Demotix/Yiannis Kourtoglou. All rights reserved.
The Cyprus financial crisis, which unfolded during the last two weeks of March, was surprising on many levels.
For the global stock markets that plummeted on announcement of the terms of the first attempted deal between the Cypriot authorities and its lenders on 15 March, the fact that small depositors had been targeted first was a surprising rewriting of teh rules of capitalist prudence.
The lending Troika institutions (European Commission, European Central Bank, and the International Monetary Fund) had agreed to tax Cypriot bank deposits below €100,000 by 6.75% as a way of raising the amount needed by the Cypriot state to co-finance the loan of 17bln (the Troika providing 10bln). The security of small deposits was flouted in principle (one of the very few assumptions of capitalism that seemed to have remained intact through the global crisis), if not in law (EU Directive 94/19/EC guarantees ‘at least 90%’ of deposits up to €100,000 while its implementation tool in Cyprus, the Deposit Protection Scheme of the Cyprus Central Bank, confirms a ‘maximum compensation’ of €100,000). The surprise that small depositors across the Eurozone could be hit in future bail outs must widely damage trust: it has made bank runs into table talk.
For the Greek-Cypriot public, who had been assured by their recently-elected president that ‘hair-cuts on deposits (understood to mean over €100,000) are a red line that will not be crossed’, the initial deal amounted to an unanticipated sheering of sheep. Sure enough, the first protesters to congregate outside the House of Representatives on 18 March, called on the deal to be voted down by MPs by symbolically dumping a pile of sheepskins in front of the parliament. The amended bill that was eventually rejected the next day had secured the first €20,000 and dropped the initial 6.7% to 3%. By then, the protesting crowd was large and its anger directed against what some argued was a ‘shock and awe’ approach by the dealmakers to stun the populace into submission.
By the same token, the three laws that were eventually passed on 22 March were described as a form of ‘shock therapy’ for the ailing banking system that had dragged the economy down with it. The most controversial of these laws, dubbed ‘the Laiki Law’, referred to the dissolution of Cyprus’ second largest bank and its part-absorption by the larger Bank of Cyprus. The decision over whether €9.5bln debt amassed by Laiki through recourse to the European Liquidity Assistance mechanism would also be transferred to the Bank of Cyprus, thus threatening to bring it down too, was not explicitly included in the Troika agreement, which remains to be finalized at the time of writing.
Politicians, technocrats, academics, and businessmen speaking across, against and over each other on Cypriot channels over this fateful week have agreed that the closure of Laiki spelled the end of an era. Economic prosperity in the previous decade had been based on the hyper-inflation of the financial services sector, the Troika diagnosed, reaching a problematic size of eight times the GDP. The therapy involves crashing its key loss-maker and allowing the rest to continue at a significant cost – losses of up to 60% were being discussed for deposits in the Bank of Cyprus. The impact of this shock was even further augmented by the fact that the proposed cure came after hopes were deflated of an alternative Russian bail-out. A hugely hyped emergency trip to Moscow of the Finance Minister flanked by a team of experts and officials who reportedly worked through the night achieved the extension of an earlier loan, but nothing more.
On the level of international politics the turn of events was also surprising. The financial magazine The Economist described them under the cover title ‘Just when you thought it was safe…’, which featured above an image of Cyprus sinking in shark-infested waters. Much of international reporting on the issue followed suit by projecting a discourse that counterposed the small size of Cyprus and its debt to the harsh measures imposed by the Troika. Another column in the same issue of The Economist that reviewed the rejection of the Troika’s initial suggestions ran the title ‘small island, big finger’. A commentary in the British The Telegraph spoke of ‘Eurozone bullies’ and ‘tiny Cyprus’. Similar language was employed by The Guardian, the New York Times, Bloomberg and other major media.
Domestically, ire at the Troika spilled over news, social media, the street, and casual conversation, often extending to specific actors involved in the deal, like Germany’s Angela Merkel and Wolfgang Schäuble, the IMF’s Christine Lagarde and Cyprus mission chief Delia Velculescu, and the Eurogroup’s Jeroen Dijsselbloem, all of whom were thought to be patronizing the Cypriot people.
Surprise, shock, astonishment, panic over deposit guarantees, fear of bank runs in Cyprus and other countries subject to Troika mandates, and uncertainty about the uncertainties of wealth from now on both ensued and augmented ‘the Cyprus crisis’. While the result remains uncertain, the ramifications of this crisis have been predicted to impact on Cypriots’ lives for the next decade at least. Yet, despite the incessant discussion about this ‘crisis’, its constitution as a cultural mechanism for understanding events seems to have fallen behind its politico-economic analyses. A cultural question might ask whether the apocalyptic scenarios pervading the discourse of ‘surprise’ are playing a role in repositioning the sense of self of Cypriots vis-à-vis their institutions, the state, or the future.
The ‘day after’ the event, arguably located somewhere between the striking of the deal in Brussels on 24 March and the opening of the banks four days later (after 12 days of closure), saw high-pitched discussions centering on blame (the previous government, the current one, the bank boards, the Central Bank director) and somber pronouncements about Cyprus’ economy having been pushed ‘decades back’. The future of austerity was presented as a collective challenge, where ‘all of us’ will work hard, rebuild the economy, rise up again as ‘the Cypriot people’ have done before. Some of the few suggestions aired on TV by politicians and economists included the curbing of unemployment by revising salary laws, and curbing the migration of European workers.
