Vol.21 (2014), No. 4, pp. 63 - 76
FINANCIAL CRISIS IN THE
For long, the inter-communal con ict between Greek
Cypriots and Turkish Cypriot as well as the invasion and
occupation of North Cyprus by Turkey de ned the Cyprus
Issue/Problem which has a ected both the reality and image
of Cyprus. The more recent nancial crisis has proved to be
a mega event that also has the capacity to rede ne both
the reality and image of Cyprus. This paper aims to address
key political and discursive aspects of the nancial crisis and
their speci c expression in Cyprus. A focal point of the anal-
ysis is the displacement of the Cyprus Issue by the nancial
crisis as the dominant factor a ecting domestic politics,
political rhetoric and international image of the Cyprus
Republic. The paper draws together and builds on insights
from a number of separate but complementary research
projects addressing di erent facets of the public commu-
nication of the nancial crisis in Cyprus. The second part
provides an account of the unfolding of the nancial crisis in
Cyprus and some of its major implications; the third exam-
ines the impact of the nancial crisis upon Cyprus politics
and more particularly the displacement of the Cyprus Issue
by the Financial Crisis as key issue in the campaign agenda.
The fourth part examines the domestic political rhetoric
employed for the crisis in Cyprus and more speci cally the
rhetoric of fear. The fth part examines the image of Cyprus
constructed by the politics of blame, not least in the German
political discourse and the sixth part considers the
international image of Cyprus.
Soﬁ a Iordanidou is
Associate Professor at
Open University of Cyprus;
e-mail: soﬁ a.iordanidou@
Samaras N. Athanassios
is Lecturer at University of
Founded in 1960, the Republic of Cyprus is an independent sovereign state.
The London-Zurich agreements reached between Britain, Greece and Turkey,
oﬀ ered Cyprus a sui qeneris independence status. Cyprus’ constitution, formed
by those three powers has proved frangible and stillborn. In July 1974, the Greek
Junta sponsored a coup d’état against President Makarios’ government. This gave
Turkey the pretext to respond by an invading and occupying the 37 percent of the
island. As a result, 200,000 Greek Cypriots have been displaced while the Turk-
ish Cypriots who used to live in Cyprus’ southern part moved to the north. UN
peacekeeping forces maintain the buﬀ er zone, known as the Green Line, between
the area controlled by the Government of the Republic of Cyprus and the occupied
territory. This Government, the only internationally recognised authority on the
island, exercises control over the southern two thirds of the island, where the Greek
Cypriots – numbering over 730,000 people – live. The intercommunal conﬂ ict be-
tween Greek Cypriots and Turkish Cypriot as well as the invasion and occupation
of North Cyprus by Turkey deﬁ ne the Cyprus Issue/Problem which has aﬀ ected
both the reality and image of Cyprus.
The ﬁ nancial crisis is a mega event that also has the capacity to redeﬁ ne both the
reality and image of Cyprus. This paper aims to address key political and discursive
aspects of the ﬁ nancial crisis and their speciﬁ c expression in Cyprus. A focal point
of the analysis is the displacement of the Cyprus Issue by the ﬁ nancial crisis as
the dominant factor aﬀ ecting domestic politics, political rhetoric and international
image of the Cyprus Republic.
The paper draws together and builds on insights from a number of separate but
complementary research projects addressing diﬀ erent facets of the public commu-
nication of the ﬁ nancial crisis in Cyprus. The second part provides an account of
the unfolding of the ﬁ nancial crisis in Cyprus and some of its major implications;
the third examines the impact of the ﬁ nancial crisis upon Cyprus politics and more
particularly the displacement of the Cyprus Issue by the Financial Crisis as key issue
in the campaign agenda. The fourth part examines the domestic political rhetoric
employed for the crisis in Cyprus and more speciﬁ cally the rhetoric of fear. The
ﬁ fth part examines the image of Cyprus constructed by the politics of blame, not
least in German political discourse and the sixth part considers the international
image of Cyprus.
