Business as Usual in Nicosia?

Election results in Cyprus suggest an endorsement of austerity. But the reality is more complex.

Cyprus' President Nicos Anastasiades arrives for the second day of the European Union leaders summit at the European Council on December 15, 2017 in Brussels, Belgium. Dan Kitwood / Getty

Almost five years ago, Greek Cypriot president Nicos Anastasiades negotiated a “bail-in” to resolve the nation’s lingering banking crisis. The original deal required ordinary citizens to give up a percentage of their savings to cover the damages caused by the banks’ overextension in debt-ridden Greece. Overnight, ATMs were shut down, causing widespread panic.

The measure provoked an outburst of rage, and protesters laid siege to parliament in the capital, Nicosia. Confronted with the anger, the Anastasiades government softened the measure. Only bank accounts with over €100,000 would be affected by a “haircut” that would levy a set percentage tax on their accounts. Nevertheless, the results were catastrophic: businesses closed, and unemployment soared.

Anastasiades claimed the European Union forced him to accept the measure. But EU officials denied this, stating, quite credibly, that Anastasiades himself proposed the deal. Moreover, it is common knowledge in Cyprus that the corruption-plagued Anastasiades and his entourage had started transferring their money abroad in anticipation of the bail-in.

As in other austerity-ridden countries in southern Europe, the crisis was a blessing for those forces ideologically fixated on privatizing state assets. Even from this perspective, the results were dismal. For example, privatizing the island’s busiest port in Limassol proved a disaster.

Austerity measures hit vulnerable groups like the elderly and the disabled hardest, as the government slashed benefits. Labor deregulation increased precarity among young people, and university graduates must now subsist on monthly wages of €500 in the private sector. Falling unemployment rates owe more to emigration than to any substantial improvement. Social security-protected employment in the public sector has increasingly been replaced by contracted “service provisions,” affecting high school and university faculty.

In the never-ending diplomatic saga that is the Cypriot question, Anastasiades abruptly embraced nationalism, turning his back on last autumn’s talks with the Turkish Cypriot leadership. This prompted UN Secretary-General António Gutierrez to simply wish “Cypriots, north and south” “good luck,” calling the future of UN efforts to resolve the dispute into question.

In every aspect, then, the Anastasiades government failed. Yet, in last Sunday’s runoff presidential election, Anastasiades comfortably defeated the Left’s candidate, Stavros Malas, by a 12 percent margin. How can we explain this turn of events?

A Decent Performance for the Left

Far from securing an overwhelming mandate, Anastasiades’s reelection owes much to low turnout: the lowest ever recorded during a Cypriot election, with abstention reaching 26 percent. His legitimacy therefore rests on the approval of just 39 percent of registered voters on the one hand and his opponents’ inability to find common ground on the other.

It may sound peculiar, but it would be wrong to call the election a failure for the Left and its main party, the Progressive Party of the Working People (AKEL). From the start of the campaign, the odds were stacked against it. Over the last five years, the level of class struggle in Cyprus has been extremely low, and, in 2016’s legislative election, AKEL suffered a defeat when many traditional voters abstained.

Meanwhile, the media, including the public broadcaster, remains firmly in right-wing hands. Polls on state television last December predicted an easy Anastasiades victory of 44 percent in the first round, with Malas and Nicolas Papadopoulos — the son of a former president who campaigned on a hard-line response to the national question — both struggling to enter the runoff with 17 percent each.

Common sense dictated that the battle would be fought over the Cyprus question, between hard-core nationalist Papadopoulos and an opportunistically nationalist Anastasiades. Papadopoulos even made leftish noises on social policies to woo AKEL voters, presenting himself as the only candidate capable of beating the incumbent.

However, Cypriot presidential elections are primarily referenda on socioeconomic issues. In the end, Anastasiades came first, but only claimed 35 percent of the vote. With a low-budget campaign, Malas secured 30 percent — a comfortable 5 percent lead over Papadopoulos, who invested millions in advertising.

