A political order represents an overarching framework extending far beyond routine election cycles.

Within its architecture, a dominant vision of political economy dictates how state authorities and private actors perceive the balance between public power and private markets. These orders typically endure for three to four decades, underpinned by a specific technological base and a set of accompanying macroeconomic theories.

Every political order follows a similar lifecycle: emerging from the ashes of a predecessor, consolidating, and ultimately dissolving into institutional atrophy and systemic corruption until a new framework takes root.

Western democracies – including small, peripheral island states like Cyprus – currently inhabit this precise transitional vacuum, the twilight of the neoliberal consensus. Government rhetoric in Nicosia and across Western capitals that frames a “centre-right” orientation as self-evident righteousness betrays a shallow reading of history. Rather than demonstrating ideological correctness, such branding conceals the deep exhaustion and decay of the current economic settlement.

The three orders of modern political economy

Modern statecraft over the past century and a half spans three distinct political orders, each representing a synthesis of macroeconomic theory, technological capability and spatial organisation. The Classical Liberal Order was anchored in the techno-economic foundations of the Second Industrial Revolution. It was the era of mass-produced structural steel, transcontinental rail networks and heavy mechanical engineering These technologies required massive capital concentration and centralized managerial hierarchies. Economically, this order ran on Say’s Law: the doctrine that supply creates its own demand, premised on the belief that markets naturally self-correct through price and wage flexibility.

This order collapsed during the Great Depression of the 1930s, giving rise to the New Deal and the post-war Keynesian consensus. This second order rejected the premise that markets automatically return to full employment, tasking the state with counter-cyclical fiscal intervention. The model was calibrated to mass assembly and cheap petroleum, where standardised production lines required high real wages and mass consumer purchasing power to absorb their output. This model built the modern welfare state, elevated progressive taxation, and protected organised labour. Continental Europe constructed the “Social Market Economy”. This settlement was shattered by the stagflation of the 1970s, which rendered energy-intensive assembly-line economics obsolete.

The Neoliberal Order inverted Keynesian logic, asserting that state intervention was the primary engine of economic stagnation. Synthesising Chicago School Monetarism, Supply-Side Economics, and Hayekian Information Theory, this third order utilised microprocessors and digital logistics to fragment global production chains. In Europe, this model was codified through supranational treaty law, most notably the 1992 Maastricht Treaty, which bound member states to strict macroeconomic rules. capping national budget deficits at 3 per cent of GDP and public debt at 60 per cent. Yet as digital networks shifted capital allocation away from long-term industrial investment toward short-term asset speculation, this global integration masked an irreversible internal decay.

Decay, institutional atrophy, and systemic corruption

The demise of a political order is rarely a single catastrophic event. It is a slow process of institutional atrophy where elites manipulate established rules to extract private rents. In this shift from production to extraction, the nature of corruption transforms. Unlike the transactional, extra-legal bribery of the earlier orders, neoliberal decay is legal, systemic and financialised.

The definitive moral collapse of this era was the socialisation of losses alongside the privatisation of gains during the 2008 financial crash. While speculative banking institutions received trillions in public bailouts, working-class populations absorbed the costs through property foreclosures and wage stagnation. This represented a fundamental breach of the social contract, signalling that state power no longer served the public good.

Since the collapse of neoliberal legitimacy in 2008, global governance has entered a volatile “interregnum” where the old consensus has lost authority, but no new framework has yet consolidated.

Financialisation, asset stripping, and state capture in Cyprus

The Republic of Cyprus serves as a case study in how “centre-right” stewardship can devolve into predatory incompetence. Following the 2013 Eurogroup bail-in, the administration’s narrative of “sound economic management” masked systemic asset stripping. A primary example was the 2018 collapse and liquidation of the Cyprus Cooperative Bank. The state transferred €10.3 billion in performing assets and €9.7 billion in deposits to Hellenic Bank for a cash consideration of just €74.2 million. Simultaneously, taxpayers absorbed a €1.55 billion Asset Protection Scheme guarantee, while over €7 billion in non-performing loans were carved out into a residual state entity, Kedipes.

The commodification of sovereignty became the hallmark of this era through the Cyprus investment programme. This “golden passport” scheme generated over €10 billion for luxury real estate developers mainly, by granting citizenship to over 7,000 foreign investors. The scheme collapsed in October 2020 after an undercover investigation by Al Jazeera filmed senior political figures offering to facilitate passports unlawfully.

This pattern of extraction extended into the energy sector. Regulatory choices by the Cyprus Energy Regulatory Authority restricted the state-owned Electricity Authority of Cyprus from expanding its low-cost solar capacity, reserving licensing for private commercial developers. Thus, private producers generated solar power at low cost but sold it back to the grid at the exorbitant “avoidance cost” of heavy fuel oil generation. Also, consumers absorbed over €1.2 billion in EU carbon emission penalties on their utility bills between 2018 and mid-2025, while private developers reaped windfall profit margins at the same time.

Simultaneously, the Vassilikos Liquefied Natural Gas terminal debacle stands as the ultimate symbol of state incapacity. Awarded in 2019 to the Chinese-led CPP-Metron Consortium to import natural gas and eliminate carbon fines, the project suffered chronic administrative mismanagement. In July 2024, the consortium unilaterally terminated the contract, leaving the Floating Storage Regasification Unit stranded in Asia and the onshore jetty incomplete. With remaining completion works and ongoing London arbitration, the debacle leaves Cyprus reliant on heavy fuel oil, facing potential large grid capacity deficits by 2029 as ageing steam units are decommissioned.

These energy import costs, combined with profit repatriation from foreign-owned assets, drive a persistent and large current account deficit in relation to GDP. Operating within the Eurozone, the state counterbalances this structural deficit by selling fixed domestic assets to foreign capital networks. This balance-of-payments model converted national territory and state sovereignty into financial assets to offset the trade deficit.

Strategic outlook

The historical trajectory from classical laissez-faire through the New Deal and the neoliberal era demonstrates that market structures cannot survive when divorced from state capacity and democratic legitimacy. The lessons of the present interregnum are clear. Economic frameworks that treat public sovereignty as a commodity to be sold or an obstacle to be bypassed eventually collapse, under the weight of their own systemic contradictions.

Constructing a viable political order requires moving past the failures of passive deregulation and state capture. The only path out of the current interregnum is a return to capable, transparent statecraft that treats economic resilience and genuine accountability as the foundations of a stable society. The centre-right model of our time is unable to meet this challenge.