Financial Crisis in Cyprus
Cyprus became a member of the European Union on May 1, 2004 and joined
the Economic and Monetary Union, adopting the Euro as its o cial currency, on 1
January 2008. During its accession negotiations with the EU, the Republic of Cyprus
was proven to have had one of the most prosperous economies in comparison with
the other 10 candidate countries (Stajano 2009, 319).
Since the country’s independence in 1960, Cyprus has gradually transformed
from an agricultural economy to a service-based, export-oriented economy. Since
the 1980s, services (tourism, ﬁ nancial services) and entrepreneurship became the
main source of economic growth (Athanassiou 2006, 61). The country’s banking
sector has developed almost entirely through private initiatives, with private banks
representing 96 percent of the sector, while the remaining 4 percent consisted of
state controlled institutions (Grigoroudis, Politis and Siskos 2002, 601; Athanassiou
2006, 58). The signiﬁ cant expansion of the banking sector, and large domestic banks
in particular, has contributed signiﬁ cantly to promoting the island as an interna-
tional business center (Stephanou 2011, 7). The large banking sector reinforced
Cyprus, boosting the country’s economic model, which was oriented in providing
sophisticated and advanced ﬁ nancial services abroad, and contributed signiﬁ cantly
to both output and employment (Stephanou 2011, 17).
However, the question still remained as to “whether the growth of the banking
sector could continue indeﬁ nitely and at what cost – especially taking into consid-
eration elements such as the threat of systemic risk, which could disturb not only
the stability of the market and the ability to provide ﬁ nancial services, but might
also have serious negative consequences for Cyprus taxpayers and the country’s
economy in general” (Stephanou 2011, 17–18).
An explanation is required as to why the strong ﬁ nancial sector did not galvanise
the economy by shifting funds from the banking sector to the production sector or
to other market services sectors. It was a mat er of time before the oversized bank-
ing sector proved to be extremely fragile and non-durable, especially in a political
fragile environment. There were several decisive factors which shaped the Cypriot
banking system in the period leading to the eve of the crisis, according to Clerides
and Stephanou (2009, 38–39). The ﬁ rst was the credit boom with extensive bank
lending to local residents, growing by 20 percent per annum during 2007–2008.
The second factor was the introduction of the Euro on January 1st, 2008, which led
to an additional large liquidity injection in the banking system. Another factor was
the so-called property “bubble” that the country had to face.
The Cyprus economy eventually succumbed to the impact of the ﬁ nancial cri-
sis. With a GDP of 18 billion Euros, amounting to 0.2 percent of the EU economy,
Cyprus presented a “perfect depth crisis” one of the most complex of the Eurozone
(Zenios 2013). Indeed, the Cyprus crisis evolved in three diﬀ erent phases according
to Zenios (2014). The ﬁ rst is the period up to the onset of the international crisis of
2008 when households and corporations accumulated excessive debt. The coun-
try’s competitiveness eroded but the emerging imbalances were obscured by a
banking sector that was overdeveloped with the inﬂ ow of foreign deposits. Debt
fragility created conditions for the Cyprus economy to suﬀ er a heavy blow when
the international crisis erupted.
The second phase is the period 2008–2011 when Cyprus government lost access
to capital market and Cypriot banks suﬀ ered signiﬁ cant losses due to the Greek
government bond haircut. The joint eﬀ ect of public debt accumulation and deterio-
ration of the bank’s balance sheet set in motion the negative feedback loop between
banking and public ﬁ nances (Zenios 2014). Thus Cyprus entered the “crisis zone”
and without any policy measures to reduce public debt it was headed for default
and only the timing was unknown.
