiatives to help businesses and announced incentives (including the bizarre offer of citizenship) for investment by foreign businessmen but these are unlikely to make the slightest difference to confidence that is at rock-bottom. Even talk about the future prospects of natural gas and the government’s determined efforts to proceed with the establishment of a gas liquefaction terminal have failed to lift the general gloom as the benefits from these to the economy are many years away.
As things are, there seems to be only one development that could possibly restore some hope, boost business confidence and attract foreign investment – a settlement of the Cyprus problem. A major breakthrough like this would not only change the economic climate, it would create big opportunities for investment, encourage joint ventures and create the conditions for the recovery we all crave. This is based on the assumption that Turkey wants a deal while the majority on both sides would support it and would want it to work.
On the Greek Cypriot side, the mere mention of a peace initiative inspires the trademark negative reactions by politicians and journalists, who seem to have made it their mission to prevent an agreement which, they are convinced, would be unfair and unjust. But it would be wrong to assume that a tiny clique of opinion formers, accustomed to repeating the same tune for decades, somehow represent the majority’s view. In 2004, many rejected the Annan plan, because they felt it went against their financial interests. They could be swayed now, if they realise that a settlement would benefit them financially or at least not harm their personal interests.
To persuade people of the value of a settlement would require hard work and a communications strategy by the government, but President Anastasiades has chosen to take small steps, in the hope these would not encounter too much opposition. His suggestion for the return of Varosha, as a confidence-building measure, is part of this policy, but it would not have the same benefits as a settlement, which, if anything, it would delay. Even in the very unlikely event that the fenced part of the town was returned, people would not automatically return and re-build their homes nor would many people be prepared to invest in the town, without having the security that would be provided by a comprehensive settlement.
That is why the resumption of talks should be treated as a priority and anything that could delay it, like the negotiation of confidence-building measures, should be avoided. For once, there are obvious practical benefits (including compensation for properties) to be had by the population from a speedily negotiated deal. There would be those who would argue that principles and history were more important than transient practical benefits and self-interest, but it would be up to the government to sell its pragmatic vision.
The question we need to ask is whether we want to seize the opportunity for an earlier exit from the recession than there would be otherwise and create real growth prospects for the economy? We should also understand that the alternative, of carrying on with the resistance rhetoric and the patriotic ‘nos’ to a settlement, now carries a high economic cost which it never had in the past. Opposition to a settlement today is tantamount to blocking the only hope of an exit from the depression that has brought the country to its knees.