This was by all accounts a decent result for the Left, still reeling from attacks on the island’s first left-wing government under Demetris Christofias between 2008 and 2013. In the runoff, Malas had backing only from AKEL; he refused to engage in the wheeling and dealing that traditionally marks Cypriot elections between rounds. The 44 percent of the vote he won indicates that the Left’s message extended well beyond his party’s traditional voting bloc.

The Unsuccessful Success Story

Forecasts of an easy Anastasiades victory were based on his government’s alleged success in facilitating the country’s exit from the eurozone crisis. Articles in the German press regularly praise the “Cypriot miracle,” offering all sorts of culturalist explanations that contrast Cypriot success with Greek failure. With a work ethic inherited from British colonialism, the Cypriots made sacrifices, accepted austerity, and can now reap the benefits. The anarchic Greeks, on the other hand, always prone to protest and disruption, are eternally trapped in a vicious cycle for which they blame those who merely want their best — in this case, the benevolent Germans.

Leaving such talk aside, appearances can indeed deceive. The Greek and Cypriot economies have fundamentally different structures. The Cypriot crisis was a banking crisis that turned into a fiscal crisis overnight thanks to the bailout; the Greek crisis manifested itself in the never-ending, austerity-induced debt spiral in which the public sector still finds itself trapped. Unlike Greece, Cyprus formally exited Troika supervision it was forced into in 2012.

Cypriots, traditionally used to a higher standard of living, often visit Greece and are well acquainted with the social catastrophe facing that country. Comparisons between “bad” and “worse” are thus quite tempting.

In addition, the illusion of Cypriot growth partially rests on external circumstances. The global economic recovery — made possible by the vast sums of money pumped into the banking sector and China’s role as the world economy’s locomotive — coincided with Anastasiades’s first term.

Local factors also contribute to this illusion. The 2013 bail-in had a profound psychological impact on citizens, similar to the effects of the shock doctrine Naomi Klein describes. Feelings of disorientation and powerlessness accelerated political disengagement and paved the way for approval of almost any growth-promising measure. This not only included privatizations and job deregulation but also loosening environmental and zoning restrictions for building new hotels, casinos, and luxury apartments.

These opulent residences go along with another short-term solution the Anastasiades government concocted: the so-called golden visa scheme, which grants EU citizenships to wealthy individuals, mostly from Russia and China, who buy high-priced real estate in Cyprus. These initiatives form the basis of an unsustainable economic model, founded on social and environmental degradation, where elites’ consumption patterns mask rising social inequality.

Left-Wing Mismanagement

The success story comes with a partner: the story of the Christofias government’s failure. We should distinguish between his administration’s numerous failings on the one hand, and the attacks it was subjected to by big business and the Right on the other.

The dominant narrative on the origins of the economic crisis in Cyprus frames the Left as the main culprit. While in power, the story goes, it wasted money on social provisions and “embarrassed” Cyprus in the eyes of rating institutions that constantly downgraded the island’s creditworthiness.

But several inconsistencies plague this version of events. Clearly, the Central Bank — over which the government exerts no control, and which encouraged local banks to invest in toxic Greek state bonds — should carry most of the blame. But according to the Christofias government’s right-wing opposition back then, Cyprus had “the best bankers.” It had castigated AKEL for clinging to “failed ideologies of the past” by questioning the financiers’ dealings.

Even though Christofias only unenthusiastically bailed out Laiki Bank, the island’s biggest financial institution, the Right blames the public debt incurred from the rescue and the ensuing austerity on his government’s “overspending.” Anastasiades also claims that his predecessor stalled negotiations with the Troika so that the right-wing president would “inherit [AKEL’s] mess.” But everyone knew at the time that the Troika itself was stalling, aware that Anastasiades would be a much more compliant negotiator.

One should criticize AKEL’s record in power and its tame attitude toward the elites. Even under attack, it defended itself half-heartedly — something many interpreted as an admission of guilt. But we cannot blame the left-wing party for the global economic meltdown!

