LOOKING BACK at 2017 it could be said this was the year that things returned to normality, both in good and bad ways. The economy was not just on the recovery path, but the main indicators markedly improved on last year, showing an impressively positive picture that was reflected in the continuous upgrades by rating agencies. The growth rate was close to 4 per cent, the unemployment rate was down to 10 per cent in the third quarter, which is the lowest since 2012, the fiscal surplus hit €482.1 million in the first 11 months – more than five times bigger than the corresponding period last year – and the public debt fell to below 100 per cent of GDP.
It was an unexpectedly good economic performance, fuelled by the highest-ever number of tourist arrivals and the successful citizenship by investment programme, which appears to have revived the construction industry, traditionally, one of the main drivers of the economy. The failure of the banking sector to reduce non-performing loans significantly is a concern, repeatedly highlighted by members of the IMF and the European Commission, who warn that they had to be, significantly, reduced so as not to pose a threat to the economy’s otherwise impressive recovery. Banks have not been helped by the inadequate legislation drafted by parties that made no secret of their wish to protect defaulters.
Despite the overall positive picture, 2017 also saw a return to the worrying normality of the pre-crisis years. The public-sector payroll is back on the growth-path, with wages restored to pre-crisis levels at the start of this year, despite an agreement for limiting annual pay rises by linking them to the economy’s growth. Significant pay rises for hospital doctors and nurses were agreed, while from this January, the economically harmful measure of CoLA (Cost of Living Allowance), which erodes competitiveness, will be re-introduced. It will be calculated in a different way, to control the automatic pay rises, but unions have made it clear that this was a temporary arrangement and we have to believe them as they are back to calling the shots.
If anything, 2017 showed that government and parties completely forgot the worst recession in our history and were keen to return to the irresponsible practices that caused it. The period of the prudent management of economy, imposed by the troika, turned out to have been a brief interlude and was completely over in 2017 as the government returned to the mindless expenditure habit of the past, the president doing little else in the last few months apart from announcing new state projects and cash handouts for assorted causes. The privatisations of Cyta and EAC, agreed with the Troika, were laid to rest this year, the SGO unions ensuring they would carry on milking them until they finally collapse.
We also saw a return to normality on the political front. President Anastasiades spurned an historic opportunity to reach an agreement on the Cyprus problem in Switzerland in June and spent the rest of the year engaging in the blame game and publicly accusing the UN Secretary-General’s Special Adviser of being a liar, because Espen Barth Eide did not support his version of events. The character assassination of UN envoys is a time-tested tradition, to which our side resorts to in order to hide its unwillingness to agree a settlement. The presidential palace began the undermining of Eide long before Anastasiades, reluctantly arrived in Crans-Montana with the objective of not signing a deal and blaming Turkish intransigence.
The political establishment is satisfied with the maintenance of the normality of the status quo as it ensures against sharing power with the Turkish Cypriots and it has support of the majority of the population. For as long as the economy was in trouble, a settlement was seen by many Greek Cypriots as a way out of the recession, but once the signs of a full recovery appeared in 2017, the economic prospects of re-unification lost their appeal. People, including Anastasiades, did not want to share power and returning prosperity with the Turkish Cypriots, but they would never admit this and the collapse of the peace talks was blamed, as always, on Turkey’s intransigence. To ensure status quo normality continues, Anastasiades has set the conditions of zero troops and zero guarantees, to return to an international conference, fully aware there is no chance the Turks would accept these, without any negotiation.
The last year has highlighted the conservatism of a political establishment, which shuns change. All the opportunities, for change and for improving things, were ignored and finally laid to rest in 2017, as we returned the normality that caused so many of our woes.