Venue: A “private room” at the back of a restaurant in the centre of Larnaca. Dateline: shortly after 15 March 2007 following a vote in the House of Representatives. 12.30 am.

Stylios (A Banker), Christos (A Government Minister), Andreas (our Property Developer friend again!) and Marios (A Lawyer) are in jubilant mood as copious amounts of Zivania are distributed.

Stylios: I have to propose a toast to Christos. How on earth did you get it through the House (he says, referring to the recent vote on joining the Euro)?

Christos: (Accepting the congratulations warmly). Well, since we joined the European Union, it was really only a matter of time before we signed up to the single currency. We now have financial stability, a template for governmental and banking structures in the EU that we can adhere to and best practice models for every aspect of life in our new member state.

Little shot glasses of Zivania, on their way to lips, are halted in mid-air as all stare at Christos in disbelief.

(Cracking up with laughter, Christos jokes): Nah, I just promised the Deputies that the EU would give us all boat-loads of money!

Relieved, everyone laughs and toasts again.

Through the laughter, Andreas, slightly concerned, has a serious question.

Andreas: Stylios, explain to me again how the next phase of the plan works?

Stylios: I thought you would ask. (He shouts for the waitress who comes running, exchanges a few words and disappears through the door to be joined by an earnest, bespectacled young man carrying a laptop. Stylios introduces him).

This is my nephew, Georgious. He studied Socio-Economics and Politics at Edinburgh University (no tuition fees) so can fill us in on the details.

Georgious connects his laptop to the overhead projector, coughs and begins.

Georgious: Well, if we look at the examples of countries acceding to the Euro, historically there is a convergence in 10 year sovereign bond yield spreads to the German Bund (produces complicated graph with even more complicated spreadsheets) – Determinants of intra-euro area government bond spreads during the financial crisis.

Andreas: Are you speaking Greek? Or English even? Stylios, tell him to say something I can understand! He’s not making any sense.

Georgious: (sweating profusely and realising he’d better not blow his big chance to impress his uncle, especially if he wants to get into senior management in his uncle’s bank, rephrases to the level of his audience). It means that Cyprus banks can borrow money from international markets, say German and French banks, pretty much at the same rate as say Germany!

Everyone stares at him. Liquidity had always been a problem in development in Cyprus (as “not paying back” was – totally unjustifiably, I must add – regarded by many in international banking circles as a Cypriot national sport, no-one would normally lend to Cypriot banks at rates other than punitive).

Georgious continued: So, in theory, Uncle, your bank could, for a limited period only, borrow as much as it liked from other institutions (historic rates about 3%) and lend it to developers at whatever rates you liked (historic 7 – 9%) and, as long as they paid it back, you’d be making a fortune. (Stylios smiles proudly at his nephew).

Andreas (again): It’s alright for you, but what happens if there is a downturn in the market and I don’t sell all my property quickly? With interest rates of 9%, plus probably penal rates, I could be building up a mountain of debt that I may never clear!

Stylios (rising to his feet and patting Georgious warmly on the back as he takes a seat): That’s the beauty of the whole thing: you don’t have to pay the bank back at all! (Seeing perplexity ravaging Andreas’ features, Stylios explains further). You see, it’s not my bank’s money, we’re just borrowing it from other foreign banks. If you don’t pay me, I don’t pay them. If they don’t get paid, then their banks crash and their whole economies are thrown into turmoil, leading to massive social unrest, poverty, political upheaval and general depression.

Christos (chiming in): Who knows, maybe even war, with countries breaking up, economic migration, protectionism and scape-goating of migrant populations.

Stylios: Yes, yes, so they HAVE to make sure our banks stay afloat. No matter how much debt we have, they have no option than to keep financing us. If they stop, we just go back to what we had before where they don’t lend us money anyway.

Andreas (struggling with the concept but light appearing to dawn): I don’t get it, what’s to stop me from not even bothering to build in the first place if I don’t have to sell to pay you back? Koombarro (he asks, addressing his family’s long-term friend and adviser, Marios the Lawyer)?

