OPEK’s stance on contemporary Cyprus

November 2012

With the completion of eight years since its accession in the European Union, Cyprus and the Cypriot society remain trapped by accumulated problems. The occupation problem is in a dead-end. In addition, during these recent years a number of new and complex problems were added which are also interrelated and intertwined with Cyprus’ geographical position, identity and its perspective in the contemporary world.

Within this world which is characterized by uncertainty, Cyprus was weak to determine a plan for its future. The most productive years before its accession to the EU and particularly the eight years of its participation in the European Family, Cyprus has not yet found a way to unleash the ability forces of its citizens. On the contrary, Cyprus remained politically bind to deep political divisions and ruthless rivalry for power.  Citizens today find that important parameters, which define the framework for an economically viable and socially inclusive society, are shaken.

For 15 years, OPEK acted publicly and actively in the society as an independent citizens’ movement to demand the modernization of our society. The extent of its capabilities, as citizens association, OPEK raised strategic issues for Cyprus’s progress and its future in open discussions and events. Moreover, OPEK worked for the inclusion and active participation in the EU and took a stance on important dilemmas. OPEK gave the floor to politicians, economic and other stakeholders. Many of its actions are encoded in a series of publications which constitute an authentic point of reference for everyone.

OPEK considers the request for the modernization and reform of Cyprus to be a current issue and a complete challenge for the place and our society.

It is vital for Cyprus to get out of the vicious circle of populism and opportunistic politicians.

Our country is more than ever in need to utilize the opportunities that the EU membership offers. Cyprus is required to be reconstructed and transformed into a regenerated state, implementing a new plan for a contemporary Cyprus.

The Cyprus Question

Today the Cyprus issue is in a strategic deadlock caused by the abandonment of the policy of interfaces that linked the comprehensive solution of the Cyprus issue with Turkey’s accession negotiations to the EU. The essence of Kranidiotis’ strategy, which defined the “Helsinki” context and the accession of Cyprus, was negated as timelines to dynamically and essentially resolve the Cyprus issue were surpassed one by one.

The result of this contradictory policy today is the neutralization of the EU’s role as a catalyst for solving the Cyprus issue and ignoring its power to act as an honest broker to overcome historical conflicts. Cyprus remains today the only ‘dissonance’ throughout Europe.

• Today the parameters of the Cyprus issue have changed and we are on the verge of a change with dramatic consequences in the history of the people of Cyprus. Mistakes and oversights in various levels have led Cyprus, in 2012, one step before division of the island.

• The policy of ‘complaint’ leads sooner or later to the acceptance of the idea that there is nothing to be done but to fatalistically accept the de facto division of our country, since according to the popular theory, a country in the size of Cyprus is not able to accomplish much and Turkey is irretrievable.

OPEK believes that we can change things:

  • The challenge is to reject the option of division of the island, to restore correlation between the Cyprus issue and the EU- Turkey relations and to grant the EU with a starring role in the efforts to find a solution to the Cyprus issue.
  • The realistic assessment of the situation creates the real dilemma: continuation of the occupation line or federal solution as described in the UN resolutions. Accept the current status quo or utilization of EU to exit the deadlock. We need to adopt a strategy of liberty for Cyprus based on the combination of ‘ UN resolutions -EU as a catalyst for the solution.”

With our own initiatives and consistent political action we need to set the Cyprus issue among the priorities in the international and European agenda. It is our responsibility to create the right conditions for a joint UN-EU initiative to solve the Cyprus issue.

-       Evaluate every experience from previous efforts to solve the Cyprus issue.

-       To emphasize on the positive action, on initiatives that create new “environment” and on public debate on important issues.

-       The public diplomacy concerns citizens and politicians who are not reconciled to the idea of the solution “as we are”, as it constitutes the alternative way towards the permanent division of our country.

ECONOMY – GROWTH

The economic features were drastically changed by the global crisis in 2008. Its impact on the global system and particularly the Eurozone debt crisis, have highlighted the urgent need for rabid European integration and structural changes. In Cyprus the consequences of the crisis have clearly set challenges for innovation and reform. Essentially is the challenge of developing a new model for a Sustainable Cyprus.

