Notwithstanding our support on many measures that this Cyprus Government has undertaken, some of which we classed as “highly capitalist” and for which we take our hat off, there is another side of the Cyprus Economy, which is managed by this Government, which makes us worried.

The Golf and Marina projects, the Qatar approach for investment in Cyprus, the “cash for passports and permanent residency”, the way forward towards the title issue and many other efforts that the Government is undertaking, reflect more a capitalist Government, as opposed to a “communist” based one. We do appreciate of course that the Cyprus Communist Party has is own brand which is more like the old labour (U.K.) party resemblance than Communist Governments in other countries. The Communist party in Greece has still the ideas of Stalin and thank God its ideas does not find the local communist party in Cyprus in agreement. When one considers that Ayia Napa Municipality with its 3.000 voters choose always a left wing Mayor and Council (with most of the residents being hotel owners and other capitalists business operators) you can appreciate what sort of Communist Cypriot type brand we have.

However during these difficult times of the economy, we note a careless handling of the country’s financial matters. This intensive idea to help the needy, finds all in agreement but at what cost? This Government has inherited a 3% excess funds 2½ years ago and it is now 6% minus (deficit) with the predictions expecting it to rise to 7% if we are lucky during this year. A memorable statement by our president during the Business Forum meeting 2 months ago that “the Cyprus Economy is in difficulty and we are burning” made at 10.0 a.m. was followed by a €2½ mil. handout to pensioners in the afternoon. Another €40 mil. handout was made to all pensioners (needy and not) whereas the very recent measure to increase the minimum salaries by other 5% is another negative indication (a Cypruswide bakery told us that this 5% increase will cost an increase in the payroll of €2 mil., a cost which will be passed on the consumers). Similarly the reduction in the operational hours of business in the tourist regions is another mistake, since it reduces employment at times when unemployment is on the increase. The Government seems to be reluctant and it is dragging its feet to take measures in the hope that the worldwide economic crisis will not touch us. Predictions indicate however, that by the end of the term of this Government (2013), the Cyprus Economy will be in a very bad shape. It is not fair to accuse the Financial Minister of inaction, but the recent proposals proposed by the Minister (which surely had the agreement of the president) were discounted by the president who added that “if I am to adopt these measures I should not be the president”.

There is no logic at all for this situation and instead of trying to reduce costs, the Government is trying exactly the opposite. The increase in the minimum salary means that costs will increase and this will lead to a reduction in employment and increase the rate of inflation. Cyprus with its 2.8% inflation ranks one of the highest in the Eurozone, whereas its (original) 3% unemployment has reached 6% and it is getting quite close to the more unfortunate countries such as Greece, U.K. and France on this count. The extended touristic hours which increase employment with overtime pay now that it will be reduced will again increase unemployment etc etc.

The Cyprus real estate market has a direct relation to the overall economic climate of the island and if this situation is not checked now, the only people with comfortable income will be the Government sector who by admission gets 1½ times the pay of the private sector employees, the semi-Governmental bodies and Bank employees. We might not see thousands of unemployed in the streets, but they are there and the side effects of this situation is felt in particular by the retail market. We do hope that this communist based philosophy will not lead us to the disintegration of the economy reminisance of the USSR era, which over the many years of handouts, lead to a weak economy and the collapse of this model.

There is “talk” in the air that the Government will enter into a reshuffle and the ex-successful Minister of Economy Mr M. Sarris will be invited to return, but even if this happens what can he do under this sort of situation?

The Central Bank Governor of Cyprus, is, by admission from the E.U. counterparts, a “brainy” professional and he has warned the Government repeatedly on the Cyprus economy and has put forward the sort of measures that are needed to be undertaken. Alas, he is also ignored, whereas the recent admission by the president that he made a mistake by objecting to Cyprus joining the Eurozone (before his election) does not seem to deter him from following this catastrophic path until, perhaps, the next time, that he will admit that he has made a mistake??

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