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It’s about the economy, stupid

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4 mins read

We have been hearing about sustainability and job creation ever since the incumbent ‘pro-business’ administration came into office the first time around, over seven years ago.

We were supposed to transform into a green-blue economy with hundreds of jobs to be created because of rapid developments in natural gas discoveries as well as the use of renewables.

Since then, the government machine has been as rigid as it has always been with little progress in the introduction of e-Government and online services, that has only now started to trickle through.

Even online learning is struggling to get off the ground, despite COVID.

Every time the administration discovers a stash of money, it is spent in all the wrong places – from maintaining an unproductive state payroll to promoting non-productive sectors, such as the ill-fated Olivewood programme to attract moviemakers.

Instead, Cyprus is paying others to shoot or produce their films here with little done to develop a native audio-visual sector while another island, Iceland with a third of our population and a fraction of our sunshine, has a fully-fledged cinematic industry envied by so many.

Government officials could argue that Cyprus has suffered one crisis after another, with the latest being the coronavirus pandemic, which will propel the state budget into deficit for the next three years.

That approach is simply sticking your head in the sand.

With so many councils, committees, consultants and advisors employed or appointed by this and past administrations, we should have come up with hundreds of alternatives to diversify our economic model and break away from the shackles of a services or tourism-dominated society.

Instead, the state budget is growing steadily, revenue streams are scarce and the administration is going from one election to the next, trying to satisfy as many of the voters as possible.

A study released this week clearly shows that the investments-for-passports scheme that raised about €7 to €9 bln, has contributed a mere €100 mln a year to state coffers.

The bulk of the money going to bail-out property developers, whose non-performing loans brought the island’s banking system to the brink of bankruptcy with billions in savings disappearing into thin air.

This proves that the current economic model is unsustainable and for the short-term only, as the money has already run out and many are defending the ‘patriotism’ of the investments-for-passports scheme as if it is the holy grail.

Employers’ organisation OEB called for the programme to be salvaged, but to allow for funds to be diverted to the productive sector of the economy, meaning industry and manufacturing that had been neglected by all administrations for three decades.

Building residential towers in Limassol and high-rise office blocks elsewhere is hardly investing in development.

Apart from a handful of foreign investors who bought old hotels and invested tens of millions to rebuild them, the rest has gone to build luxury apartments that will soon be deserted with aesthetic as well as environmental hazards.

Cyprus can never compete with China’s cheap-labour industry, nor with Germany’s precision and high-end manufacturing.

Some businesses can relocate to Cyprus if it focuses on renewable energy, research and innovation.

Some are already here but operating under the radar, as they do serious work and do not need to get embroiled in local politics.

This administration’s legacy should be that it saved the economy, not that it ran it into the ground.