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Who's Occupying Cyprus?

by The Rt Revd Dr Peter Selby

Posted: 27 Mar 2013

A visit to the Tomb of St Barnabas, one of the original Apostles and Patron Saint of Cyprus, shouldn't be that complicated; for the members of the Synod of the Anglican Diocese of Cyprus and the Gulf it was; as well as a moment of touching base with our earliest Christian history, it created an exposure to the world as it is.

I was addressing their meeting in Larnaca, in south-east Cyprus, and the outing was scheduled as a morning trip to Famagusta, in the Turkish-occupied north of the island, where the Synod Eucharist was to be held, and where we were to visit St Barnabas' tomb on the way.

But 'on the way' makes it sound too simple. Elaborate negotiations with 'the authorities' were needed to get that journey allowed. Then as the coach proceeded we had to enter the British sovereign base area, a relic of the independence negotiations that had led to Cypriot independence, and then cross into the Turkish-occupied part of the island, through a buffer zone overseen by United Nations peacekeepers.

So far, three occupiers, and counting: Turkey with 35,000 troops, and the British and UN contingents with a far smaller number; but all signalling that the Government of the Republic of Cyprus is far from master in its own house. These forgotten occupations have continued through getting on for five decades.

But now has come the worst. I have written before about the effect of the Eurozone's requirements of Greece in exchange for the bailout of their economy, involving as it did the virtual suspension of democracy in the country that is the cradle of European democracy. But a little noticed aspect of that decision was its effect on the Cyprus banking system: the 'haircut' required of the Greek depositors involved Cypriot banks to a large extent, and the timebomb under the Cypriot economy started ticking.

We are hearing that the Cyprus situation is unusual, that it doesn't set a precedent, because it had 'allowed itself' to have a banking system so much larger than the whole of the rest of the Cypriot economy. But what is this 'allowing itself'? A small, peripheral economy beyond the edge of continental Europe is offered huge amounts of currency so that prosperity could cascade downwards from its banks. Like the two-thirds world countries in the 1970s, offered huge loans at low interest, only to discover too late that times would change and debt as a result would be unsustainable, so Cyprus now has discovered, too late, that the money that enabled prosperity was actually merciless money. The prosperity was a bubble, and when it burst all that would be said was how unwise it had been of the Cyprus banks to be allowed to get so big.

That, you may remember, is what was said in 2008 about our banks, and about an economy too dependent on the financial sector. It is a feature of the financial sector (a weasel expression, because it allows us to forget that 'the financial sector' actually consists of human beings making decisions) that it is delighted to grow in good times, and is then totally merciless and un-self-critical when things crash.

Like so much of Europe in living memory Cyprus found itself caught between the power of Germany and the power of Russia, and as the crisis unfolded you had the President of Cyprus shuttling between Moscow and Berlin begging for help, and being told in both places that while they had been happy to pour money into Cyprus in the good times, they were not to expect any support in bad times.

Of course it's no part of my purpose to suggest that no mistakes have been made by those responsible for the Cypriot economy, nor to suggest that there were not Cypriot economists warning against what could happen and not being heeded. But what has been the outcome for this small island with its venerable history and tormented story of occupier after occupier controlling its destiny in its own interests?

The distressing answer to that question has to be that the outcome is another occupation, and one that will make all the other occupations last even longer. This new occupation is by foreign banks, who dictate to the Cypriot authorities what are the terms under which it will be allowed to survive at all - shades of the quisling regimes in nazi-occupied countries and the Russian-authorised regimes of eastern Europe. And the survival on offer is little more than that. The decision to tax even small depositors, now rescinded, is being seen as a tactical error, underestimating the psychological effect of taking money out of ordinary people's bank accounts. Instead, deposits that are the lifeblood of Cyprus' real economy, the capital businesses need to function, are to be taxed more heavily with the consequence of bankruptcies and unemployment.

And as the bankers occupy their country, Cypriots can be sure that the other occupiers - the Turkish army dividing the island - will stay yet longer, yet more likely to be forgotten by the world. So the occupations support each other. A little island, but a picture of a world occupied by money.

About this author

The Rt Revd Dr Peter Selby is the former Bishop of Worcester. Following his role as part of the Interim Directing Team from 2012-2014, he continues as an adviser to St Paul's Institute.

Paul A Newman - Posted: 04 Apr 2013

Thank you for this cogent analysis of disastrous systemic dysfunction.


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The opinions expressed in this article are those of the author, and do not necessarily represent the views of St Paul's Institute or St Paul's Cathedral.