The superficiality of Cyprus politics was laid bare once again this week as opposition parties rejected the 2021 state budget for no substantive reason other than to cause difficulties to the government. Thursday’s vote ended the tradition of the annual budget always securing majority backing. This first could not have happened at a worse time for the country, a time when the economy has been shaken by the pandemic and only government support schemes are keeping unemployment from soaring and businesses closing down.
If there was one year when the parties should have put petty politics aside and showed a heightened sense of responsibility it was this. We are in a period of extended uncertainty and the last thing we need is to make a bad situation worse because some parties have decided they must punish the government, unable to accept that in a time of crisis the country needs to pull together. This is a time when state intervention is the only way to keep the economy moving and ensuring some social cohesion, but parties that normally champion state intervention, even when it is completely unnecessary, have blocked it when it is most needed. The irony is that during the pandemic all the parties backed the measures taken by the government to support businesses and protect jobs, but have rejected a budget designed to continue these policies they all agreed with.
Immediately after rejecting the budget, the parties approved an Akel bill suspending foreclosures on primary residences of a value up to €350,000 and premises of small to medium enterprises until March. In effect, they were protecting strategic defaulters, people that had not made a loan repayment for years, while stopping government spending aimed at supporting workers whose businesses stopped operating because of the measures. No thought was given to how the European Banking Authority or the ratings agencies would view this brainless populism, which prioritises the protection of loan defaulters and the undermining of the banking system over the smooth operation of the state.
The party fight against foreclosures and the banking system featured prominently in the political horse-trading that commenced the day after the voting down of the budget. After Friday’s meeting with Disy leader Averof Neophytou, Akel chief Andros Kyprianou set some general conditions for backing an amended budget. There were issues regarding workers, people on low incomes and “people that face huge difficulties with the banks.” Edek leader Marinos Sizopoulos also brought up the banks in his meeting with President Anastasiades, at which he presented the package of proposals that had to be included in the budget for his party to vote for it. Proposals, he said, were “related to the protection of citizens from foreclosures.”
It is difficult to understand how seasoned parliamentarians and party leaders like Kyprianou and Sizopoulos do not know that the budget is about state spending and taxation and cannot interfere in contractual agreements between a bank and its customer. Do they want the state to pay off the debts of loan defaulters so they stop having huge difficulties with the banks, or perhaps to make it illegal for banks to make repossessions in order to pass the budget? We suspect the talk about the banks is a diversionary ploy aimed at taking attention away from their irresponsible behaviour in rejecting a budget during a major economic and social crisis for no substantive reason but solely to embarrass the government.
The sad thing is that the government now has to pander to these parties in order to secure a majority. Fortunately, it will not have to take on Akel’s proposals, whose annual budgets led the state to bankruptcy, because the three deputies of Edek are enough to swing the vote in the government’s favour. Sizopoulos spoke about the proposals he made to Anastasiades, but these were more policy related. He claimed his proposals did not require additional spending, even though we should take this with a pinch of salt. Anastasiades is also scheduled to meet Giorgos Lillikas of the one-seat party Citizens Alliance on Tuesday. Lillikas will also take proposals to the president, he said, although he did not elaborate what he expects to give his vote. Diko leader Nicolas Papadopoulos has not been invited to participate in the horse-trading as his opposition to the budget is auditor-general-related.
We are confident the horse-trading will yield a result without placing state finances under additional strain and a slightly amended state budget will be approved some time in January. All this could have been avoided if we had political parties that behaved in a mature and responsible way, at least when the country depended on it.
