Opinion
By Yiannos Stavrinides
The entry of French company Meridiam as the majority stakeholder in the consortium behind the Great Sea Interconnector (GSI) provides greater certainty about the project’s future and significantly reduces its political risk. Yet the Cypriot side hardly seemed to recognize the significance of the development. The government welcomed the news but remained notably restrained. And that is where the questions begin.
How can a project that ranks among the EU’s eight strategic projects, receives European funding, connects Cyprus to the European market and strengthens ties along the Israeli axis fail to become a cause for celebration for the government? Especially when far less important matters have prompted elaborate ceremonies and public celebrations.
The GSI, after all, comes with an easily marketable political narrative. Yet the government remains cautious, to the point that Athens has been forced to consider scenarios that would leave Nicosia out of the decision-making process. That appears to have been the case with the agreement involving the French that ultimately brought Meridiam into the project, catching the Cypriot side off guard, however hard it may have tried to conceal its surprise.
And despite the many significant geopolitical arguments surrounding the project, one essential issue remains largely absent from the discussion: whether the GSI will actually reduce the price consumers pay for electricity.
Those familiar with the technical details explain that the GSI is not simply intended to connect Cyprus and Crete with an undersea cable. The project also aims to break new ground in submarine interconnections while setting a world record. No cable has ever been laid at such depths or across such a long distance. This naturally leaves a fundamental question about whether the project can actually be completed, since there is no guarantee that construction can be finished within a defined timetable.
The agreement for recovering the construction costs is front-loaded, meaning consumers will begin paying long before the project is completed and put into operation. This is precisely where the problem lies.
President Christodoulides promised at the beginning of his term to reduce the price of electricity. He knows he will not achieve that goal and is presumably hoping that a second term would give him one final opportunity to do so.
This is, after all, a government with a strong instinct for political survival, one that has little interest in finding itself forced to answer for its own bad decisions. It therefore makes sense that the government has kept its distance and maintained a low profile when it comes to the GSI, even after Meridiam's entry.
For months, the government bought time by repeatedly demanding updated studies, apparently suggesting that the financial calculations simply do not work.
President Christodoulides leads a government with little appetite for risk. When it comes to electricity, he knows that if he cannot make things better, he must at least avoid making them worse.
To put this in the context of Cyprus' recent economic history, one could say that if this government had been in power at the time, it probably would not have produced the desperately needed restructuring plan to save Cyprus Airways. But it also would not have allowed the creation of a subsidiary in Greece, HellasJet, a decision that dealt a serious blow to the company's finances and ultimately contributed to the fate that followed.
