The finance minister’s fixation on narrow financial metrics reflects a deeply myopic view of what economic stewardship means

The Great Sea Interconnector (GSI) – the electricity link connecting Cyprus, Greece and eventually Israel – is reaching another critical milestone. Sadly, Cyprus risks repeating a familiar pattern where strategic national projects are undermined by a toxic mix of bureaucratic hesitation and political short-sightedness.

The GSI is not just another infrastructure venture. It is a national security necessity. For decades, Cyprus has remained an energy island, wholly dependent on its own generation capacity. The 2011 Mari disaster, which destroyed the Vasilikos power plant and plunged the island into darkness, should have taught us how fragile this isolation makes us. The interconnector would finally link Cyprus to the European electricity grid, providing the redundancy and stability every modern economy needs.

Unfortunately, we seem determined to sabotage our own progress. The European Public Prosecutor’s Office (EPPO) is already investigating the circumstances under which management of the project was transferred from the Cypriot company EuroAsia Interconnector to Greece’s Independent Power Transmission Operator (Admie/IPTO). Whether irregularities are found or not, the investigation should not derail the project itself. Even its critics acknowledge its strategic importance to Cyprus and Europe alike.

Even though there are valid concerns over the geopolitical risks to the project, what is most disheartening is that the loudest voice of skepticism comes not from Brussels or Athens, but from our own Finance Minister Makis Keravnos who continues to cast doubt on the project’s “viability”. While fiscal scrutiny is essential for any major public investment, his fixation on narrow financial metrics reflects a deeply myopic view of what economic stewardship means.

Keravnos repeatedly cites two studies – by Charles River Associates (CRA) and Curtis, Mallet-Prevost, Colt & Mosle LLP (CMPCM) – as evidence that the project is not viable. While I have not been able to get my hands on the studies themselves, my colleague in the Cyprus Mail, Charles Ellinas, analysed them very well in his column on October 19. While the CRA study emphasised that an alternative path of using large scale battery systems would be a more cost-efficient solution to the GSI, this as Charles eloquently put it, is like comparing apples and oranges. Installing battery systems is not a substitute but a compliment to GSI and one that is necessary by itself as part of the Green transition. As for the CMPCM study, this is focusing on the legalities of the contractual arrangements which are still in the drafting stages and, as with all legal contracts, will surely be amended many times before finalisation.

Keravnos also claimed, during the presentation of the 2026 state budget, that the European Investment Bank (EIB) had refused to finance the project. This is misleading at best. The outgoing vice-president of the EIB (retired on October 20) Kyriakos Kakouris has indeed left many question marks over the project, but he too had to admit that no formal application by the Cyprus government had been made so no official evaluation was performed. This was supported by EIB president, Nadia Calvino, who said the EIB stood ready to consider any formal application by Greece and Cyprus and that in principle the EIB was very much in favour of projects of strategic importance to Europe.

In other words, the door is wide open – but our own finance minister seems intent on keeping it closed.

But Keravnos stance towards the GSI is something that is in line with his conservative and short-sighted viewpoint of what a finance minister is supposed to do. I have on many occasions in the past written in this column that the government budget is not simply looking at the sterile statistical ratios of Debt to GDP or even the annual GDP growth numbers. As I said before, Goodhart’s Law rightly described that once a measure is made a target it loses its ability to accurately reflect good performance.

The fixation that government expenditures are inherently bad is a fatalistic misconception. The objective I have argued is not to aim for a big or small government budget but an effective one. How a government spends its money is more important than how much it spends. This is supported by a recent IMF publication where it analysed 174 economies in its latest Fiscal Monitor. The IMF highlights the idea that spending smarter to boost growth is best exemplified by the performance of Rwanda over the past two decades, where remarkable progress has been recorded with modest increases in investment but more efficient public spending.

Keravnos, I am afraid, lacks the flair and imagination to see beyond the numbers and look at the bigger picture. The recent proposed tax reforms are a case in point. Instead of grasping the opportunity to address fundamental issues like inequality, by making reforms that would tax more fairly capital gains and accumulated wealth, we are seeing piecemeal changes on various giveaways to different interest groups.

The best fitting description of Keravnos was made by a friend recently (I hope he does not mind my making use of our conversation), who said that the finance minister was like a goalkeeper in a team where he tries to keep everything out. While having a superb goalkeeper is vitally important in any championship side (Arsenal’s David Raya is a current example of that), the role of the finance minister is more akin to a playmaker than a goalkeeper. More like a Martin Ødegaard than a David Raya if you like. Because any team can tell you that even though not conceding goals is more than desirable, unless you also score you cannot win.

Perhaps, then, the time has come for the finance minister to move to a role better suited to his instincts – like managing the CoLA dispute, where blocking maximalist demands by both the unions and employers might actually be useful. But as finance minister, Cyprus deserves someone who sees beyond the spreadsheets – someone who can play offence as well as defence.

Because if we continue to let narrow caution trump strategic vision, we risk condemning Cyprus to another self-inflicted blackout – not only of electricity, but of leadership.

Loukis Skaliotis is an economist