The Order of Crisis

Crisis as a Political Tool in Cyprus

Contextualizing the Politics of Crisis

Paralimni Collage. Photo courtesy Berkaysnklf Wikimedia Commons

Even though the Cyprus financial crisis exploded onto global newsfeeds during the last two weeks of March, problems in the Cypriot economy had been the fodder of daily local media discussions since the summer of 2011. Viewed alongside problems recognized as systemic to Cypriot public and financial governance, these discussions suggest that the crisis should have been expected. Indeed, most social science studies of the global financial crisis emerging at the moment seek to explain such systemic factors that should have been recognized prior to 2008. If the term crisis is taken as a misnomer, what does the employment of the concept enable in the sphere of governance and public action? What are the means through which crisis becomes a political tool?

The discussions of crisis in Cyprus had in large part been sparked by the 2011 accidental explosion of a large munitions’ pile, confiscated from a Russian vessel travelling from Iran to Syria in 2009 and temporarily placed in a naval base next to the main electricity power plant while negotiations between the Cypriot government, the UN, the US and other global players were on-going. The explosion claimed the lives of 13 soldiers and fire-fighters and destroyed the greater part of the electricity facility. With the cost of the explosion estimated at around 2bn (prices throughout in Euro), the economy (of a magnitude around 20bn in GDP) appeared to have been knocked off the Stability and Growth Pact criteria (set by the EU to ensure financial cohesion). In the days that followed the explosion, crowds of protesters converged on the presidential palace and called on the communist president to resign on the double count of responsibility for the explosion and pursuing bad economic policies. The explosion had heralded a crisis discourse more than it did crisis per se by introducing a geopolitical vocabulary of victimization to allocate responsibility to some actors (government, global powers), while allowing others, such as the military, to abdicate it.

In financial terms, the debt to GDP ratio had in fact been hovering on the 60% threshold set by the EU in the previous years too (rising from 8bn in 2008 to 13bn in 2011). In February 2012, the decision of Greece’s lenders to write-off half of its debt, left banks in Cyprus, exposed to about 22bn of Greek private debt, at the brink of default. The government recapitalized one of these banks (Laiki, the second largest bank on the island) in May 2012 in an effort to keep afloat the main driver of the economy. The size of the Cypriot banking sector, estimated at five to eight times that of the island’s GDP, has been approached as a problem by the EU and IMF chiefly because of its reliance in the last decade on Russian offshore investors and a property bubble. In December 2011, the government had secured an emergency 2.5bn loan from Russia, in order to avoid applying for assistance to the European Stability Mechanism, which in its previous forms had bailed out Greece and Portugal. By June 2012, however, the application proved unavoidable. In short, the financial breakdown resulted as much from accidents (Greek “hair-cut,” bursting of the property bubble, explosion) as it was prefigured in recent Cypriot financial history (debt ratio balancing, the property bubble, banking malpractice).

This double source of the crisis (in exogenous and endemic factors) is recognized in the preamble of the document that has since become a staple part of political discussion in Cyprus. The Memorandum of Understanding on Specific Economic Policy Conditionality (“the Memorandum,” mnimónio in Greek) was initially drafted in November 2012 and eventually adopted in April 2013. It has since become a term of identification in daily parlance: “Memorandumean” (mninomiakó) refers to austerity laws and other measures adopted to fulfil Cyprus’ obligations to its lenders (EU, European Central Bank and IMF, collectively known as the Troika), as well as to the political stance of being pro-Memorandum (in contradistinction to those who are anti-mnimoniakí and advocate a variety of alternatives). In such discussions, crisis is unequivocally spoken of in terms of shock: break is emphasized over continuity, surprise over expectation, aberration over order. The significance of this discourse is that it is increasingly framing political conduct within the parameters of emergency, whereby the deterioration of social welfare and rights is considered inevitable and thus naturalized, while ‘the economic condition’ is used to explain away policies and decisions, whose financial benefit is not always obvious.

The discourse of crisis, in short, is being used as a political tool to highlight some aspects of the problem (especially those relating to an outside, variously defined), while obscuring others. This consolidates a sense of injustice against a national self that appears as unified and victimized. The subject of the crisis may thus be pluralized, as shown below, but the moral evaluation of victimhood remains rooted in nationalist premises. In this context, class difference is effaced, racial difference is vilified, and gender difference is de-prioritized.

