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Our View: Government should not have thrown in the towel at airports over ‘petty politics’

In an unprecedented move, the ministries of transport and finance issued a joint statement announcing they would terminate negotiations about expansion work with Hermes, the company running the airports. It seemed like a rather childish response to the censure of the Auditor-general and the ensuing criticism by opposition parties; something along the playground lines of ‘I am not playing any more.’

The ministries lamented the fact that serious matters relating to the economy, affecting incomes and jobs “have become the subject of petty politics and populism.” Taking into account the “toxic climate” shaped by the election campaign, the ministries said they had no choice “but to terminate any negotiations with operator Hermes in relation to reaching a compromise on the construction of Phase 2 works at Larnaca and Paphos airports, and to suspend the implementation of the air travel incentives scheme for the 2020-30 period.”

Who does the government intend to punish with this decision, which it considers necessary for the country? The Auditor-general for meddling in the executive’s affairs or the opposition parties for exploiting the issue? If it considers the sealing of a deal with the operator for Phase 2 of vital importance it should ignore the criticism and carry on with the negotiations. This is not first time the government’s decisions or policies have become the subject of petty politics and populism – in fact most of them have inspired opposition populism – but never in the past had the government responded by abandoning them in protest.

This reaction could very easily be interpreted as an admission by the ministries that they were in the wrong and the criticism they came under was justified. Normally the ministries under attack would have defended their decisions, explained why there had been delays in Hermes implementing its contractual obligations regarding the extension work and why they had chosen the path of compromise. It would have been very easy to argue that the government was trying to find a compromise with Hermes because a protracted legal dispute would have caused more delays which would have negatively impacted tourism and the economy.

For some unknown reason, the government shied away from confrontation, which is often necessary to get things done. If it believed an agreement with Hermes about the extension work was of great urgency it should not have thrown in the towel. On the other hand, the general impression is that the contract for the operation of the airports is heavily weighted in favour of Hermes – it is being compensated to the tune of €7-8 million a year because of the operation of Tymbou airport – which is not even committing to carrying out the extension work. This would be subject to securing funding of €150 million.

While a compromise is necessary, allowing Hermes to avoid its contractual obligations by citing an inability to secure funding, should not be an option. Perhaps the ministries have realised this.

 

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