And then there's Cyprus...
Just when the temptation to follow the pack and to focus on today’s US employment report and its impact on the elections is at its greatest, one of my little spies pops up from the largely forgotten crisis-stricken island of Cyprus.
Portugal might be on the front pages today with further anti-austerity protest strikes and the war of words between Brussels, Frankfurt and Madrid might be sharpening but all the while there is another member of the Eurozone which is truly back-to-the-wall. The demographics of this divided country are not easy to get one’s arms around but, all in, the population is just north of a million people. Bird droppings on the windscreen of the Eurozone crisis? Yes; unless you happen to a citizen.
Economically, Cyprus might be irrelevant but geopolitically it is hot stuff. Since the fall of the Soviet Union, Moscow’s influence in the Middle East has been waning – hence it is hanging on to Syria as it’s last “stronghold” in the area. A toehold in Cyprus could be invaluable. Anyhow, here are two letters which I received and which give a wonderful view on the Cypriot situation. The are written by a retired portfolio manager with a property on the island:
“Seems that our commie president of the EU [Cyprus currently holds the rotating Presidency of the EU and its PM is the Russian-educated Dimitris Christofias, leader of the communist AKEL party] is still negotiating hard with Putin as he hopes Vladimir will offer him a cheaper rate in return for a naval base on Cypriot shores. He still has four months in office left in Cyprus, and although he will not stand again – he still has time to do more damage. Meanwhile, we are promised lots of new tourist trade from Russia, China and old Soviet Eastern states next year as it will be made easier for them to obtain visas …
“Andros Kyprianou, leader of AKEL, is as clueless as Christofias. He thought Cyprus could easily exit the euro. Every journalist and man on the street is clearly aware of the knock-on effect and the press is so totally anti-Christofias and AKEL, it makes reading of all daily newspapers amusing in the lack of respect for the “Akelites” and the President.
“Thanks to the press, the man of the street realises that if Cyprus exits the euro and the Cyprus Pound is brought back – with the overnight devaluation of 60% very few would be running cars as the cost of petrol would eat up about 50% of an average Cypriot’s income. Remember, there is virtually no public transport on the island other than taxis (or so-called shared taxis) – but then they need petrol as well!!
“It just gets worse.”
This letter was followed by another in response to my enquiry as to how my portfolio manager friends actual holiday had been:
“The weather was perfect. Since the last three May visits were wet and cold, September is the only time in the year when it is safe to expect great weather. July and August are just too hot to invite people because all they want to do is nothing with aircon on full blast. Cyprus must have the most expensive electricity rates in the EU. In summer we used virtually no lights as daylight lasted until 8pm and we usually came in after dinner and went to bed, I did not use the oven as we ate out, I only watched Euronews at breakfast time, nobody turned the aircon on, the water is all heated by solar and was always extremely hot – so it cost €39 to run the fridge freezer for two weeks. A lot of money for ice on tap!
“A shop assistant earns about €400–€500 per month; see what I mean about paying for petrol? You cannot survive there without a car. I just do not see an end to the average person’s misery. Tourism is way down – my favourite restaurants (always greedy during the good times) have loss leader menus for between €9.95 and €15.00 for three course menus just to attract a few more customers – the situation is dire … but our village, which already has four churches, has the pleasure of being the site of the Archbishop’s cathedral because he was born there. The cost is upwards of €6m. The world has gone mad. Do you have any idea how few people live in this small village 9km from Paphos? The world is going to hell.”
Welcome to some of the unmentioned transport-technical and geopolitical realities of the eurozone crisis. I doubt very much that the situation there will make it into the Presidential TV debate on foreign policy or even beyond Page 85 of an 84 page Western European newspaper. Giving Cyprus the few billion euros it needs to stay afloat might, in the longer term, prove to be cheap at the price, but I suspect that this will prove to be mightily difficult – rules is rules.
On a lighter note, I read an article yesterday in Business Insider titled: “A Hedge Fund Has Physically Taken Control Of A Ship Belonging To Argentina’s Navy”. Apparently Paul Singer’s Elliott Associates has a UK and US court ruling against Argentina with respect to the payment of some notes. The Argentineans of course haven’t paid up. Elliott has had a keen eye on the ARA Libertad, a three-masted training ship, as it has sailed the seven seas. As it moored in Ghana, a location where it thought it might get the court judgement enforced, Elliott grasped the opportunity and applied to have the ship seized.
It’s now in the hands of the bailiffs with 200 hands on board. Argentina is incensed, the rest of us are laughing our heads off.
Alas, it’s that time of the week again. All that remains is for me to wish you and yours a happy and peaceful week-end. This week-end, the Grand Prix circus descends on Japan. May you either please yourself on Sunday morning by remembering to set the alarm clock in time or your better half by forgetting to do so.