These challenges are:

• To address the chronic economic imbalances

• To reorganize and improve the productivity of public administration,

• The independent operation of supervisory institutions,

• The competitiveness of productive sectors

• Education and reorientation of human resources

• The effective implementation of social policy and welfare

• The shift to high-skilled services, research and innovation, the green economy.

The sectors of economy which have severe weaknesses have been known for many years. Comparative studies, reports and best practices from the European Union were ignored under the guise of established interests of individual groups. The political and economic sectors were dominated by the notion of short – term rather than long-term benefits.

Today, seeking a rescue plan by the European Support Mechanism and the IMF is inevitable. Firstly, the Cyprus banking system was exposed vastly in Greece and secondly, the lack of a restructuring plan for the public sector for years.

OPEK’s stance is that if the political forces in Cyprus had prepared and implemented- with responsibility free from petty politics and populism – a comprehensive restructuring plan for the public sector, they could have handle better the consequences of the debt crisis in the Eurozone.

Today under these adverse conditions, the solution lies in a genuine consultation with Troika in order to find permanent policies that will address the massive structural economic problems.

Permanent solutions require high-level internal consultations and proposals which will be reinforced by strong political will for structural changes and reform otherwise growth would not be achieved nor the productive forces and human resources will be able to free themselves from chronic entanglements.

A reform policy entails the subversion of the dominant political culture in which the political parties alternated in power for decades to «plunder» the state. The Eurozone crisis has shown, among other things, the accumulated legacy of the lack of meritocracy.

The reform plan for a CONTEMPORARY CYPRUS among others includes:

• Redefining the role and size of the state. Developing a new approach for the production process.

• The fiscal consolidation so as to restore the sustainability of public finances

• The shift to development investment that are future-oriented, in order to liberalize the human potential

• The partial equity swap of organizations aiming the increase of their finances. The public sector could control of the majority of the shares in semi-governmental organizations .This policy will offer new possibilities to increase the capital and provide new investment opportunities for the benefit of the community as well as the semi-government organizations employs such as the CYTA.

• The introduction of new regulations to public bodies such as hospitals’ autonomy, the introduction of new regulations of business administration in public bodies, transforming of post offices to entity of private law.

• The mobility of civil servants, substantial changes to the evaluation system. The evaluations and promotions should be transparent.

• Review the system of appointments in education etc.

All the above measures will contribute towards the increasing of efficiency in public institutions for the benefit of citizens and public finances.

• The semi-governmental organizations’ profits constitute a valuable wealth for the community. The utilization of this huge capital can generate new, productive investments for the benefit of the economy, rather than be utilized for short-term government loans.

• The operation of the independent supervisory authorities within the EU is a necessary institution which guarantees the protection of citizens and ensures rational development in the various areas of supervision.

• The Central Bank, the Commission for the Protection of Competition, the Cyprus Securities and Exchange Commission are some of the independent supervisory authorities which, judging by the outcome, they failed to effectively protect the citizens.

• The strengthening of supervisory authorities and the appointment of the most competent employs are preconditions for the healthy functioning of the economy and society.

The solution lies in structural changes and applying a different policy that stimulates growth and maintain the welfare state but with targeted rather than generalized interventions.

This policy includes as examples also the following: utilization of state land, special ” solidarity fee ” on big real estate, new incentives for investment, digital state, taxation with documented compensation to quality public services, combat of tax evasion, privatization of  the Cyprus Stock Exchange, strategic investment in Cyprus Airways , closing of semi-governmental organizations which have successfully completed their activities, licensing of controlled opening of casinos , implementing a contemporary National Health Plan with a contribution by three parts to address the economic pressure on the state budget and to upgrade the health care offered to citizens.

The notion that the welfare state is kind when it is providing generalized benefits is a deadlock policy. In practice it perpetuates an outdated benefit system based on the practice of «customer relations» and trade union influence which in practice it cannot be sustained by the society .

Targeted benefits constitutes reduction of social injustice, it is a fair policy because it reduces inequality through redistribution of resources to benefit those who really need it. The welfare state needs to have own resources to pursue social policy because with borrowed recourses the deadlocks are transferred to next generations.