Subjects of the Crisis

One of the major challenges of the declining economy is widely recognized as being the spiralling unemployment, which officially stood at 14% in March 2013, 3.5 percentage points higher than the previous year and double in size from the 7% figure for 2011. Lowering salaries to allow more people to work at the same cost to companies is now held to be an intuitive expectation in the management of the crisis. The lowering of living standards is presented as inevitable. This then enables corrective policies to be approached from the bottom up rather than top down. Another aspect of this approach is the emphasis on ensuring that jobs go to Cypriots, backed by government incentive schemes giving preference to Cypriots over EU citizen applicants, who should otherwise have enjoyed equal labour rights, but who are instead the target of public stigmatization under the label kinotikí ([European] community workers). Below them, third country nationals from the global south, many of whom having worked irregularly and often under exploitative conditions in previous years are now facing voluntary return or deportation. As the terms of the debate are racialized, the gains to be had from such universal lowering of labour costs become muffled. Under this prism, the crisis in Cyprus, perhaps more than elsewhere, seems to hinge on a disjuncture between the primary targets of intervention policy (‘the rich’, represented in the figure of bank share-holders) and its ultimate trickle-down victims (who are racialized, classed, and, considering the multiple effects of welfare cuts, gendered).

In its final form, the memorandum provides for a severe cut (in the 40-60% range) in deposits above a 100,000 Euro threshold held at the remaining major failing bank in Cyprus, after Laiki was effectively closed down. Some of these depositors were reportedly returning retirees from the diaspora and adherents to a Protestant ethic of work and saving; others were companies, institutions or corporations (including the Orthodox Church, which is known to control vast assets, and provident and pension funds, for which part exemptions were being planned). All of them were projected as the inadvertent victims of a policy devised by the Troika to target Russian depositors. Conspicuously absent in this register are the higher classes (Cypriot, Russian and otherwise) with accounts abroad, who had shifted their capital out of the country upon reading the signs of the failing economy well in time. Despite much public and morally charged condemnation of such actions, and the set-up of investigations to determine wrong-doing through proof of access to privileged information, concrete policies aiming at the repatriation of capital are yet to be discussed.

In the meantime, the repressive apparatus is instead targeting protesters, who are calling for enforced contributions from the biggest capital holders and for cutting back on expenses other than welfare (including, for example, on defence). Anti-austerity demonstrations, Cypriots were informed in February by the government spokesman shortly before he took office, would henceforth be seen as an obstruction to important governmental work and should not take place. So far, from the thousands of jobs being shed in the public sector, the most worrying to the government seem to be those in the police, where civil servants from elsewhere have been enlisted to desk duties to make up for posts vacated due to early retirement (spurred by fear of shrinkage to pension-linked benefits). In May, increased patrols to combat a rise in burglaries were cited as the context in which a robbery at a bakery was thwarted but the suspected thief left with a police bullet through the forehead. While large demonstrations of the magnitude seen in Madrid and Athens are yet to take place in Nicosia, a brutal police raid on the local Occupy movement a year ago (April 2012) remains a reminder of the capability for violence against fringe political movements that might gain strength. It is also a reminder of how far reconciliation discourse vis-à-vis the Cyprus conflict, has shrank since then.

The upper and middle classes then, along with migrants, political activists, and radicalized individuals and groups from across the political and economic spectrum (including bond-holders’ groups, bank employees, humanitarian organisations, and a strengthened extreme right-wing movement), are all subjects of the crisis in different ways. The extraordinariness of the crisis serves to blanket disparate goals, conditions, and aims under a sense of victimization, which, however, is likely in the aftermath to cloud the distinction between those who stand to gain and those who are placed in social positions from which they can only lose.

Olga Demetriou is a social anthropologist based at the Cyprus Centre of the Peace Research Institute, Oslo (PRIO). Her research focuses on marginality and subjectivity in Greece and Cyprus. She has recently published Capricious Borders: Minority, Population and Counter-Conduct between Greece and Turkey with Berghahn.

via Anthropology-News http://www.anthropology-news.org/index.php/2013/06/11/the-order-of-crisis/