Small debt, large problems in Cyprus: How even small debt in a British Colony led to the political crisis and violence in October 1931
During the interwar period Cyprus faced a small deficit, yet the inflexibility of the colonial finance structure created a political impasse. As a result the disagreements between the Colonial government and the Cypriot elected members of the islands legislative assembly sparked violence against the regime. Such violence would not have been possible if the already aggrieved political and economic situation allowed those with nationalistic agenda to undermine the legitimacy of the colonial regime. Although the traditional argument indicates that the 1931 riots were a purely nationalistic act, the disagreements of the colonial government and the actions of the leaders of the largest communities have to be understood within the sense of increasing crisis caused by the continual fall GDP. At the same time, the political situation was paralysed to react in a severe economic depression in part due to the disagreements between the Governor and the colonial office in London on one hand and the internal struggles for control within the Turkish and Greek communities. As a result the tinder for the violence in 1931 may have been nationalistic, but the fuel was provided by the prolonged economic crisis in Cyprus. The economic crisis influenced the political stagnation, reduced the ability of government to react and created a sense of imminent crisis that could only be averted through drastic action. Some commonalities may be seen with current events in Cyprus, especially in how government resists a structural reduction of government revenue just when public opinion and economic orthodoxy (of the time) seemed to suggest it.
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- Constantinos Stephanou, 2011. "The Banking System in Cyprus:Time to Rethink the Business Model?," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 5(2), pages 123-130, December.
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