The Left’s Recent Campaign

Since Malas served as minister of health under Christofias, Anastasiades could wield the story of “left-wing mismanagement” as an ideological weapon during the campaign. Many traditional working- and lower middle-class voters of the Right buy into this story, something reinforced by indoctrinated anti-communism and Greek nationalism. By highlighting its candidate’s “independence” and keeping a low profile during his campaign, AKEL avoided confronting this false premise, thus implicitly confirming the Right´s narrative.

Indeed, Malas doesn’t belong to the nominally communist AKEL. A genetics researcher by profession, he sees himself as a figure of the center left. He ran on the most socially progressive platform to date, regarding issues like multiculturalism, the environment, LGBTQ rights, and curbing the church’s influence on education. His socioeconomic views are mildly neo-Keynesian; he emphasizes investment in innovation and advocates sustainable development. On the Cyprus issue, Malas ran as an unambiguous supporter of negotiations and reunification in the framework of a federal solution.

His nomination aligned with AKEL’s old pattern, whereby the communists, traditionally excluded from power, field independent “social modernizers” as candidates. In a US-style presidential republic, AKEL believes such figures will have a broader appeal and the capacity to secure the absolute majority needed for the highest executive office.

Nevertheless, the candidacy of Malas proved effective in rallying the bulk of the Left’s voters behind him. However, his emphasis on consensus and the belief that his socioeconomic proposal would appear beneficial to everyone, appeared out of step with the ferocity with which Greek Cypriot capital conducts its onslaught for the past five years. The reason for this inoffensive posture is twofold and entirely related to the strategic impasse AKEL currently finds itself in.

On the one hand, a sizable section of the party has internalized the idea that the Christofias presidency was a disaster. But this critique, rather than addressing the inherent structural limitations of left-wing governmental power in the absence of popular mobilization, is often framed in personal terms and geared towards electoral considerations — that is, how to make the party “less ideological” and attractive to forces on its right.

The other reason is the Cyprus question. Having stated numerous times that conflict resolution remains its top priority, AKEL effectively backed Anastasiades during the talks in Switzerland, toning down its criticism of the government’s neoliberal policies. When Anastasiades walked out, AKEL saw an opportunity to rally liberal audiences disappointed by the president’s relapse into nationalist rhetoric. For this reason, the party leadership considered running a pro-unification businessman with neoliberal views, an embarrassing move that the rank and file fortunately blocked. As a result, the party started its election campaign relatively late, whereas the liberals — themselves a marginal force in a country with no liberal traditions in the Anglo-Saxon sense — ultimately voted for the church-backed Anastasiades.

Far-Right Gains Alarming Legitimacy

The most disturbing feature of the recent elections was undoubtedly the surging support for the candidate of the National Popular Front (ELAM), Golden Dawn’s Cypriot branch in everything but name. Christos Christou came fourth with almost 6 percent of the vote, a significant increase from the 0.88 percent the party won in 2013.

When Golden Dawn attempted to register as a political party a decade ago, the move was met with near-universal condemnation and promptly rejected by the authorities. Now, in an all-too-familiar pattern, the fascists appeared on talk shows, and the media treated them like normal politicians.

After the first round, ELAM sent a questionnaire to the remaining candidates, ostensibly to help it decide its preference in the runoff. Malas refused to engage, but Anastasiades replied — while ignoring questionnaires from environmentalist and migrant-support NGOs. His response helped legitimize the openly racist party. ELAM opted not to support any candidate, but 70 percent of its voters predictably went to Anastasiades.

What accounts for this apparent mainstreaming of fascism? One obvious explanation is the Cyprus question. As ethnic nationalism forms the dominant framework of discourse in the Greek-controlled Republic of Cyprus, the fascists have easily entered the mainstream by focusing on the national question. This turns into a kind of gateway drug to other themes, like immigration. The fascists claim that Turkey is using the northern part of Cyprus to “flood” the island with Muslims in order to replace ethnic Greeks. Similar ideas are prevalent not only within parties that oppose a federal solution but also within Anastasiades’s own conservative Democratic Rally (DISY), which once housed the far-right paramilitaries who briefly toppled President-Archbishop Makarios in 1974.

