THE SAME script we witnessed during the first visit of the troika unfolded during its second coming in the past week. Once again the troika’s representatives met the government negotiating team, central bank officials, party leaders, employers’ representatives and union bosses. And once again we heard the union bosses talking about their red lines, only this time they also issued threats of strike action and dynamic resistance to austerity measures, targeting the workers.
After last week’s meetings everyone had a better idea of the measures the troika was considering, which is why the public reaction has been much more vociferous and included the bizarre threat of ‘dynamic measures’. Who would measures punish? Our union bosses must have taken leave of their senses if they think IMF, ECB or the European Commission could be blackmailed by the threat of strike action in Cyprus. The EU presidency may suffer and the Cyprus economy would come to a standstill if our civil servants go on strike, but we doubt the troika would be too bothered.
The government is indirectly endorsing the irrational reaction of the union bosses, as its negotiating team opposes austerity measures. The AKEL leadership told the troika, during their Wednesday meeting it rejected the suggestions for suspension of payment of 13th salaries, the extension of the retirement age and the abolition of CoLA because social cohesion must be maintained; ‘social cohesion’ is code for obeying union diktats. President Christofias, reportedly said the same in Thursday’s meeting with the troika, arguing that measures should combine fiscal discipline with development spending and social cohesion, because austerity was proven not to work.
It truly defies belief that the government camp is under the illusion that the lenders are here to finance the economy’s development. Perhaps it is not and is merely engaging in its customary propaganda techniques, to fool people into thinking that there was an alternative to the proposed austerity package, but that the evil troika flatly refused to consider our caring government’s no-pain remedies. This obsession with misinformation rhetoric when the country is sinking deeper into chaos every day is truly alarming and indicative of the government’s irresponsibility.
The latest diversion tactics are the calls for wealth to contribute to the tackling of the crisis. This point, reportedly made by the government’s negotiating team at its meetings with the troika, was being repeated by the union bosses while government mouthpiece Haravghi trumpeted that measures should target wealth. The devious implication was that the troika was opposed to targeting wealth and was intent on making the poor government workers pay for the crisis. Yet anyone capable of rational thinking knows that targeting wealth would raise nowhere near the annual loan repayment amount.
And if the government proposed it, we are sure the troika would have no objection to wealth making a contribution through an increase of the corporate tax, but is this what we want? How much better off would the economy be with a corporate tax of 50 per cent that might raise an extra few tens of millions from Cypriot companies and drive away all foreign businesses? State revenue would fall rather than rise as a result of such a measure. And we could not impose a tax rate of 60 per cent on incomes above €60,000 per year, as the unions of the wealthy public employees would be up in arms, because social cohesion would be at risk.
These silly publicity games must stop and the government should for once act professionally and take responsibility for the situation instead of offering scapegoats to the public. It should accept that the troika is here because we asked for its help, because the banking sector is in a deep crisis and our state cannot meet its financial obligations. In order to lend us the billions of euros the lenders want measures to be taken to ensure that they would be repaid over a pre-specified period. The troika does not care whether the money comes from targeting wealth, higher taxes or the nationalisation of private businesses, but the measures we propose to take must be backed by real data and proper documentation instead of by hollow rhetoric.
We cannot reject everything the troika proposes because we are in desperate need of a bailout. We are a small and inconsequential state which could be left to sink if we refuse to impose austerity measures, because there would be no danger of contagion or threat to the eurozone from our bankruptcy. And what would happen to social cohesion if we are left to go bust, because of our government’s refusal to cut wages and pensions of public employees?