By Stelios Orphanides
Finance Minister Harris Georgiades said that economic policy makers need to counter the rise of rising populism by designing policies that benefit the whole of a society instead of succumbing to entrenched interests, something his government did repeatedly.
“We should also be ready and willing to acknowledge our faults,” he told delegates at a conference in Limassol on Friday. “Economic policies should become more inclusive to ensure a broader distribution of prosperity and to be less biased towards pressure groups whose interests are inevitably more narrowed”.
Phenomena like the nomination of Donald Trump, the US xenophobic and misogynist billionaire, as the presidential candidate of the Republican Party in the US presidential elections, Greece’s narrow euro area exit, widely known as Grexit, and the June 23 vote in the UK in favour of Brexit, all have populism in common, Georgiades said.
“We are facing a real and present danger; the rise of an irrational, demagogic, Eurosceptic, antiliberal populism,” Georgiades said. “The populism challenge comes from the extreme right and the extreme left. The populist mix varies from country to country, is often contradicting, self-conflicting but there is much in common, such as protectionism as direct challenge to globalisation”.
Georgiades said that populists try to gain support from those parts of the population which feel that they have been left behind or lost out to globalisation, or not benefited enough as others, which may well apply to the cases of Trump, Brexit and Greece’s almost Grexit, where a radical-left party, Syriza, and a far-right Part, Independent Greeks, formed a coalition after winning the January 2015 elections on the promise to ditch the cash-strapped country’s austerity.
Trump promised to deport all illegal immigrants living in the US, to construct a wall at the US-Mexican border and have Mexico pay for it and so prevent illegal immigration, ban Muslims which account for one fourth of the world’s population from entering the US and cancel trade agreements already in place or in negotiation. Trump whose presidential ambitions took a nosedive in recent weeks after a video leaked in which he bragged about sexually harassing women and following a Washington Post report that he had paid no federal taxes for decades, had extended his support to Britain’s Leave camp led by the former mayor of London Boris Johnson, a member of the conservative party, and the xenophobic UKIP leader Nigel Farage.
After the Leave-camp which made immigration and the funds transferred to the European Union’s budget key issues of its campaign, won the referendum causing the country’s economy to plunge into uncertainty. After Premier David Cameron resigned following the vote, his rival Johnson, then considered a likely successor, said he would not seek to become prime minister. Farage also resigned as leader of UKIP.
“The Brexit vote should act as a wake-up call,” said the Cypriot finance minister who served until February 2013 as a lawmaker of the ruling Disy faction and added that liberalism needs “to fight its ground all over again”.
“There is need for an effective case in favour of the flow of goods, ideas, capital and people as essential elements of prosperity and to take the principled stance in favour of tolerance and compromise which offer the necessary conditions for people to realise their full potential,” he said.
Therefore, Cyprus’s main challenge on its way towards full economic recovery is “irresponsible populism,” Georgiades who oversaw Cyprus’s economic recovery following the 2013 banking crisis after being appointed as finance minister by President Nicos Anastasiades.
On March 29, 2013, days after the bail-in and three days before Georgiades took office, Anastasiades assured civil servants’ union PASYDY that he would seek to reduce the cost of the state apparatus without touching the salaries of public workers who are overpaid.
Still today, a bundle of bills on the public service reform submitted by the government in August 2015, which include a provision linking the increase of public payroll to the economy’s performance await approval at the parliament.
Last year, the government also decided to remove power producer Electricity Authority of Cyprus from its privatisation list after its workers threatened to strike. Months later, the government was forced by the opposition to withdraw a bill on the privatisation of the state-telecom Cyprus Telecommunications Authority, Cyta.
The government’s privatisation programme provided for revenues totalling €1.4bn. The failure to complete is expected to significantly delay the repayment of the government debt which is estimated at 108 per cent of economic output, and therefore considered a major risk to economic recovery.