Finally, a third phase comprises the period 2012–2013 which saw Cyprus nego-
tiate an assistance programme with international lenders. During this phase, the
ﬁ nancial crisis involved the exposure of Cypriot banks to the Greek debt crisis, the
downgrading of the Cypriot economy to junk status by international rating agencies
and the loss of access to international credit markets. The Cypriot state was unable
to raise liquidity from the markets to support its huge ﬁ nancial sector, as Cyprus’
banking sector was now estimated to be seven times the country’s GDP. There was
a growing expectation that Cyprus would need to apply for an additional bailout
loan. On 25 June 2012 the Cypriot government requested a bailout from the Euro-
pean Financial Stability Facility, citing di culties in protecting its banking sector
exposed to the Greek debt. The preliminary agreement terms were made public on
30 November 2012. The resultant austerity measures included cuts in civil service
salaries, social beneﬁ ts, allowances and pensions and increases in value-added tax
(Katsourides 2013a; Pashardes 2013; Pashourtidou 2013).
On March 13, 2013 Moody’s downgraded the long-term sovereign credit rating
of the Republic of Cyprus with a negative outlook. This decision was based on two
parameters. Firstly, the added risk that the government of Cyprus had to provide
unprecedented support to the country’s banking system as a result of the damage
caused to the economy from the severe exposure of Cypriot banks to the Greek
economy. Secondly, the fact that Cyprus has been locked out of the international
capital markets. During the Eurogroup meeting on the 15–16 March 2013, agreement
was reached by the Member States of the Eurozone to grant ﬁ nancial assistance
to the Republic of Cyprus. Financial assistance amounting to 10 billion euros was
granted to cover ﬁ scal needs, the restructuring of the banking system and for the
support of the economy in general.
The Eurogroup made the decision to impose levies on depositors’ accounts. The
Cyprus bailout is the ﬁ rst that involves directly taxing bank depositors.
This decision froze Cyprus’ economy. Cyprus’s banks closed on March 16 and
reopened on 28 March 2013. While the banks were closed, a deal was worked out
to provide the country with an aid package and avert the complete meltdown of
the island’s oversized banking and ﬁ nancial sector. The government of Cyprus
implemented capital controls and limits. The ﬁ nancial restrictions included limits
on withdrawing, exchanging and exporting currency.
The resolution adopted by the ﬁ rst Eurogroup related to the imposition of a
one-time tax on deposits. In particular, it called for bank deposits under 100,000
euros to be taxed at a rate of 6.75 percent. Deposits above 100,000 Euros would be
taxed at a rate of 9.9 percent, the aim being to use the money raised by this extraor-
dinary tax to recapitalise the banks and service the debt. Those contributing to the
recapitalisation would receive stocks of the same value from the banks.
What followed was a public outcry amid widespread protests and the rejection
of the proposal by the Cypriot parliament on 19 March 2013. Amidst a widely held
perception that the European allies had betrayed Cyprus, President Anastasiades
was forced to seek some sort of ﬁ nancial aid from Russia. Following the failure of
the at empt to obtain funding from Russia, the government of Cyprus returned to
the troika (Katsourides 2013b, 53).
The second meeting of the Eurogroup on 24–25 March 2013 resolved to secure
deposits under 100,000 euros, in compliance with the Directive 94/19/EC on Deposit
Guarantee Schemes of the European Commission. The bailout deal made with the
international lenders would avert Cyprus’s exit from the Eurozone. The terms of
the deal, required the country’s second largest bank, The People’s Bank of Cyprus,
to be closed down. The holders of stocks, depositors and uninsured clients would
contribute to the reorganisation and winding-up of its credit institution and the
ﬁ scal consolidation of the bank. The holders and depositors of more than 100,000
euros would not be secured, which meant that they would lose their money. The
deposits under 100.000 would be secured and guaranteed by the state, thus pro-
tecting the holders of such deposits from loss.
As a consequence, the bailout deal reduced the size of the Cyprus’s banking
sector. The Bank of Cyprus, the largest bank of the island was restructured, put ing
a levy of 47.5 percent on shareholders, bondholders, and depositors of uninsured
deposits, converted into shares.
Needless to say, the austerity measures that formed part of the bail-out package
had sweeping economic consequences. The country’s gross domestic product (GDP)
declined by 5.9 percent at the end of the second quarter of 2013, while unemploy-
ment increased to 16.9 percent.
