Undersecretary to the President Constantinos Petrides said that a settlement of the Cyprus Problem could provide an opportunity to address shortcomings in Cyprus’s public administration.
“The settlement provides a chance to lift many of the distortions contained in the 1960 constitution which left us trapped in an outdated regime,” Petrides said days after the parliament rejected a bundle of draft legislative bills aiming at modernising the public service’s human resource management in an attempt to make it more efficient and eliminate budgetary risks.
Petrides named as an example the Public Service Committee which consists of five political appointees, which approves hiring and promotions of civil servants, anchored in Cyprus’s constitution. “The reason had to do with the quotas of Greek Cypriots and Turkish Cypriots, which made the existence of an absolutely centralised body necessary, tasked with scrutinising appointments in the public service so that the quotas were maintained,” he said.
“It will be a chance with the settlement of the Cyprus problem especially with respect to what (will) happen in the constituent states to change this drastically,” Petrides, who was born just 19 days before the Turkish invasion, said. “Whatever we do (now), will be there the day after and will help the day after”.
“The best reform we can carry out is the settlement of the Cyprus Problem,” he said, echoing President Nicos Anastasiades, who in three weeks’ time is scheduled to meet Turkish Cypriot leader Mustafa Akinci in Geneva for talks on the remaining chapters of the Cyprus Problem, which include the territorial and property question, security and guarantees.
Parliament’s December 8 decision to vote down the reforms package, submitted to the House in August 2015, was politically, not ideologically, motivated, Petrides said, and vowed to continue to work towards structural reforms even after the latest setback.
“This public service reform has no ideological mark,” Petrides who heads the Unit of Administrative Reform, tasked with reforming the public sector to strengthen Cyprus’s competitiveness to encourage investment and economic recovery, said. “It is something that even a socialist could do. Introducing objective and reasonable procedures or protecting taxpayers’ money don’t have any ideological mark, they only have a modernist mark”.
Petrides said that political discourse which preceded and followed the rejection of the bill is not unrelated to the combination of the political culture and system of Cyprus, which he described as a country in economic, social and institutional transition.
Following the vote, deputy Stefanos Stefanou of main opposition party Akel, said that the rejected reform was not “substantial” and not far-reaching enough, while lawmaker Marinos Moushouttas of Diko, the second-largest opposition party, said that the reforms would create a system prone to interventions.
During the consultations which preceded the submission of the bills, political parties did not raise any substantial objections and “amendments proposed by the parties were absolutely or mostly accepted by us,” Petrides said.
“It was a political decision to vote down the reform,” he said. “I have publicly asked which were the substantial proposals which I turned down and unfortunately they haven’t been presented”.
“There are inherent weaknesses in our political system,” he said. “We are supposed to have a presidential system, but everything has to go through the parliament, to an extent that there have been governments which were unable to implement their programme because they lacked parliamentary majority. This also has its benefits, as this offers more stability and there are no government frequent breakdowns like in other countries”.
The trade-off is that the system is more rigid and less conducive to changes, which is exacerbated by the lack of exposure to and understanding of “modern-day practices” abroad, he continued. “We would prefer a system more supportive of changes. We would like to see more structural changes but I don’t know of any other country which carried out that many reforms in three years”.
Cyprus has managed to overhaul practices and institutions in various areas, such as the introduction of a welfare state with the guaranteed minimum income, considered a “model” in the EU and the completely “bloodless” reform of the pension system in the public sector, he said. Petrides also named the introduction of electronic governance, a change of the framework for innovation which has led to the establishment of start-ups, and last but not least, the modernisation of the insolvency and foreclosure framework which made the banking sector healthier.
A change in the framework for research and innovation would also help Cyprus capitalise in this area, in which it compares unfavourably with other European countries, he said.
According to Eurostat, Cyprus spent in 2015 0.46 per cent of its economic output on research and development (R&D), which was the lowest in the European Union, compared to an EU-average of 2.03 per cent.
“There is criticism that we are lagging behind in research and development,” Petrides said. “This is true, but it is because we have no framework in place to allow the private sector engage in R&D, although the state in Cyprus spends more on R&D compared with other countries, and as a result the private sector’s expenditure is minimal”.
According to a new government scheme, which will come into force in January, companies investing 10 per cent of their operating expenses in R&D in at least one of three consecutive years can be considered innovative and benefit from incentives, which include, among others, tax incentives such as exemptions from taxable income.