THE SUPREME Court saved the country from a risky adventure with unforeseeable consequences, in announcing its decision about the four foreclosure-related laws that were referred to it by the president. All four laws were unanimously ruled unconstitutional by the full bench of the court, finally ending a saga that started in August and threatened to take the country backwards, derailing the country’s adjustment programme and leaving the state with no money.
The decision will now pave the way for the release of the fifth tranche of financial assistance, two months later than it was due. The fifth review of the Cyprus economy had been completed by the Troika at the end of July but the political parties, with the exception of Disy, had insisted that additional legislation was passed to limit the scope of the foreclosures law, which they claimed would lead to repossessions of primary homes on a massive scale.
The parties passed six bills which in effect would make the foreclosures law a dead letter, fully aware that this would block the release of some €450 million.
Yesterday’s decision exposed the irresponsible populism that is sold as serious politics by the parties. They approved bills that were blatantly in violation of the constitution as the unanimous decision of the Supreme Court made evident, in order to pose as the protectors of vulnerable groups. For this they were willing to risk the adjustment programme and cause the state to default on its payments by depriving it of funds that had been budgeted. Or perhaps it was just theatre, the parties knowing that the bills were unconstitutional but passing them so they could claim they did their best to protect primary residences.
But they never consider the damage they cause an economy plagued by low confidence with their antics – all they achieved was to boost the existing uncertainty. Hopefully they will now accept the court decision as a face-saving solution for them, having courageously tried to protect vulnerable groups, and will not try to draft any new bills.
Some deputies were yesterday expressing concern about the future of cash-strapped small businesses and claiming that 70,000 primary residences were under threat from the banks, but they refrained from mentioning plans for new ‘protective’ legislation.
At least the adjustment programme will be back on track now, even though it is difficult to share the optimism expressed by the IMF spokesman who said that the legislative package on foreclosures “would help Cyprus, with the high level of non-performing loans, restart flowing of bank credit and return to growth.” This still seems a long way away, but the demise of the legislature’s bills at least put the economy back on the right path.