
Letter of the General Secretary of the C.C. AKEL to European officers
The General Secretary of the C.C. AKEL, Andros Kyprianou, sent today to EU officials of the EU, a letter on the foreclosures law. The letter has been sent to the outgoing president of the European Commission Mr. Barosso, the new President Mr. Juncker, the outgoing President of the European Council Mr. Van Rompuy and the upcoming Mr. Tusk, the President of the European Parliament Mr. Schultz and the leaders of the political groups of the European Parliament.
Within the letter are analyzed the catastrophic provisions for the economy and the society of a path of massive and rapid foreclosures especially regarding the primary residence and the commercial property as well the Troika’s extorting behavior. It is provided in a documented manner the alternative solution for the protection of the primary residence through the update of the legislation. With his letter the G.S. of the C.C. AKEL, calls for a discussion in a European political level, within an initiative, so that dramatic economic and social consequences will be avoided. The letter follows:
18th September 2014,
Nicosia
Your Excellency,
As you know, in Cyprus a fierce political confrontation has broken out as a result of the Troika’s insistence with regards the modernization of the Bill for the transfer and mortgaging of immovable property.
It is our belief that the modernization of the existing legislation was necessary. Besides, this is precisely the reason why we had taken the imitative to table a relevant Bill in December 2012. The Government dragged its feet and submitted its own proposal, previously agreed with the Troika, in August 2014. It did so without any prior comprehensive political and public consultation between the Government, the political parties and social organizations. Neither the Government or/and the Troika entered into a dialogue in advance about the formulation of legislation relating to insolvency framework so that the interested parties, namely the borrowers, could understand their rights, especially regarding the right to protect their primary residence.
Unfortunately, the government’s Bill will lead to mass and swift seizure of properties and more specifically of very small houses and SME’s premises, leading thus to the further increase in unemployment and certainly to homelessness. Mass foreclosures would also result in a reduction in the prices of immovable property and thus cause further problems to the banking sector.
The Bill does not distinguish between large companies and their mortgage loans on the one hand and individuals and small enterprise’s mortgagesthat have been severely affected by the global and domestic economic crisis. It is precisely this crisis that made them unable to repay their instalments on a regular basis, as they were in fact doing previously, due to the consequences from unemployment, the significant cuts in incomes, even in benefits.
Furthermore, I point out that the banking sector has not yet satisfactorily proceeded to procedures for a real restructuring of mortgages, after consultation with the borrowers, resulting in the terms remaining unfavourable for the debtors.
Through their interventions the majority of the parties in Parliament ensured that in the cases that will prove in court that the temporary inability to pay the instalment is due to the crisis, then the foreclosure of the primary residence should be suspended for loans up to €350,000 and for small commercial premises.
We are fully confident that the approval of the Government Bill without the Parliament’s amendments will:
1) Irreparably destroy the social fabric, while social cohesion will suffer a severe blow. Such a development will not allow us to focus on all the other critical issues our country is facing.
2) Allow, given that the Bill contains such devastating terms, the mass auctioning of private properties, even those of strategic public character, to any interested buyer at very low and unfair prices, while real complications on the property issue, that are part of the current negotiations on the Cyprus problem, are not excluded.
3) The Cypriot people cannot take yet another social raid on their basic social needs, which would render their families homeless so that the Troika’s demands are enforced which aim exclusively at serving the banking sector.
4) Such a “shock” type of reform would indisputably undermine the already limited economic activity, as well as any kind of significant growth, and consumption. In addition, the proposed legislation would undermine severely the prices of immovable property, as in the case of Ireland, and according to some estimations that they would only be at the level of 40% -50% of their real value.
Dear President,
The representatives of the Troika, following the decisions of the House of Representatives, insist on their unacceptable demands, threatening inter alia to suspend the next instalment. This absurd and counterproductive attitude is not accepted by the majority of the people and political parties in Cyprus. This approach is unacceptably cynical, constitutes technocratic blackmail and curtailment of our national sovereignty.
We appeal to you with the request that you undertake a political initiative at a European level to secure Cyprus’ economic and social fabric and the right to housing, especially in the conditions of the current crisis.
I would like on this opportunity to point out that there has been no study to measure the effects of enforcing such a law, neither by the Government, nor by the Troika. Permit me to remind you that this important precondition was taken up by the European Parliament during the evaluation of the implementation of the Programmes in the various countries.
At the same time, I would like to recall the position of the European Parliament, in particular the opinion of the Employment and Social Affairs Committee, that the European bodies “are equally responsible for the imposed fiscal consolidation measures, as well as for their impact on society”.
Dear President,
We share the same opinion on the modernization of the legislation in question, but disagree with the content of the legislation proposed by the Government and the Troika that would lead to mass and indiscriminate foreclosures, as well as to the private auctioning of very small houses and business premises.
It shouldn’t escape anyone’s attention that Cyprus, apart from the enormous economic and social problems it is facing, is also under semi-occupation. This fact aggravates the general situation even more to the detriment of our people, making it unbearable.
We appeal to you requesting that you help the Cypriot people on a political level to overcome the Troika’s demands that will be catastrophic for our people and country. We are certain that the Republic of Cyprus can fully meet its obligations towards the lenders, without impoverishing of a large section of our people.
Yours sincerely,
Andros Kyprianou
General Secretary of the C.C. of AKEL