The Political Impact of the Financial Crisis
The political system in Cyprus is centred on a Presidential Democracy with a
powerful President. Elections are held at three levels: presidential, parliamentary,
and municipal. A simple majority elects the President every ﬁ ve years, usually
in two rounds. Major parties in Cyprus are the communist Progressive Party of
the Working People (AKEL) which is the oldest party in Cyprus, the right-wing
Democratic Rally (DISY), the centrist Democratic Party (DIKO), and the socialist
United Democratic Center Party (EDEK).
In the presidential elections of 2003 challenger Tassos Papadopoulos, leader
of DIKO and supported by AKEL, DIKO, EDEK, and the Ecologists Movement,
won the elections in the ﬁ rst round with 51.5 percent of the popular vote (Christo-
phorou 2003). During the presidential elections of 2008, Christoﬁ as the leader of
the communist party AKEL won against the incumbent Papadopoulos at the ﬁ rst
round and against also challenger Kasoulides (candidate of DISY) in the second
round of the elections (Christophorou 2008; Katsourides 2012).
On April 24th 2004 the two simultaneous referenda took place among the Greek
and Turkish Cypriot communities. Greek Cypriots rejected the Plan by a majority
of 75.8 percent. The debate of the Annan Plan cut across partisan lines in Cyprus.
The debate on previous plans and the interplay of such plans with party politics
have led to the emergence of the bipolar “Rejectionists – Concessionists” (Katsis
2002). This bipolarity cuts across the Right-Left divide because the right-wing DISY
and the left-wing AKEL both tend toward the “Concessionist” pole, whereas the
centrist DIKO, the socialist EDEK, the NEO, and the Ecologist movement tend
toward the “Rejectionist” pole. The content of the Annan Plan was the source of
much discord amongst the Greek Cypriots and it managed to upset the parties
most likely to agree with it. AKEL kept out of this trouble by gradually switching
to a “No” position. Anastasiadis, the leader of DISY was a strenuous supporter of
the Annan Plan. Right from the beginning, the electoral basis of DISY was “poles
apart” with respect to the Annan Plan which subsequently led to the emergence
of a splinter party (Samaras and Kentas 2005).
The most important eﬀ ect is that the referendum campaign transformed the
“rejectionist-concessionist” cleavage into a “pro-anti Annan Plan” cleavage. The
“pro-anti Plan” split, which was primed into importance by the referendum
campaign, posed a challenge to the “Right-Left” cleavage (Samaras and Kentas
2006). Thus, it is important to note how the Cyprus issue had long dominated
public and media agenda and that political campaigns in Cyprus have especially
revolved around the contrasting positions on this issue (Christophorou 2008, 229;
Charalambous 2009, 99).
However, the transformation of Cyprus’s economic and social landscape due
to ﬁ nancial crisis has shifted concerns to the economy and to a focus on the per-
sonal consequences of the crisis rather than on wider politics. As Katsourides,
(2013b, 53) observes: “the economic crisis sidelined discussions regarding the
Cyprus problem for the ﬁ rst time in Cyprus’ electoral history.” The time distance
from the 1974 events, combined with false hopes and unfulﬁ lled expectations for
a solution under Christoﬁ as, displaced the Cyprus problem from the top of the
political agenda (Katsourides 2013b, 56–7). Still this was not the case of an issue
that fades away from the agenda but an active process of issue displacement due
to the dynamic of the events.
During the presidential elections of 2012 the most prominent feature of the
campaign was the economy. Each candidate focused on persuading the electorate
that he could manage the crisis bet er. All three major candidates and the parties
supporting them adjusted their campaigns to target the economic crisis, highlighting
the weak points of their fellow candidates (Katsourides 2013b, 60–2). Moreover Ka-
nol and Pirishis (2013) at ribute the results of the 2012 elections to economic voting,
arguing that a substantial amount of votes lost by AKEL was due to the deterio-
rating economic situation since it took o ce in February 2008. The displacement
of the Cyprus problem by the ﬁ nancial crisis in the public agenda worked to the
beneﬁ t of the DISY candidate Anastasidis. During the 2004 referendum campaign,
Anastasidis was a proponent of the Anan Plan vis-a-vis the independent candidate
Lilikas who, being a minister of Papadopoulos Presidency, was strongly linked to
the opposing campaign. Anastasiadis won against Lilikas in the ﬁ rst round and
against AKEL candidate Mallas in the second round.
