Cypriots consider leaving the euro
“How are things at home?” I asked my Greek Cypriot student who was looking quite worried. “We are all in shock; no one knows what will happen in the end. Most people I know are saying that it would be better to go back to our Cypriot pound!”
In her early 20s, Maria is among the new crop of Greek Cypriot exchange students who chose Turkey for their one semester abroad. Curious and perplexed about a country which she grew to see solely as the “invading enemy,” Maria as well as several other Greek Cypriots of her generation, took advantage of this successful EU exchange program in order to join one of Turkey’s universities. Her aim was to get first-hand experience of a society completely unknown to her and mostly shrouded behind negative representations.
The shock of the last eurogroup decisions, which put the Cypriot Republic under unprecedented capital restrictions, found Maria stranded in Istanbul with little cash to cope with. She had to change her plans to travel to her island for a short holiday, and her cousin from Nicosia had to cancel her plans to come to see her. Until last Friday, when I last saw her, she was not sure what she would do after her term finishes in Turkey. In a moment of deep worry, she even thought of trying to seek work here in Istanbul. She has some knowledge of Turkish through her father who is a fluent Turkish speaker, and she is now taking regular classes to learn the language. Maria certainly does not belong to those who keep over 100,000 euros in Cypriot banks and whose deposits will suffer a brutal “haircut” of perhaps up to 60 percent. And I am sure that her incapacitated father who lives on a disability pension does not have an account over 100,000 euros either. “We do not have money in the bank,” she told me. “My father just receives his pension money.”
Maria, as well as her father, is among the many Greek Cypriots who are now looking back with nostalgia to the period when the Cypriot pound – in use from 1879 until 2008 – was a stronger currency than the euro. Because there is a major scandal unraveling at the moment in Cyprus that involves certain Cypriot banks writing off the debts of major political figures, relatives of theirs or companies related to them worth millions of euros, the “problem” of Cyprus takes up an additional dimension – that of a moral nature. The collapse of the Cypriot banking sector also exposed a system that serves the political, economic and religious establishment which transcends parties. It is an establishment that led Cyprus to the creation of an “overgrown banking system that secured its survival through its good but not always ‘transparent’ relations with political power, coupled with an uncontrolled connection to money coming from Russian oligarchs, the limitless activity of offshore companies and the setting up of dozens of law firms whose work was to represent ‘invisible’ foreign investors,” writes Greek daily Ethnos.
The new Greek Cypriot president, Nicos Anastasiades, has been trying to assure everybody that his country has a future in the euro although in the same speech last Friday, he accused his eurozone partners of using Cyprus as an “experiment.”
But more than accusing his euro-partners, he should perhaps listen to the growing voices of skepticism over the future of the island under the straightjacket imposed by the German led eurozone. These voices are more likely to find strong support among lower to middle income Greek Cypriots. With a forecast 10 percent annual recession and with the nightmarish prospect of a rapidly shrinking economy and massive job losses, these “poorer” Greek Cypriots may long for the period just after 1974 when a spirit of social consensus and entrepreneurship created a successful model for the Cypriot economy.
Nobody knows whether the Anastasiades government will be able to manage to get the country’s economy back on its feet while keeping the country in the eurozone. Growing voices in Cyprus and abroad, like the International Institute of Finance (IIF), argue that Cyprus would better cope with its problems outside the eurozone. In such a way, it could devalue its currency and become competitive. And such an option may be become increasingly popular among a public in Cyprus which will see its living standards drop rapidly in the near future. And, as has happened in Greece, where social benefits – even heavily disabled people – may be sacrificed under the orders of a cruel memorandum.