THE LATEST hikes in the price of fuel have sparked unprecedented public discontent, which seems to be spreading like a contagious disease. Residents of mountain villages have been staging protests since the latest increases were announced, complaining about the prohibitive cost of heating their houses. But they are not the only ones protesting. Radio shows have been inundated with calls from irate pensioners and low income earners, openly saying that they cannot make ends meet. Farmers are also up in arms because of rising costs and plan to hold demonstrations to push their demand for state assistance.
Meanwhile, opposition politicians have been exploiting the discontent, encouraging the protests and accusing the government of imposing price increases that were totally unnecessary. They have been saying that the only reason the government increased the price of fuel was to raise money for other financial obligations, a claim vehemently denied by the commerce minister. But even if this were the case, there must have been a pressing need for the government to announce a measure that was certain to be unpopular. Cyprus governments never impose unpopular measures unless it is absolutely necessary.
The big problem is that we have reached that stage at which unpopular measures are an imperative for the long-term survival of the economy, and this government has been lumbered with the unpopular task of implementing them. To use the old cliché, things will have to get worse before they get better. The fuel price hikes will give the cost of living another upward push, putting an additional strain on households and businesses while the government will probably have to raise indirect taxes yet again if it is to realise its target of reducing the fiscal deficit. The outlook is not good, especially for low-income families and pensioners.
This is why the politicians have already begun the game of laying the blame. Those from the opposition are blaming the Papadopoulos government, which in turn is blaming the previous government for squandering money and when there is a truce both camps blame EU harmonisation. It is true that membership carries a significant economic cost and puts additional pressure on the government to put its finances in order, but the gaping fiscal deficit was not created by the EU. The fiscal deficit was created by the criminal irresponsibility of populist politicians, all of whom championed the squandering of public funds.
When AKEL was in opposition it would accuse the Clerides government of being tight-fisted and of not spending enough money in social benefits when it knew that it was already spending far more than the state could afford. The AKEL-Papadopoulos government is now forced to pick up the pieces and is being accused by DISY of being tight-fisted and of not spending enough money to help lower-income groups. So perverse have things become that on Wednesday the AKEL mouthpiece, Haravghi, boasted on its front page that the government had so far spent £300 million in social benefits! This is the level of the absurdity. Even now, with a fiscal deficit at six per cent of GDP, when everyone should be calling for spending cuts, AKEL is boasting about the government’s mindless expenditure.
Nobody seems to understand that it is payback time and we are now paying for the financial recklessness of the last 25 years. Had we not been joining the EU in May, we may have been able to carry on living beyond our means for another couple of years before the belt-tightening and economic austerity was imposed. But the period of lavish spending and boasts about our high standard of living are unfortunately over. Many working people will now be living below the poverty-line, pensioners will struggle to make ends meet every month and businesses will struggle to survive because we had been living beyond our means for far too long.
Hundreds of millions of pounds were spent every year on defence, so we could go to the parade and applaud the politicians who were supposedly building up the National Guard. We have probably the best-paid civil servants in the world, in relative terms, as well as the best-paid state school teachers, whose remuneration is completely out of step with the capabilities of the economy. We have an excessive number of cash-strapped and over-staffed municipalities and an abundance of over-staffed, loss-making state-owned corporations. Unions have been securing annual pay rises for their members well above productivity increases – with the active encouragement of the politicians – every single year, and are now protesting about rising prices, which are also affecting the country’s main source of income – tourism.
Things are at a critical point but the main culprits, the politicians, are still playing the irresponsible games that put us in the mess we are in today. This is why the government must put together an economic rescue plan and seek the support of all the political parties. It might involve the downsizing of the public sector, the selling off of state companies, a drastic reduction in defence spending, a general wage freeze and higher taxes. Unpopular measures, but we have reached the point at which there is no alternative. Failure to act now will mean a steady increase in the number of people living below the poverty line and much more social unrest.
