28 May, 2012
In the middle of the euro-fiasco we seem to have forgotten them.
For a long time the political class in Brussels refused to contemplate the possibility of Greece leaving the euro, saying the process was irreversible. The Greeks, taking them at their word, have said they won't administer the austerity package, so that the Eurocrats have been forced into a U-turn, saying Greece would have to leave the euro if it didn't take the medicine (or das Medikament, as it's known in Berlin).
Of course we don't know what will happen and won't until a day after the 17th June elections in Greece. But we have all been advised to do a bit of contingency planning and I expect quite a lot of that will be going on in Nicosia.
You see, the Greek Cypriot economy is inextricably linked to the Greek one, and if Greece leaves the euro, Greek Cyprus will have to as well.
So what will it be? The New Drachma? Actually Cypriots have a rather interesting alternative. Their currency has never been the drachma (in my opinion Cyprus isn't Greek) but following its long period of Ottoman Turkish rule was run by the British from 1879 (annexed in 1914) and the currency was the Cypriot pound.
The Cypriot pound was divided into 20 shillings and each shilling into 9 piastres, making 180 piastres to the pound.
In 1955, sixteen years before Britain, the Cypriots decimalised, with 1000 mils to the pound. This excellent system subsisted until 1st January 2008 when they joined the ill-fated euro.
The solution is simple: they just revert to the Cypriot pound.
Incidentally the British bases on Cyprus, Akrotiri and Dekhelia, which are sovereign territory, are the only instances of British territory using the euro. Poor things. I hope we are doing something to protect them.