Cyprus Mail

‘Trick the troika’ plan won’t derail foreclosures

By Elias Hazou

EVEN if opposition parties were to push through parliament legislation suspending implementation of foreclosures this would likely not derail the release of the next aid tranche from Cyprus’ international creditors.

“At this point, whatever the parties do is inconsequential. More like it, the opposition is putting on a dog and pony show for public consumption,” sources within the ruling DISY party told the Mail.

That’s because – and despite a warning by the Eurogroup that the payout to Cyprus came with strings attached – the disbursement of the next aid tranche has already been set in motion, with national parliaments of eurozone nations currently in the process of ratifying the cash release.

According to the government, the next instalment – part of the island’s bailout – is due by December 15. And reports yesterday said Cyprus’ adjustment programme is set to get back on track, with the troika due on the island in late January for their sixth review mission.

Two parties, AKEL and EDEK, have submitted bills, the first to suspend implementation of the foreclosures law until July next year, the second to suspend it until the beginning of the year. Given that EDEK’s less draconian bill has DIKO’s endorsement, it appears that AKEL is politically isolated with its own legislative proposal.

Earlier this week, DIKO leader Nicholas Papadopoulos said that, before deciding when to bring the bills to the plenum for a vote, they’d wait to hear from the finance minister on the progress concerning the so-called insolvency framework.

Passage of the framework – consisting of five bills – is a condition set by the opposition parties for not blocking the foreclosures law. They say that repossessions cannot be enforced until and unless such a safety net is first in place.

But Papadopoulos’ wait-and-see remarks this week seem to be designed as a tactical way out. Although no one can be confident that the troika will not withhold the next tranche, it appears the opposition does not want to risk it and take the blame for such an eventuality; at the same time, publically, they insist on passing bills suspending the foreclosures law in a bid to protect primary residences.

“It’s hard to guess what they’re playing it,” the DISY sources commented.

“Say the EDEK/DIKO bill is passed, suspending foreclosures until January 1. So what, all they’ll achieve is suspend the foreclosures law for, say, a couple of weeks. But primary residences are already exempt from foreclosures until January 1.

“Also, when are they going to take these bills to the plenum? There are two or three more plenary sessions left, this week and the next. And on December 15 and 16 the plenum will be busy voting on the budget. After that parliament closes for the Christmas recess.”

The real gambit, said the same sources, is what happens come January when the insolvency framework is set to begin being discussed at the House finance committee.

It’s almost a foregone conclusion that the opposition will want to tinker with these bankruptcy-related bills – perhaps to such an extent drawing the ire of the international lenders.

And although passage of updated insolvency legislation is not a condition for the release of the aid tranche following the December one, the troika technocrats could well turn it into a prerequisite.

“Bottom line, it seems we got through the foreclosures law saga but now we’re set for round two with the coming debate on the insolvency framework,” the sources said.

George Loukaides, spokesman for main opposition AKEL, seemed to bear out this forecast.

From what AKEL has glimpsed of the draft insolvency bills so far, he told the Mail, the legislation affords no substantial protection to home owners who have fallen on hard times.

“I agree, it’s not as if we’re going to trick the troika by passing the bills suspending foreclosures once we’ve gotten the next tranche,” said Loukaides.

“So, say we do get the tranche in December. What about the one after that? If the troika people don’t want us to tamper with the insolvency legislation, and threaten to withhold further cash, should we just give in to their demands?

“We might as well give up and close shop,” he added.

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