SINCE the crash of the economy in 2013, we have been hearing our demagogue politicians telling us that austerity did not work and what was needed was economic development as if we could log into a website and order whatever we wanted.
If they were pressed to say how there would be development at a time when the struggling banks had no money to lend and the bankrupt state was in an assistance programme their stock answer was ‘foreign investment’. The impression they gave was that there were thousands of investors keen to undertake multi-million euro projects in Cyprus and all we had to do was ask.
The truth is that in the last couple of years Cyprus could hardly have been described as the ideal country for investments. It was in a programme taking orders from lenders, its banking sector was in disarray, capital controls were in place and the economy was steadily shrinking. There may have been opportunities, but there was still too much uncertainty and instability for rational investors to even consider undertaking any projects.
In the end, there was one big investment – the biggest ever in fact for Cyprus – by American billionaire Wilbur Ross who put €400 million into the Bank of Cyprus last year and ensured its capital adequacy, but little else. The president has also tried to attract investments, visiting the rich Gulf states, while representatives of the Cyprus Investment Promotion Agency (CIPA) have been touring the globe without much success.
Although the economy has been stabilised and the banks seem to be slowly recovering – the high percentage of NPLs however has not yet been tackled – it may still be too soon after the collapse of 2013 for investors to consider putting money in Cyprus, especially as there are still big question marks over the hydrocarbons. This is not to say that if the economy had recovered and the banking sector had been given a clean bill of health, there would be foreign investors queuing up to sink funds into Cyprus.
Such things happen only in the fantasy world of Cypriot politicians, who over the years have touted the island as a regional centre for all sorts of things, without ever doing anything practical to realise their dreams. In fact for the last 20 years or more we have been hearing politicians telling saying that a very slow state bureaucracy, which was discouraging businesses from coming here had to be tackled. But nothing has been done even though the problem is constantly being brought up by business leaders.
At Tuesday’s AGM of the Employers and Industrialists Federation (OEV), its chairman said that one of the major obstacles for faster development was the “unacceptable, unproductive, time-consuming and expensive bureaucracy that is stifling business.” President Anastasiades, addressing the meeting, acknowledged that the “state has often not been friendly to private initiatives.” This was not intentional, he claimed, but “because the institutions that we have created did not allow it.”
What the president fails to see is that there is an anti-business culture in the state sector which is actively encouraged by the majority of the political parties. Politicians and bureaucrats are on the same side, making life as difficult as possible for businesses, local and foreign, because it is their way of exercising power and control over society; this is also gives rise to corruption. Opposition parties tried to stop Sunday shopping because this benefited “big business”, which for our politicians are intrinsically bad.
Senior civil servants believe it is their national duty to find reasons to prevent business projects being undertaken as justifies their job, not to mention that it creates opportunities of corruption. Many investment proposals are aborted because of the negativity of bureaucrats. Then there is the issue of investment ideas which should be the responsibility of Cypriot businessmen. If these are attractive enough they would also be able to find the investment funds instead of relying on the government.
We also have to create a business-friendly environment, one that helps, encourages and gives incentives to potential investors. First the anti-business culture of bureaucrats and politicians has to be dealt with, but this will not be achieved through speeches. We need an action plan that would change these negative attitudes if we are ever to attract the level of investment that would put the economy back on the growth path.