Marios: Absolutely nothing. As selling property is not the main aim, if you build and sell, you get more money. If you build but cut whatever corners you can to save costs (i.e. no damp-proofing, no insulation, no electricity, running water, drainage etc.) when you build, you get more money. If you don’t build at all, you get even more money! My friends and I have kept the law on property fraud sufficiently lax for you to sell even the most disastrous pieces of concrete imaginable and never see the inside of a courtroom for non-payment of borrowings nor face any criminal prosecution. You can even sell the same property twice, even if it doesn’t exist.

The really great thing though is that, with the way we’ve set up the transfer of title process if you DO sell a property (existing or non-existant), then you can still use it as collateral to borrow even MORE money from Stylios right up until the contract of sale is registered at Land Registry by the conveyancing Lawyer; which would be me. Borrowing against the property after I tell Stylios when the sale was officially registered would be unfair.

(The Banker and the Lawyer exchange smiles. Marios continues): We thought it was the least we could do.

Marios (continuing): We’ll have to change EU lending criteria (on Non-Performing Loans, using only Loan to Valuation and not ability to repay) and lie about it until the EU find out. Valuations will be carried out by friendly Cyprus RICS registered Surveyors. Do we have any in the room?

(Everyone puts their hands up, including Georgious and the maid, returning with another bottle of Zivania).

(In anticipation of Andreas’ next question, Marios adds): Don’t worry about the EU, UN, Nato etc, we know how ineffective they can be (a brief moment of silence follows as the older guests’ hearts turn towards the direction of nearby Famagusta), besides, every member state can do pretty much what it likes (Implementation Deficit – Why Member States do not Comply with EU directives?), as the only sanction the EU can give for any non-compliance would be financial, and they’re the ones who would be giving us money to stay afloat in the first place. So, they are likely to kick any case against us by disgruntled buyers back to Cyprus and, as we’ve rather cunningly I think had the policy for years that there are no official translations of any laws and that the only legally-binding documentation is in Greek, we are in the process of drafting a paper which says that all grievances against us are civil matters and so will have to be taken up in the Cyprus Courts with a Greek-speaking lawyer. Apart from tiny bits of Italy, Armenia, Romania, and Ukraine, as well as Albania (who would want an Albanian lawyer?), ALL Lawyers would be us again. Oh, and maybe Greek ones, but they understand.

(All congratulate Marios on his carefully worked out plan. As an aside, he adds…)

Marios: All developers, bankers and my humble profession will be able to stash away all the borrowed money, with no fear of prosecution and any debts not written off will be saddled on the properties themselves. The courts will have cases running for years and, my professional colleagues and I will be there to, erm, assist until the plaintiffs eventually run out of money and go home. The long term plan is that once they’ve all gone, we can claim back our Cyprus soil. And if there’s anything I haven’t thought of, we can always change the laws as we go along. Any questions?

Andreas (not yet 100% convinced and to the general annoyance of the others): Er, yes, actually…. I take it we’ll be selling mostly to the English? (Marios nods). What’s to stop them rioting against us, really getting together as a group and putting us out of business completely through some form of collective action, say bad publicity, websites, boycotting of everything Cypriot until they get justice? And then there’s the UK Government who won’t take this lying down…

(Stylios waves to his nephew, who stands up and coughs again).

Georgious: I’ve been studying these people since I’ve been away and read up a lot on them. Firstly, in general, they have a deep sense of right and wrong and genuine moral outrage if they feel they are being unfairly treated. They have a faith in institutions though, probably because their own institutions work quite well, so will exhaust all of the conventional channels of redress before they realise that neither Cyprus, nor the EU, function anywhere near the way England does. Probably as a consequence of empire and probably unintentionally, they consider foreigners as being slightly inferior (hence outraged statements like: “The French have a better railway system than ours!” the implication being that “ours” SHOULD be better than “theirs” because we’re British!), so they are likely to consider their property situation as being a series of unfortunate events or unscripted chaos based on failings in our Cypriot systems rather than as a well-devised plan. They also DO like to consider themselves individuals, so being part of a protest movement which aims to find a collective solution to a problem that affects everyone is not something they would do naturally; being more prepared to find an individual escape (“I’m alright Jack”) is not considered selfish but clever. Competition, especially amongst themselves – an idea of “keeping up with the Jones” – is also favoured.