The reference for this past feat was the critical year of 1974, when thousands of Greek-Cypriots had been driven from homes in the northern part of the island by the Turkish army, which remains in control of northern Cyprus to this day. The invasion was prompted by a coup engineered by the Junta then in power in Greece in order to achieve the island’s unification with what many Greek-Cypriots consider their ‘motherland’ – the coup itself was preceded by a decade of instability during which Turkish-Cypriots were pushed into enclaves and barred from accessing constitutional rights, while the Greek-Cypriot political sphere was dominated by a left-right split fought through the organization of paramilitary forces.
In the wake of that war, large numbers of Greek-Cypriots migrated abroad, while others made do through the setting up of small enterprises and work in refugee relief sectors (e.g. large-scale construction of social housing). Remittances, self-reliance, and the use of a rapidly urbanised labour force were major contributors to the economic recovery of the 1980s known as ‘the Cyprus miracle’. That ‘miracle’ has formed the basis upon which the tourism sector bloomed in the 1990s, and the property one in the 2000s. That past ‘miracle’ is now hailed as the beacon of a future way out of the crisis.
But this historical perspective is also riddled with assumptions about political conduct that Roitman argues are inherent in the conceptualization of particular events as ‘crisis’. In the case in question, political recovery drew mainly on the official endorsement of nationalism that relegated questions of blame to an ‘internal’ left-right debate, while exonerating paramilitary crimes, brushing over difficult questions about co-existence with Turkish-Cypriots, and effacing wider questions of difference. A Greek-Cypriot ‘public’ was thus constituted on discourses of victimization, unity, and national purity that pushed dissent into the sphere of ‘domestic’ politics and delegitimized calls for accountability as divisive and diverging ‘from the national cause’.
The recidivism of the current ‘crisis’ discourse projects itself onto both these levels. During a large demonstration against the initial proposals of the deal that was rejected, fringe left-wing groups stood beside the largest labour union which is supported by the communist party, as well as supporters of a new centre cross-party coalition of nationalist and anti-Troika objectives currently under formation. Some of the chanting was common and familiar amongst the crowd: ‘Troika out of Cyprus’ was reminiscent of the 1980s slogan ‘Turks out of Cyprus’. But other chants were not.
When a megaphone announced that ‘the time of the left is now’ the speaker was approached by a middle-aged woman and warned that ‘this is not the time for politics’. ‘Politics’ in her definition was the politics of blame, the politics of internal strife, the prerogative of ‘politicians’ as a class which in current crisis discourse is presented as suffering a secondary ‘crisis’ of delegitimisation. But it was nevertheless a political articulation of a desire to hold the crisis as a hapless accident of history that can be overcome through return to what Roitman analyses under the term ‘normalcy’.
In this sense, the current crisis has little to qualify it as an ‘event’ of foundational repositioning of political subjectivity as Badiou might describe the term. The political subject of the Cypriot crisis is a post-colonial citizen thoroughly embedded in liberal capitalism who will resist the ‘hair-cut’ of hard-earned deposits but will also persevere through austere welfare cuts. This moral worldview is already supplanting a growing anti-migrant rhetoric and a heightened nationalist discourse in the face of Turkish provocations over disputed energy resources and geopolitical power claims. It also underpins the orderly queues outside cashpoints and banks after their re-opening, as cash is being rationed under special restrictive measures.
This is not to dismiss other elements in political discourse that could facilitate a shift in moral evaluation. The recognition that what tipped the stakes in this debacle was the over-exposure of the two failing banks to Greek government debt through the speculative buying of Greek Government Bonds shortly before their ‘haircut’ (effectively meaning that much of the debt pledged through these bonds was shed) is beginning to erode views of Greece as a benevolent motherland. Scandals over the administration of Laiki Bank under a Greek tycoon that prefigured its collapse and the lump sale of branches of Cypriot banks in Greece in a rushed deal struck concurrently with the eventual agreement over the Troika loan, reportedly as part of a European attempt to contain contagion in the event of Cyprus’ exit from the Eurozone, might give further pause for thought about such views.
But there remains, at the same time, a blanket evaluation that ‘the party is now over’. Under this evaluation hopes are being articulated, largely in private for the moment, that ‘the coming of the Troika’ can be good. It has the potential of putting checks and balances in place, revamping an ailing system, inaugurating accountability and transparency. In the wake of the Troika deal, commissions have been appointed to investigate and apportion responsibility to parties involved in financial wrong-doing that brought about the crisis.
Hopes that these commissions may deliver justice still hangs in the balance, as the work of previous commissions on two tragic events in the last decade (an airplane crash and a huge ammunitions’ explosion) is still being debated. At the same time, the process through which Laiki Bank is being restructured (with supervision from the Troika) appears extremely opaque. Meanwhile, the space for arguing for redistribution or the repatriation of capital in foreign accounts as a way of combating neoliberal reforms to the welfare system is shrinking that much faster under the sign of a ‘party’ which is over and in which invitees are presumed to be all those now called upon to pay up.