BIG ISSUE CYPRUS
Solving the Cyprus crisis
Words | Francine Carrel
itting on a balcony in Cyprus, the sun beating down with unseasonable intensity, the gentle background noise of nature only occasionally interrupted by the obscenities coming from the golf course, you could almost be forgiven for thinking that all is well in the picturesque island. Of course, as anyone who’s been watching the news in the last few months knows, this is far from true. A bubbling pot of troubles has boiled over into a fully-fl edged economic crisis for Cyprus. Aphrodite Hills Resort set up a press trip for OPP several months ago – but as April’s departure date drew closer, the issues in the country started to come to a head very publicly. The ex-Governor of the Central
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Bank of Cyprus, Athanasios Orphanides, recently held a lecture on the crisis.
Mr Orphanides claims that the
government of Cyprus (at the time under the socialist Demetris Christofi as) ignored warnings from central banks and signs that “should have been obvious to anyone with access to market data”. Whether this is strictly accurate and fair is a topic of some debate. It can’t be denied, though, that warning signs have been fl ashing for a while. Mr Orphanides stressed that Cyprus should have sought help from the Eurozone in May 2011, when it was pushed out of the international markets. Once the
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island fi nally reached out for aid in 2012 (on the same day that Spain asked for help) it took a long time to fi nalise a deal. (In contrast, Spain’s bailout package was confi rmed within three weeks of the country requested EU assistance.) All in all, Cyprus’s descent into crisis has been drawn-out and complicated. Many parties can be blamed in one way or another. All we can do for now is look at what has happened – and what is likely to happen next. .
FINANCIAL CRISIS TIMELINE 2010
May 18: The Cypriot Central Bank warns the government of an impending crisis. December 15: The European Central Bank warns the Cypriot government in a “strictly confi dential letter” (now available to read after a little Google-ing) that “signifi cant concerns exist” about Cyprus’s banking sector.
2011 May: Cyprus shut out of international markets July 11: Cyprus’s main power station suff ers a catastrophic blast after explosive materials were left out in the sun nearby. A total of 53% of electricity production is wiped out, causing catastrophic fi nancial and political backlash. October 5: Russian Federation grants a EUR 2.5 billion loan to Cyprus
TITLE DEEDS
Whilst all this has been going on, one of Cyprus’ long running real estate problems has dropped out of the spotlight. This is the ongoing problem over delays – often stretching to years – in issuing title deeds to the buyers of properties and the associated issues of buyers being unable to obtain their title deeds because the developer has granted its bank a mortgage over the land or because the property had not been built in accordance with building and planning permits. “Owning” a property without
title deeds exposes the buyer to great danger. This was something of
sufficient concern to the Troika (EU, ECB & IMF) handling Cyprus’ application for a bailout that dealing with it was written into the Memorandum of Understanding between it and Cyprus setting out the steps that the country had to take in order to receive its bailout money. By Quarter 4 of 2014 it must reduce the backlog of people waiting for title deeds for more than one year from the claimed 100,000 cases or more, to just 2,000. Cyprus must also take steps to deal with cases where issuing deeds was impeded by banks, those that had mortgages or those with no valid building permits. When OPP visited Cyprus
in September 2012, both the Director of the Lands Department and of the director of the local Nicosia office were confident that they would meet these targets and its staff was working overtime in order to make this happen.
How are they doing? The Department concedes that the austerity measures have put it under pressure but still seems confi dent that it will comply with this timeline. We will review the position in December.
www.opp-connect.com
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