Missed opportunity of unity: Cyprus’ EU presidency will be about division not unity

Πηγή: Cyprus Mail
By Theodore Panayotou

June 24 2012

“United Cyprus in a United Europe” should have been the motto of the Cyprus EU presidency. Divided Cyprus is emblematic of the past divisions of Europe that led to the creation of the European Union in the first place. It is also emblematic of the current economic divisions in Europe between a growing North and a languishing South that threaten to bring down the euro and derail the entire European project. Uniting Cyprus and itself should be EU’s top priority but it is likely to go down in history as the missed opportunity of the Cyprus EU presidency.

It is the bitter reality that Cyprus is drifting apart and so is Europe! In the last three years, the outlines of two Cyprus and two Europes have been drawn sharper as the efforts to solve the Cyprus problem lost their momentum and the efforts to solve the eurozone economic crisis have made bad things worse. A divided Cyprus within a united Europe was always an oxymoron for which the EU could and should have used the economic carrot to resolve. Instead, Europe itself grew apart into a prospering North Europe and a languishing South Europe.

The economic centripetal forces of a common market and a common currency have turned into centrifugal by the first major economic crisis that the eurozone encountered. The willingness of Europe to unite has been tested and found wanting in the same way that the willingness of Cyprus to unite has been tested and found wanting.

The Cyprus presidency of the EU offers a unique opportunity for both Cyprus and Europe to look at themselves in the mirror and reflect on their failure to arrive at a common vision to create a shared value for their constituents and a formula to implement that vision. Both Cyprus and Europe played several rounds of a zero-sum game and, in the process, destroyed instead of creating shared value.

The expected holistic gains from uniting turned into holistic losses as Cypriots have shown a pathetic unwillingness to share power and a common future; and fellow Europeans demonstrated similar reluctance to share wealth and a common future in Europe. Each partner’s gain is viewed as a loss by the other side.

Apparently, in Europe true sharing was never intended, otherwise support mechanisms and institutions of inter-state wealth transfers would have been put in place right from the start and not made in response to crisis along the way. Likewise, in Cyprus true sharing was never intended, otherwise the creation of value for both communities within a common home would have replaced the eastern-bazaar-type of horse trading that characterises the current moribund intercommunal talks.

In Europe the lack of a wealth-sharing mechanism, the absence of a lender of last resort, the lack of fiscal integration and the piecemeal management of the financial and debt crises paint a picture of partners willing to share the benefits but not the costs of their partnership. The Northern Europeans enjoy the benefits of thriving exports and budget surpluses boosted by an “undervalued” (from their standpoint) euro but resent the “sloth and profligacy” of the Southern Europeans that makes this possible. With some justification they consider it unfair to share their hard-earned wealth and worry about the moral hazard of doing so: if the Greeks know that the Germans (through eurozone institutions) will always come to their rescue why should they be more efficient, save or spend wisely. From their perspective the Greeks view the Germans as harsh and unsympathetic bent on punishing them and exploiting their predicament. The result is loss of trust among EU partners and erosion of “Europeaness”, the idea of shared values and a common future.

Thus, a half-baked economic union through a common currency without a common fiscal policy and the necessary wealth-sharing institutions of a federation are undermining the entire European project, by creating a North-South divide and a Europe of “two speeds” not unlike the North-South divide and the Cyprus of “two states”. How credible can a union of 27 states aspiring to a federation be when a mini-state of under a million people within the union has split into two tiny states that cannot find a way to unite into a federal state? The internal contradictions and inconsistencies of the EU, both in the political and economic sphere, are not lost to outside observers and more devastatingly to European citizens.

Shouldn’t the mounting eurozone crisis as Cyprus assumes the EU presidency provoke a stock-taking and self-reflection on the drivers of the widening chasm within the union? And, shouldn’t Cyprus, as it assumes the EU presidency similarly reflect on the receding prospects of its own reunification? Instead of sweeping their growing internal contradictions under the carpet of hundreds of technical committees producing an avalanche of paper on mostly inconsequential matters, host Cyprus and its EU guests should face head on the challenge of reversing the growing centrifugal forces in both Cyprus an the EU; they must be turned again into the centripetal forces that the European project was meant to create for the entire Europe?

With regard to reuniting Cyprus, the fact that Turkey, the player with the most cards in her hands, aspires to join united Europe should have made things easier, not more difficult. This requires two things. Turkey should be encouraged to face head on its own internal contradictions, and, negotiators should adopt a value-creation model rather than the current zero-sum game of negotiations.

What a better place to do this than this beautiful “island of love” which continues to be a microcosm of the very divisions that led to the creation of the European Union in the first place? For the first time, the EU is meeting at the crossroads of three continents and the doorstep of the Middle East, the historical and geographical epicentre of irrational conflicts and ethnic divisions. Shouldn’t we project the image of a “united Cyprus within a united Europe” instead of the current image of a “divided Cyprus within a divided Europe”? All Europeans, Cypriots and Turks included, have a stake in a truly united Europe.

Dr. Theodore Panayotou, Director of the Cyprus International Institute of Management (CIIM) and Professor of Economics and the Environment at Harvard University, served as consultant to the UN and to governments in the U.S., China, Russia, Brazil, Mexico and Cyprus. He has published and was recognized for his contribution to the Intergovernmental Committee on Climate Change won the Nobel Peace Prize in 2007.