APPARENTLY oblivious to the fact that Cyprus will not receive the next tranche of the bailout if the foreclosure bill does not pass into law, the parliamentary debate on the bill continues at joint sessions of the House finance and interior affairs committees in efforts to reconcile political differences.
According to reports the government advised the troika of international lenders of eight amendments proposed by political parties; the troika rejected them all stressing the need to comply with the Memorandum of Understanding (MoU).
Following the troika’s response political parties are now demanding that the insolvency law, which is planned for later this year, is submitted together with the foreclosures bill, which in its current form, will only protect primary residences from seizure until 1st January 2015.
But the government has advised that the insolvency law is a complex issue and its needs more time to work on a bill before presenting it to parliament.
Although the troika said that Cyprus was making “relatively good progress” at the completion of its fifth review of the Cypriot economy, it is clear that Cyprus has failed to achieve some of the target dates it agreed with its international lenders in the MoU:
Paragraph 1.26 – “The authorities established a Task Force to prepare a study assessing the magnitude of registered, but untitled, land sales contracts and underlying mortgages and to develop recommendations by end-June.”
Paragraph 1.27 – “The authorities will, in consultation with EC and IMF and informing the ECB and ESM, prepare a comprehensive reform framework to be endorsed by the Council of Ministers by end-July, establishing appropriate corporate and personal insolvency procedures. A draft of the reform framework as well as an impact assessment of various options on lenders will be completed by end-June, and shared with the EC, ECB, IMF and the ESM. On the basis of that framework, corporate and personal insolvency legislation will be adopted, which will include licensing and regulation of insolvency practitioners by end-December.”
Paragraph 1.28 – “The legal framework in relation to foreclosures and the forced sales of mortgaged property will be amended in consultation with the EC and the IMF and informing the ECB and the ESM, and adopted by end-June, with immediate effect for all mortgaged properties except primary residences (for which provisions will enter into effect by end-December, in line with the adoption of the insolvency legislation), to allow for private auctions to be conducted by mortgage creditors, without interference from government agencies.”
During a conference call following the troika’s fifth review Delia Velculescu, Mission Chief for Cyprus, answered a number of questions relating to the foreclosures bill and warned “this [the foreclosures law] is a precondition for the conclusion of the fifth review with Cyprus. If the law is not passed, the review would not be concluded and we may need to come back to Cyprus and discuss again the situation.”
Meanwhile political parties appear content to continue the bunfight trying to score political points from their ‘adversaries’ – seemingly oblivious to the fact that the foreclosures bill has to be passed into law before Cyprus receives the next tranche of the bailout loan.
Nice article. The Cyprus mindset is to say anything now to get what you want. This is where many unsuspecting buyers went wrong all those years go; developers promising everything to wrest the last few quid from you and then delivered little or nothing and certainly not title deeds.
Title deeds don’t seem to make much difference to us that are trying to sell building land with planning permission and title deeds and no lien. Anyhow, who in their right mind would, anytime soon, buy a plot, engage an architect and wait 2/3 years for the finished villa? I wouldn’t and we own the bloody land!
They (Cypriots) simply do not think nor act like westerners but will whore themselves to the next wheelbarrow full of cash. They’ve always done it this way and are now up against an advesary (troika) that hopefully wont budge.
Assuming troika doesn’t cave in then its political Jenga for the ruling political party or go cap-in-hand to someone else…..Dear Vladimir……
I think Mike has hit it absolutely on the head with his assessment. This property/ loan scam was a MASSIVE gamble where the possibilities of self-enrichment were far too great for the establishment to not risk laying waste to its own economy for generations. Especially when they knew that, despite the rhetoric, the EU would be desperate to foot the bill for Cyprus’ continued participation in the Great European Euro Project.
The only downside Mike has not mentioned though is this: “Will Cyprus be ALLOWED to be free to trade with Russia?â€Â
Would the “Powers That Be†permit the continued existence of: a rogue state, defaulting on its EU debts, selling oil and gas to an increasingly marginalised and aggressive Russia, routing its natural resources anywhere it liked and laundering more ill-gotten gains than Widow Twankey’s clothes’ line?
I believe current events on the international stage point very strongly towards the answer (that’s a “Hell No!â€Â, by the way); the arrogance of the gambler normally proves his undoing (Gambler’s conceit).
Alternatively, as has been suggested by some, we are where we are simply as a result of administrative incompetence.
As we have read many times in these columns, Cyprus, as much as any other bankrupt member state, will not be allowed to bring the EU into disrepute or damage the long-term agenda of a ‘United States of Europe’ by failing to comply with the terms of its MoU with the Troika and thereby, theoretically, jeopardising the next tranche of bailout funding.
The MoU is clearly just a blunt instrument which can be revised and modified to suit prevailing circumstances as the banner of “relatively good progress” unfurls in the political arena. Goal posts will undoubtedly move and stadia continue to change as target dates fail to provide any meaningful constraint on protracted adversarial debates.
can’t we just sit down and talk about this?
After all we have talked about the Cyprob for years and are no further forward.
If only we could export procrastination.
Cyprus is a nation of gamblers. They have gambled in the past that the EU will not do anything other than spout rhetoric and they will probably gamble again that the EU will not withhold funds and potentially send the country into default as the Euro will suffer as a result.
If as is indicated by treaty leaving the Euro also means an Exit from the EU then it will create pandemonium. Cyprus will be free to trade with Russia, any future oil and gas can be sold and routed anywhere other than Europe, Cyprus could re-instate the money laundering and Banking operations slowly being closed down thereby attracting billions in inward investment and of course refuse to pay back anything owed. A real headache for the EU. Turkey will then join the club and EU imports to Cyprus will be expensive. On the up side those of us who can live without HP sauce, Benson & hedges cigarettes and Cadbury’s dairy milk and do not live beyond their means will not feel a thing and so what if the Cy£ is not worth anything overseas. As long as it feeds us and quenches our thirst why worry.
On the upside property developers and lawyers will have their billions protected so can remain arrogant but arrogance can only be shown if people do business with them (with apologies to the handful of those who do have integrity, they know who they are). Tourism arrivals will multiply in millions assuming we go from the most expensive destination to the cheapest overnight.
I think it is more a circus for public consumption rather than any serious proposal. Why else would anyone be able to buy anything, home or not, and then not pay for it and have it ring-fenced and protected. Give me a dozen! If we cannot afford to buy we should either rent or buy a tent. Or is that not guaranteed to secure the political career (gravy train) and fringe benefits.
Whilst still batting around the detail of an essential Foreclosures Bill 1.28, the government should – and surely could? – also get stuck in to finalising the necessary Insolvency Bill 1.27 above. Surely the latter should form a key part of the former?
It seems like government in this country is a game played by politicians who, collectively, primarily delay as long as possible those essentials that would help bring to an end the cronyism and protection of vested interests apparent almost everywhere.