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Our View: Co-op was in trouble prior to 2013 crisis

NO BANK has ever generated as much sentimentality and grief as the Cyprus Cooperative Bank (CCB) after it was put up for sale by the state last week. Admittedly, the grief is not universal, but is exhibited primarily by members of Akel, who have been publicly shedding tears over the government’s decision that, in effect, signalled the end of the CCB as we know it.

A columnist writing in last Monday’s Haravghi, remembered how the impoverished farmers went to the co-op to buy seeds, fertiliser, weed-killer and farm tools, pointing out that this was an establishment set up at the time when people were “in fear of usury.” He asked: “Do you remember the time the co-op movement was the refuge of the poor, the beleaguered, the illustration of social solidarity for the lower classes in terms of banking?”

Has the writer and his comrades not realised that the world has moved on and that we are no longer living in the era of usury? This is the era when the farmers are out on the streets demanding compensation from the state when it rains too much and when there is a drought. And they are always compensated. They no longer need the co-op credit organisations to help them because they invariably appeal to the state.

There is no doubt that the co-ops played a very important part in the first half of the 20th century, helping poor farmers and craftsmen stand on their own feet, by offering them credit they would otherwise not have access to. The co-ops in a way empowered the poorest members of society at a time when things like state support were unknown and loan sharks were always lurking.

Akel refuses to accept that things have moved on since those days. The beleaguered, impoverished, exploited farmers are extinct. Nowadays they are organised, enjoy good living standards and are very good at fighting for their rights. As for the co-op credit organisations, they had outlived their role, turning into badly-managed and corrupt entities in the last 30 to 40 years. Next month, the trial of several top Co-op managers – including the former top boss – facing criminal charges for the fraudulent granting of loans among other things, begins.

The truth is that the co-op movement, after years of mismanagement, was in big trouble by the time of the 2013 meltdown and needed an injection of €1.7 billion of taxpayer’s money to stay afloat. It never made the recovery hoped for in the last few years – more than 50 per cent of its loans are non-performing covered by inadequate security – and inevitably reached the end of the road.

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