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Our View: The sooner SGOs are broken up and sold off the better

POPULISM will never be defeated in Cyprus, not even after it bankrupted the state and completely destroyed our economy. A new bout of mindless populism was sparked by news that the government had decided to hire consultants to advise it on how to proceed with the privatisation of the semi-governmental organisations.

Everyone knew this was on the cards, as privatisation is a stipulation of the MoU, but they have reacted as if it was the first time they had heard about it. AKEL, whose government had agreed to the inclusion of privatisations in the first draft of the memorandum in November, is furious about the Council of Ministers’ decision. DIKO, which is part of the government, “rejects any idea regarding the sell-off of SGOs,” while EDEK said it was “inconceivable” to sell “three profit-making organisations”.

But what were the political parties proposing? Should the government not honour its signature and keep the SGOs in state hands? Most seem to agree that we could fool the troika by turning the organisations into public companies in which the state would have the majority shareholding. But what investor would buy a stake in an organisation that would be run by the state – in other words, self-serving and clueless politicians – which has proved a totally incompetent manager? No businessman would invest his money in a company run by the corrupt political parties and the unions.

DIKO has suggested that SGOs should undergo re-structuring and re-organisation in order to become more productive and competitive, but it did not elaborate whether this would be achieved through pay cuts and/or redundancies. The demagogues of AKEL embraced the monumentally ridiculous idea that the chairmen of CyTA, Ports Authority and EAC proposed, whereby their organisations would collectively borrow the €1.4bn that MoU expected to generate from privatisation and give it to the government. AKEL failed to inform us where we would find bankers stupid enough to give such a massive loan.

The government needs to go ahead with the hiring of the consultants and resist the temptation of opting for the half-baked solution of keeping the majority shareholding of the SGOs in the hands of the state. We doubt the troika would allow this, because privatisation is not just about generating cash, but also about making these state monopolies more streamlined, efficient and competitive, for the benefit of the economy. Paying the highest electricity rates and port fees in the EU is not something that should be preserved.

Privatisation will bring down these crippling costs, imposed on all businesses and households by the “profit-making state monopolies” which benefit only their underworked and grossly overpaid employees and corrupt politicians. The sooner these monopolies are broken up into smaller units and sold off to the private sector the better it would be for the economy. And the interests of the economy should be the government’s only guiding principle.




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