DEEPENING THE FUNCIONING OF INSTITUTIONS

The crisis surfaced the debate on the need of deepen the functioning of institutions and the restoration of public confidence in them. The democratic functioning enlargement is linked with the continuous effort to improve the functioning of the political system. The political parties remain the main policy makers, but at the same time, the contemporary representative democracy needs to be reinforced by new procedures of participatory citizens.

Such procedures include, among other things, systematic public consultation in policymaking, decentralization and upgrading of local government, transparency and accountability of decision makers, ensuring the independence of supervisory bodies, upgrading the role of the Media and their responsibility towards citizens and society, introduction of new forms of provision of positive information and secure the rights of citizens, especially through online access, etc.

ENERGY

The developments in relation to energy issues are important and give economic and political power to our country.

The identification and exploitation of undersea resources of Cyprus is a complex task. Cyprus must utilize its most capable human recourses. The structure and context can be determined based on best practices at the European and international level.

In the political field, a common understanding between the political parties is required to support the functioning of technocrats with strong political will and support. The political leadership will be called to handle issues that are associated with complex and competitive geostrategic and trade interests. The safest way to handle these issues is the step by step promotion of the project in a way that it will gain European and international support and be part of the common European policies and EU energy networks. This way, the trade choices will become the most profitable for Cyprus.

The prospect of natural gas constitutes a unique opportunity for Cyprus to design the future in terms of sustainable development and to make the economy more competitive. The design of a long term plan for the exploitation of the natural resources is needed to ensure social cohesion and solidarity between generations.

The exploitation of the natural resources of Cyprus could be included as part of the efforts to find a solution to the Cyprus issue as it could cover the financial needs of a solution especially in correlation to the reconstruction in the early stages of settlement and the island’s needs for projects that are of mutual benefit to all citizens such as investment in Renewable Energy Resources in the context of sustainable development.

EDUCATION – RESEARCH- INNOVATION

The crisis has demonstrated the importance of decisive turn to a better organization and utilization of human resources of Cyprus. The declining course of competitiveness of Cyprus is associated with the lack of strategic plan for investment in highly specialized areas of research, innovation and new technologies. A similar problem is the inconsistency between the education system and labour market needs as well as the Cypriot fixation in low skill jobs. A large percentage of the youth in Cyprus stand on the sidelines due to lack of skills and another large percentage of the youth, while holding university degrees, is oriented to professions that cannot recruit more employs.

These facts combined with the anticipated increase in labour mobility in the Single European Market due to the crisis will worsen the position of Cypriot workers and will expose especially the younger generation to an intensifying competitiveness.

The announcement of yet another educational reform raised some key pillars for change but did not go to the extent required by the new needs created by the economic crisis. Often, the need for change is entangled in political rivalries and trade union expediencies constantly involving the political leadership. Cyprus needs to regain lost ground. A comprehensive educational reform will mark the rational redistribution of the extensive resources available by the state budget and the families for their children’s education as well as the promotion of EU policies for lifelong learning.

EU INTEGRATION:

The economic crisis has revealed the weaknesses of the traditional way the EU is organized.  We support the increasingly close cooperation with the Member States aiming to the development of a federal EU or to the “United States of Europe.” The economic crisis has shown that only the euro or only the intergovernmental level, are not enough evidence to solve problems that arise in the environment of a globalized economy. To restore market confidence towards the EU economies, decisions regarding the creation of a single banking supervision and creating the ESM as a mechanism for direct recapitalization of banks, should rapidly be implemented. Moreover, the constitutional protection of the obligation by the euro zone Member States not to implement national budget deficits is element to that direction of European integration. The common economic governance is important and necessary step in that direction and will work in the interest of the forces of production and labour. The actions towards the consolidation of the democratic legitimacy of the EU such as for example the direct election of the President of the European Council and the President of the European Commission by the European citizens constitute a similar push towards European integration.

On behalf of the Board of Directors

Kyriacos Pierides, President                George Efstathiou, General Secretary