(All were silent as Georgious, now feeling the senior management job was virtually within his grasp, pressed on)…

Georgious: The English are normally friendly, well-mannered and of mild temperament, from what I’ve seen, but also blissfully unaware of the amount of deep-seated hatred against their nation from the world in general. Even though it’s in living memory, they tend to forget that they’ve invaded nearly everywhere – British have invaded nine out of ten countries – so look out Luxembourg – and were responsible for some pretty horrendous acts carried out all over the world, including here in Cyprus in the late 50’s, but also that they still illegally occupy 98 sq miles of ROC territory even now (the older guests nod in solemn agreement.

Georgious’ eyes narrowed as he pressed home his advantage with steely determination).

Georgious: Many English do not realise that for so small a country as theirs to be punching so far above its weight on the international stage, they have had to be extremely clever and extremely ruthless (while at the same time giving everybody the impression that they are the international Good Guys!) When hard choices need to be made between protecting the national interest and the rights of a small number of their citizens, the British State is more than capable of making those choices. Those 98 sq miles of prime territory, in the heart of potentially massive mineral resources and at the crux of 3 continents is of significantly more importance to Britain than the rights of those citizens.

So, in summary, the English will: refuse to believe what’s happening to them until it’s too late, wasting loads of money in the process going down official channels; they’ll refuse to believe Cypriots are capable of putting in place such a plan; they won’t understand why it’s happening; they WON’T organise to stop it and some of them will be only too willing to completely deny what’s happening for their own benefit (as: they have their deeds already; they want to sell their indebted property on to another unsuspecting Brit or because they have Estate Agencies etc. to run). Most importantly though is neither the EU nor their government will do a thing to help them. (Announces triumphantly) Gentlemen, our plan will be successful.

(Collective banging of glasses and fists on table, plus cheers. Andreas finally allows a broad grin to stretch across his face. However…)

Andreas: Er, one final question (pause). What will happen to the Republic of Cyprus with all the debt, potentially broken banks and a broken economy? You’ve talked about turmoil, massive social unrest, poverty, political upheaval and general depression; are we not abandoning future generations to a future without hope?

The sound of four voices raised in raucous laughter could be heard deep into the warm Mediterranean night.

CYPRIOTS are not fools and should not be treated as such or as idiots. The people are fully aware of the government’s spin trickery attempting to convince politicians to vote in support of a bad law. If approved it will reduce many families into utter poverty and the loss of their homes. The unemployed and the most vulnerable sectors in society will become the first victims of the proposed law if approved by parliament.

The present government is actually using political blackmailing tactics once again – just like it did previously. It is now attempting to introduce – indirectly – another “kouremma” (cropping) by allowing banks to sell problem loans of hundreds of homes “en-mass” to third-party investors on the international market.

Meanwhile the banks keep promising in public attempting to reassure the citizens that they don’t intend to make people homeless. The collusion between the banks and government to convince the public “that all is well” is becoming desperate and is quite obvious. Yet it has been leaked in the press that: “the Authorities will allow and facilitate lenders to transfer existing individual loans together with all collateral and securities to third parties at minimum transaction costs without having to obtain the consent of the borrower”.

Reading between the lines, it is of no wonder people don’t believe in official statements that reek with spin and trickery.

The betrayal of citizen’s trust has left deep scars in peoples’ minds and will not be so easily forgotten. Two year in power the Anastasiades government is still at a loss without direction as to where the country is going and how to get out of the mess. Things are worse off today than ever before; citizens are furiously angry with the government and its policies of what is happening to the nation and they demand radical changes, not wishy-washy rhetoric full of promises without results!

In fact, Cyprus has been raped socially and economically and while the rape continues, banks refuse to reduce the interest rates of their poison-loans to help kick-start the economy. Aside from promises, they continue to offer the highest interest rates across Europe killing incentives and any hope for recovery. The present government through deception plans to bail out failed banks for the second time round at people’s expense. It’s cheap and easy!

