Lesson from Cyprus: Spending Restraint Is the Pro-Growth Way to Solve a Fiscal Crisis | Cato @ Liberty

Map of Cyprus with EU flag

Map of Cyprus with EU flag (Photo credit: Wikipedia)

This is an outstanding must-read article from the Cato Institute. It argues that unlike many other European nations, Cyprus decided to deal with its over-spending problem by tightening belts in the public sector rather than the private sector.

Source: Lesson from Cyprus: Spending Restraint Is the Pro-Growth Way to Solve a Fiscal Crisis | Cato @ Liberty

The article puts Cyprus on a pedestal as best practice and this will be good for Cyprus to attract inbound investment and borrow money in international markets.

However, the article ignores the political and social context.

Firstly, Germany gave Cyprus a very raw deal because she was small. German policy makers deliberately tried to destroy Cyprus business with large Russian companies.

Secondly, unlike bigger countries like France or Italy, Cyprus could not manipulate the rules of the fiscal compact.

Thirdly, the Cyprus example highlights that the EU economic engine is a sham. There is no cohesive energy strategy that capitalized upon Cyprus’ offshore gas reserves. Meanwhile, Angela Merkel, in a box domestically because of her refugee policies, was able to get the EU to stomp up EUR3 billion for Turkey.

The bottom line is that it is not possible to consider economics in isolation, social and political policies must be dovetailed.

In the case of Cyprus, the real prize will come from reunifying the island.

Thoughts?

 

EPC Publications | ‘Blue Gold’ – The forgotten rationale for climate action by Andrea Frontini and Annika Hedberg (formerly Ahtonen)

NOAA-CPC-drought-monitor-sample

NOAA-CPC-drought-monitor-sample (Photo credit: Wikipedia)

English: Dry earth in the Sonora desert, Mexic...

English: Dry earth in the Sonora desert, Mexico. Español: Tierra seca en el Desierto de Sonora, México. Français : Terre asséchée du Désert de Sonora, au Mexique. Deutsch: Trockenrisse in der Sonora-Wüste, Mexico. 日本語: 乾いた大地、メキシコのソノラ砂漠にて。 Nederlands: Uitgedroogde bodem in de Mexicaanse Sonorawoestijn Polski: Wysuszona ziemia na pustyni Sonora w Meksyku. Português: Terra seca no deserto de Sonora, México. Русский: Высушенная земля в пустыне Сонора, Мексика. 中文: 墨西哥索诺兰沙漠干枯的土地。 (Photo credit: Wikipedia)

In this ETC Commentary, Annika Hedberg and Andrea Frontini argue that in the fight against climate change, the EU should incorporate the ‘water factor’ in all its internal and external policies and initiatives.

Source: EPC Publications | ‘Blue Gold’ – The forgotten rationale for climate action by Andrea Frontini and Annika Hedberg (formerly Ahtonen)

This is an excellent overview of why climate action must stay center stage in global political priorities.

Thoughts?