Cyprus’s hopes of reforming its economy and so reduce its cost of financing the mountain of debt it accumulated in past years have received a serious blow as the leaders of two opposition parties demonstrated that they are no longer willing to support badly-needed economic reforms.
The leaders of Diko and Edek, Nicholas Papadopoulos and Marinos Sizopoulos, withdrew on Tuesday morning from a meeting to which President Nicos Anastasiades invited party leaders to discuss the introduction of the national healthcare scheme, the reform of civil service and local administration, the creation of under-secretariats and clamping down on corruption, the Cyprus News Agency reported on Tuesday.
“If the president is seeking national understanding in important, internal governance issues, then there should also be national understanding on the Cyprus Problem,” Papadopoulos was quoted as saying by the Cyprus News Agency.
His remarks came a day after Diko lawmaker Christiana Erotokritou said in an interview with Politis Radio that her party would cease cooperating with Disy and other parties on reforms including obligations to Cyprus’s creditors, citing the lack of information by Anastasiades on reunification talks.
Diko which is represented with nine deputies in the 56-seat parliament and Edek which has three lawmakers, are traditional hardliners on the Cyprus problem. The Anastasiades government relied after Cyprus’s bailout on Diko to pass laws required by its international creditors.
Last year, Edek decided to withdraw its support from reunification based on a bizonal, bicomunal federation which serves as a basis for talks for the past 39 years. Papadopoulos’s late father, Tassos Papadopoulos who served as president until 2008, asked Greek Cypriots in 2004 to reject a United Nations-sponsored plan for the settlement of the Cyprus Problem.
For the time being, investors seem to take into account the absence of economic reforms following the completion of the Cypriot adjustment programme in March and the continuation of the island’s division, forcing Cyprus to issue 10-year bonds at a rate which is roughly 350 basis points above that of Germany. Capital Intelligence, the Limassol-based rating company, said on September 2 that it decided to maintain Cyprus’s sovereign credit rating unchanged at B, which is below investment grade, citing the stalled reforms process and the absence of a settlement in the Cyprus problem.
Economist Sofronis Clerides said that the reform process should not be linked with the reunification talks, which could help the economy.
“Reforms are required whether the Cyprus problem is settled or not, as we will have to repay our debt at some point,” Clerides who teaches at the University of Cyprus said in a telephone interview.
Still, Cyprus would have “to manage the problems and challenges stemming from the non-solution,” he added.