Ethically, banks should bail themselves out and not the citizens. It is not people’s problem or people’s responsibility or even obligation to do so. Iceland did right by not supporting them and did Argentina. That takes daring political decisions that are so badly missing in Cyprus.

Where banks were cornered, when they recognized no financial bailout was forthcoming from taxpayers, they soon found money to bail them-selves out. In Iceland, they did so because the leadership used the law of the land to protect its citizens and not the banking institutions. No such initiative was ever contemplated by the present or even past government. Today, the result of those policies is quite obvious; they were wrong from the very beginning!

Before the release of the next loan tranche of cash payment to Cyprus, Troika demands – a pre-condition – that people with payment difficulties have their homes repossessed. Yet, they conveniently ignore the fact that it was Troika’s EU policies that ruined the country in the first place. Today more than 130,000 people are out of work and forced to live on hand-outs and below poverty standards. The unemployed and small businesses will certainly encounter payment problems and not necessarily due to their own doing but due to government bad policies.

Home repossession formulas suggested are complicated but in short, banks will have the right to foreclose and forcibly sell people’s homes at 50% (and even less) of their current evaluation – keeping in mind that house prices have already dropped by 75%. At the same time homeowners will be held responsible for the outstanding balance of the same loan.

As for an example: if a loan outstanding is 150,000 Euros and the market valued of the property is valued 200,000 Euros and then sold at 50% reduction at 100,000 Euros, the homeowner will still owe the bank 50,000 Euros and be legally held responsible for the balance.

Under those conditions, not only people will have their homes repossessed but also under Cyprus law – unless it is revised – the fear of imprisonment for failing to pay a debt cannot be ignored or be excluded. Ironically, a person in distress may find a new home in prison!

Banks and the finance minister are resisting calls by the political parties to consider wiping out the balance owing once people are forced out of their homes. If the proposal is approved it would actually also enslave and commit the borrower’s children and all the other nine co-signers involved with the case until the outstanding balance is paid in full. An economic tragedy will then rise out of the ashes of despair to become the worse nightmare the country has ever encountered.

That is stuff that revolutions are made of and if the government fails to recognize that possibility, it may have a rebellion on its hands unless it listens to its citizens demanding fairness and not be so inclined to support EU-Troika and banks at the expense of the people.

In fact, “the right to rebel is the right or duty of people to overthrow a government who acts against their common interests or abuses constitutional powers as authorized by the electorate” – American Constitution.

That is precisely what the government is attempting to do: “act against the common interest of the people”. The right to rebel extends back to ancient China and is enshrined as an effective measure to protect the nation from bad government.

Fortunately people have finally wised up. They will no longer tolerate being dismissed or ignored by an elitist government that fails to understand the needs of the people and the country. There is a grassroots movement growing to resist this criminality because the family home of a Cypriot, is sacrosanct and he will defend it with his life if necessary!

In view of this, a rebellious move against the government’s attempt to rob people again has grown and mass rallies will become a regular sight across the nation. The entire country is in uproar. This indicates that the general public, labour unions and other organizations can no longer tolerate injustice. They are ready to defend their rights by rebelling against a system that has not been in support of citizens and the country.

Most importantly, it will demonstrate that in full respect of democratic principles, Cypriots as a civilized nation did not rebel the last time their bank accounts were robbed. This time it’s very different.

The government’s attempt to enforce a bad law may turn out to be the straw that broke the camel’s back. Cypriots are not fools and certainly can no longer be fooled by politicians again.

That is a good sign for the future and for democracy.

Andreas C Chrysafis
Author – Writer – Artist

https://www.facebook.com/A.C.ChrysafisAuthor

Foreclosures: what’s going to happen?

With the government trying to pass a law on foreclosure of mortgaged properties, the Cyprus Mail asked various people in the Old Town of Nicosia what they think is likely to happen.

[youtube=https://www.youtube.com/watch?v=cyVJNqNRB9c&w=470&rel=0;&showinfo=0]