EDITORIAL: A mixed or free-market economy for Cyprus?

There is no doubt in anyone’s mind that the only issue in which either Ioannis Kasoulides and Demetris Christofias differ is the economy.

On the political front they both agree on what sort of settlement we want and how to achieve it, one with a slightly different approach to the other, but the end-result would be the same. As regards health, education and social welfare, the two candidates – and the major parties that support them – are so close, it is hard to tell them apart.

Then there is ideology – AKEL is a reformed communist party, but is leaning towards the centre left to widen its spectrum of supporters, while DISY is a watered-down version of the right-wing party it aspired to be when first established in the late ’70s trying to become a neo-socialist democratic party, in turn, to attract as much of the centre-right as possible.

Ironically, there could be no better coalition than if both AKEL and DISY came together. The extreme differences in ideology are in the minds of the individuals and not in their platforms.

Hence, the choice is now between a mixed and a free market economy.

Kasoulides wants to follow the free-market principle, but realises that the size of Cyprus does not allow full liberalisation of all public sectors. That is why corporatisation is the best solution for many sectors, in order to make the public services as competitive and efficient as the private sector.

According to AKEL, Cyprus has had a mixed economy ever since Independence in 1960 and this is a model it wants to maintain. But this would mean an economy that contains both private and state-owned enterprises at a time when the European Union and the WTO are calling for less state involvement and more liberalisation. The state owning a few enterprises is not a bad thing, particularly if the enterprise in question is offering an essential public service, one that the private sector cannot do.

But rejecting outright the corporatisation of state-held enterprises, such as the Postal Service, the power, telecom and water utilities, only sends us back to the dark ages of a planned economy that would include some elements of capitalism and socialism.

Although the philosophy of a mixed economy emerged in post-war Britain, primarily to ensure the state supported certain industries, Gordon Brown’s plans to nationalise Northern Rock can hardly be regarded as a return to socialism and greater influence of the state.

If AKEL comes to power, it has to deal with the fact that with the Cyprus economy relying almost entirely on the financial services and tourism sectors, the island could only lead towards a full free market, rather than a mixed or socialist economy.