Cyprus: Austerity sees living standards fall back 40 years

One year of the right wing Anastasiades government

A year after the election of Nicos Anastasiades as President, representing the right wing party, DISI, Cyprus resembles little of the Cyprus of a year ago. Anastasiades was elected when many considered (and still do) the outgoing AKEL (Cyprus ‘communist party’) president, Christofias, the “worst president we’ve ever had”.

Anastasiades was elected following the first AKEL government, which started off trying to manage the capitalist system and enhancing the so called “mixed state” and from 2011 it backed down in face of capital, imposing austerity measures. The Christofias government applied for Cyprus to be included in the European Stability Mechanism and subsequently Cypriot people faced a huge attack from international and local capital. Under these circumstances, and with 10 years having passed since the last DISY government, Anastasiades committing himself to:

Re-negotiating the memorandum with the Troika, and correcting its “distortions” (unfairness) hitting the poorest in society, to restore welfare benefits for the disabled scrapped by the previous government and to bring stability to the economy not proceed with privatisations and to run the health system to the benefit of patients and to creating jobs and to stop the infringement of the rights of working people

A week after he got elected, Anastasiades committed himself not to proceed with the “haircut” on bank deposits. Just two weeks after his election, Anastasiades began to reverse everything he committed himself to do.

He signed for (and it was also made public that this was his proposal) a levy on bank deposits. Thousands of euros were taken from small and middle businesses, pension funds and even from charities.

The haircut caused a chain reaction – many businesses found an excuse to close down, sack workers and to cut wages. 2014 began with unemployment reaching 17.5% and will soon reach 20% or more. Amongst youth, unemployment is at 40.8%. Over 10,000 families depend on food banks. Around 23% of the population lives under the poverty line. Wages decreased by 22% and it is estimated that in 2014 they will fall by 30%. But profits have increased by 10%!

Anastasiades signed a ‘memorandum’ with the Troika (EU, IMF and EU Central Bank), on conditions much worse than those that he initially promised voters. It included tax increases, the introduction of new taxes, such as the property tax, further cuts in public sector wages, and also fast-track privatisation of profitable public utility organisations (the Electricity Authority (EAC), the Telecommunications Authority (CYTA) as well as the Ports Authority). Anastasiades is proceeding to introduce legislation that will allow the confiscation of family homes in cases of bad debt!

Using the excuse of the Troika’s dictates and the memorandum, and in an undemocratic manner, using ministerial cabinet decrees, Anastasiades implemented all the neo-liberal measures that previous governments and parliaments did not dare to try. Bus fares increased by 50%, free bus passes were abolished, fees were introduced for access to public health services (thus abolishing free public healthcare), labour collective agreements were ended, work overtime and bank holiday pay were abolished and a 500 euro monthly ‘salary’ will be crated through workfare and apprenticeship schemes.

And these are only some of the measures that have passed, so far. The state has not even begun to pay instalments for the public debt, the burden of which is on the shoulders of the working class, despite the fact that the financial crisis was not created by them.

Cypriot people are being asked to pay 10 billion euros to the international lenders (the Troika), to begin with. On top of that, there are costs of 250 million euros a year in interest rates and 2.9 billion that was given as new guarantees to the banks in January. The pre-existing debt (prior to the signing of the memorandum) stands at 12 billion euros. Cypriot citizens are committed for the next 22 years to pay an astronomical sum, which could even reach 200% of the country’s GDP (In 2013 Cyprus’s GDP was 17 billion. But because of the recession, this figure will be reduced by about 5% every year).

When the government completed a year in office on 27 February, the state media stated that Cyprus was “doing well”. But just last December the DISI president admitted that 2014 will be harder than 2013, that unemployment will go beyond 20% and that Cyprus faces continuous recession. In 2013 the economy shrunk by 5.3% and it is estimated that it will decline by a further 6.5% in 2014. This means there will be no investments and no “economic development” as those in government claim.

Honeymoon over?

The only ones benefitting from this situation were local and foreign bankers, big businesses and other speculators. Profits before taxation in 2011 reached 3.5 billion euro. This increased to 4.2 billion in 2012-2013. Even after its restructuring, the Bank of Cyprus continues to be profitable. In contrast, more and more workers are on the brink of bankruptcy.

Despite these facts, the government’s popularity in the polls throughout 2013 was very high. Even in April, after the levy of the bank deposits, 79% of the citizens thought that the previous AKEL president Christofias was to blame for the economic crisis, while only 13% faulted the Anastasiades government. Even in October 2013, 42% had a positive view of the actions of the president.

Even though there are no polls in the end of 2013 or beginning of 2014, protests outside ministry buildings showed a definite shift in opinions. The “honey moon period” of the new government is reaching its end.

