.
The Cyprus government purposefully dragged its feet on the privatisation of the state-owned telco Cyta, probably assuming that delaying any decision closer to the May parliamentary elections would secure votes in that it would appear to be the ‘saviour’ of the national entity and safeguard the 2,000 jobs.
As a result, it has shot itself in the foot with any privatisation deal now permanently pushed back till after the elections and jeopardising bringing the national finances into a healthier growth path.
With the Cabinet approving on Monday the relevant bill that secures salaries, job security, promotions and the collective labour agreement (as if these were never secured in the past), the allegedly pro-business government, driven by the political ambitions of a handful within the ruling DISY party, has now completed its trio of failures, as it has backed down on the privatisation of Cyta, the power utility EAC and the ports authority, where workers and contractors have been more than generously compensated.
In other words, this administration is telling new local and foreign investors that “we don’t need your money” and that the economy can continue to cope with a pathetic growth rate of less than 1% of GDP over the next few years.
Investors in the three state-owned and profitable assets, that were supposed to be part of the bailout deal with the Troika of international investors, were not only going to pour in 1.8 bln euros over the next four (now almost two years), but would also introduce know-how and competitiveness that would propel the economy into a new era where the state would focus only social priorities, such as health, education, quality of life and security.
Instead, the government has made the tragic mistake of remaining owner/operator of the three national assets and will continue to intervene in the running of these companies by appointing party-affiliated persons, instead of qualified managers.
It has also sent out an ill-boding message to any potential casino investor that despite being an open-economy, it may consider nationalisation of whatever contracts it farms out to third parties, almost like Venezuela did – and see where that brought them, despite the riches of oil revenues.
Finally, if safeguarding the workers’ rights was the main intention of the privatisation bill, why did it take the government three whole years to discover the ‘golden share’ principle, allowing it to intervene for national security reasons?
In other words, the soon-to-be established privatisation company, that will hold assets with the aim of finding new investors, should better rename itself National Leasing Company, as it seems to agree with the previous communist administration of not letting go of costly assets, while taxpayers continue to pay for this mess, hopefully until revenues from the natural gas exports start pouring in. Even then, we might be stupid enough to cancel contracts thinking that we would be better off drilling, pumping and selling the fuel ourselves. After all, this is Cyprus where everything is possible.