But focusing solely on the island’s division as the main incubator of fascism is not only shortsighted, but it can also lead the Left into disastrous strategic conclusions. As elsewhere, the fascist vote correlates directly with economic hardship. ELAM has so far rallied downwardly mobile middle-class voters who typically support mainstream right-wing parties. It has not made any inroads into AKEL’s voting base so far, although there is no law guaranteeing that this won’t happen in the future.

Anastasiades’s reelection was assisted by the activation of the Right’s traditional clientelist networks that handed out favors, the Church, the relative relaxation of austerity, the complicity of the media, as well as an implicit anti-communism that rallied voters from the far right to the pro-settlement “liberals.”

More brutal measures, such as large-scale home foreclosures due to nonperforming loans are expected in the coming months. No doubt, the fascists will try to seize on this opportunity to present themselves as a social opposition force.

Look to the North

Any Left preoccupied with restarting reunification talks will find itself disarmed if such a development occurs. Stating this does not mean downplaying the dangers engendered by the status quo. On the contrary, the “motherlands” of both communities, Greece and Turkey, remain in a state of perpetual tension over sea rights in the Aegean. In the meantime, both countries — known for their high arms expenditures — are engaging in their own complex and potentially destabilizing alliance-building in the region. Cyprus itself remains at the heart of regional rivalries over natural gas reserves recently discovered on its sea shelf.

But the starting point of any progressive solution to the conflict must be existing material and social contradictions, as opposed to the abstract idea of “reunification talks” — themselves merely an expression of the shifts in the regional balance of power. Cyprus is not divided because of the archaic stubbornness of two rival communities drawing a border through an island paradise. It is divided because of two rival projects of capital accumulation, a conflict embedded within the tangled geopolitics of the world’s most volatile region. Offering a vision for a lasting peace on the island is directly tied to confronting the twin dangers of austerity and fascism in the here and now.

The first step is to isolate and delegitimize the ELAM through mass and determined action. In a country where memory still plays an important role in politics, the Left can point to the fascists’ openly declared ideological lineages with EOKA-B, the terrorist organization that toppled the democratically elected government in 1974 and murdered not just Makarios’s supporters but also countless Turkish Cypriot civilians.

Such a step would help channel resentment with austerity and the establishment away from diffuse anti-immigrant and nationalist sentiment, while politicizing younger voters who are justifiably disillusioned by mainstream politics. It would simultaneously mount a serious challenge to capital’s so-far unchallenged assault on living standards. To succeed, any such attempts will have to link up with similar developments in the North.

Already, the Turkish Cypriot left and labor movement have taught their Greek counterparts a lesson in antifascist mobilization. When a minor radical Turkish Cypriot newspaper compared Turkey’s recent invasion in Afrin to its invasion of Cyprus in 1974, a group of fascist Grey Wolves, instigated by Recep Tayyip Erdoğan himself, violently attacked the newspaper’s offices. This provoked a five-thousand-strong mobilization against Turkey’s domineering role in northern Cyprus’s affairs, in which fears about the loss of Turkish Cypriot identity fused with anger at Ankara’s neoliberal restructuring of the economy. The mobilization was remarkable, given that not all participants shared the newspaper’s view on the Cyprus question. But it nevertheless highlights the real issues at stake.

The failure of the Switzerland talks and the defection of pro-unification liberals to the nationalist camp once again demonstrates that the Left is the only force with the clout and ideological backbone to push forward a viable peace.

The often-posed dilemma of which agenda it should follow — reunification talks or social opposition — is premised on electoralism and a false reading of the current conjuncture, not to mention the Left’s capabilities within it. The Left can strengthen the fightback against austerity, but it cannot influence the grand bargain of regional powers on the fate of Cyprus. A major shift in the balance of class forces in both parts of the island is the necessary precondition a durable reconciliation of both communities. This shift can begin with the struggle against fascism and a capitalist onslaught increasingly delegating people to the margins of society, two enemies found in both parts of Cyprus.