A changing situation

Since December, various groups, such as cancer patients, pensioners, school students and workers in different sectors have started to protest outside of different ministries. People’s tolerance, or as the Minister of Finance phrased it in a BBC interview, the “understanding” of the citizens is exhausted.

For the first time, the trade unions from different sectors created a common front and organised two very big mobilisations compared to others in the recent history of Cyprus. Some unions have not joined the demonstrations however – the SEK (right wing union of private sector workers), PASYDY (public sector workers union) and the two unions of secondary school teachers (OELMEK and OLTEK), all of which reportedly made an agreement with the government not to take part in any protests

One protest was on 13 December and the second on 8 February. The unions called for solidarity action with strikes by public utility workers against privatisations. Even though the unions are postponing putting forward the demand for strike action – with the excuse that people are not ready for more militant action – workers show that they are more than ready for such action! After the levy, and strikes by bank workers that took place during March and April 2013, workers followed their example in many other workplaces including municipality workers, precarious workers in a big chain of department stores, Hilton hotel workers, private owned TV channel workers, Basiliko cement factory workers, construction workers, workers at the British bases, port workers, together with recent public utility strikes. Many of these strikes were victorious.

A strike is the most powerful tool in the hands of workers in order to fight for their rights. And it is clear that the workers in Cyprus are willing to use it! This was quite evident in the strikes organised by the unions in the public utility sectors, which according to the Troika will be the first to be privatised: Ports Authority, Cyprus Telecommunication Authority and Cyprus Electricity Authority. For the first time, a general strike of the public utility unions took place, as well as indefinite strikes, and in the case of the Ports Authority the action escalated. The strikes continued for over 2 weeks and managed to put pressure on DIKO – the centre right wing party that was, until recently, in the government coalition – not to vote in favour of the bill for the privatisations on the first day it was voted on in parliament. The fact that this bill was voted for the second time it was brought to parliament, five days later, despite the dynamic struggle of the workers, is a clear indicator of the lack of an alternative and the consequences of the failure of the rest of both the public and private sector unions to call for a general strike.

It is therefore the time now for the trade unions of all sectors to call for a mass strike movement and to prepare for a general strike that can bring the economy to a halt. This could stop the new legislation and even prevent the implementation of laws already voted for, demanding their revoking.

Lack of alternative

During the March 2013 movement, especially on the day of the parliament vote for or against a levy, when eventually the parliament was forced to say no, there were some calls for Anastasiades’s resignation. But who could take his place? And what policies would they implement?

AKEL was badly damaged after its years in office when they ‘managed’ the system and backed down in front of capitalist establishment. They published their alternative proposal to the memorandum only three days before it was voted on. However, this proposal was not convincing in terms of guaranteeing the rights of workers and preventing the collapse of the economy. The current proposals posed by AKEL are not very different to those of DISI, with the exception that they are asking for the continuation of the existing status and ‘social role’ of the semi-state public utility sector (which will not happen in a capitalist economy that seeks to give more profits to the rich and demands payment of national debts).

It was evident from the very beginning that Lillikas (a centre right wing adventurer/opportunist who created a new party during the last presidential elections called Initiative of Civilians) and EDEK (the social democrats) did not have better proposals. Lillikas essentially argued to replace the Troika with Russia. So instead of having the Troika control the economy Russia would do so – but also imposing austerity! EDEK’s contradictory proposal is that the only way to exit the memorandum is to implement its policies as soon as possible!

This lack of alternative is what Anastasiades and his government are taking advantage of and, along with the excuse that it’s the previous government’s fault, they move on to the dismantling of the real economy and with it the dismantling of our living standards. The government is moving in the footsteps of Greece, on a fast track. Within a year it carried out policies that took the Greek government four years to impose (and with great difficulty, against the resistance of the Greek working class people).

Time to resist, to organise, to build new workers’ parties!

As workers, the unemployed, pensioners and youth facing a blighted future, we know what we don’t want. We won’t sit idly by and let them destroy our future! We need to resist, whether the leaderships of the trade unions are on our side or not. Already parts of OELMEK and OLTEK attended the mobilisation on 8 February, despite their union leaderships’ decision not to participate.

We won’t pay for a debt that we did not create! We can’t lose our wages, and be burdened with taxes, when the billions of the banks were lost by speculators, bankers and big business people!

We won’t let anyone take our homes! We don’t let any unemployed workers become homeless so that the banks reach their targets!

These demands, even though are not as loudly made as workers in other countries where the Troika has brought havoc, are widespread in Cypriot society.

But these basic demands to be realised, we need to fight for another society. We cannot depend on any pro-capitalist, corrupted politicians, who serve interests others than those of the workers and the poor. We need to create new parties of the workers, new parties of the Left that will fight for democratic public control and management of economy and society.

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April 2014