Crisis Discourse and the Rhetoric of Fear
Fear, risk and threat are three rhetorical phenomena intrinsically linked with
the politics of the “Memorandum states” (PIGS). A quantitative content analysis of
representations of the world system in the British press examined the proportion
of the nation image of each state that is presented through the fear frame. States in
the core of the European economic crisis take high rates in fear framing: Greece 47
percent of all depictions, Spain 40 percent, Portugal 44 percent, Ireland 31 percent
(Iordanidou and Samaras 2012). It is noteworthy that Greece, at the epicenter of the
ﬁ nancial crisis, ranked third after Syria (71 percent) and Afghanistan 48 percent.
Another content analysis of fear related arguments on the same data identiﬁ ed that
while hegemonic states are connected to the argument of threat and to projections
of fear through their power, while the “Memorandum states” (PIGS) are connected
to the argument of risk, produce fear through their problems and experience fear
too (Dogani, Samaras and Iordanidou 2014).
As the aforementioned data suggest, the rhetoric of fear is intrinsically related
to the reality of the memorandum. In this part of the paper, we employ qualitative
content analysis to examine how fear, risk and threat were rhetorically constructed
and politically actualised during the introduction of the bailout plan in Cyprus.
On March 2014 political leaders in Cyprus faced an intense political dilemma:
“Should we follow a Memorandum programme or not?” A close examination of the
political rhetoric that took place in the week of the decision, furnishes interesting
evidence about the representation of the dilemma. Dilemmas in politics may be
distinguished from ordinary issues as they tend to be presented in tones of black
and white thinking. This bipolarity oﬀ ers an ideal ground to strategically deploy
fear appeal practices. Fear is caused by the realisation of a real or imaginary threat.
This realisation is being caused either by a cognitive process that warns us of an
impending danger, or an explicit or implicit threat that we addressed (Bauman
2007). Fear is only a natural reaction when confronted with the unknown, when
confronted with the possibility of a hostile environment (Siegel 2005, 15). The
appeal to fear is a strategically structured at empt to arouse the emotion of fear to
the receiver of the message (Rogers 1975, 97).
The main theoretical model for the analysis of fear appeal messages employed
in this section comprises appraisal theory (Lazarus, 1991). Appraisal theory diﬀ ers
from other theories of emotions because of its emphasis on “the interpretations of
events rather than the events themselves that cause emotion” (Roseman and Smith
2001, 6). According to the appraisal theory, the representation of an event is consid-
ered as fear appealing when: it connects bonds between the threat and the person
or group, when postures the values of the person/group etch to be intimated by
the threat and when incorporates fear avoiding proposals and information about
managing the threat (Lazarus 2001).
A qualitative content analysis was applied on the President’s addresses and
on the discussion in the Cyprus parliament that were held before (17 March, 25
March) and after (19 April) the Memorandum negotiation, using the analytical
instruments of appraisal theory (Dogani, Samaras, Aggelou, Koutsimpogiorgos
and Konstantinou 2014).
In the Cyprus case, when the dilemma is crucial and the negotiations in progress
(Memorandum or not? – 17 and 25 March Presidential address) we observe high
levels of fear appeal, supported by strategic communication that highlights the risk
possibilities and the disastrous consequences of the “wrong” decision. Fear appeal
during this period interconnects the undesirable decision (“no” to Memorandum)
with the disastrous consequences (leaving the U.E., collapse of the Banks).
In the Presidential address of 25th of March, strategic fear appeal is construct-
ed by creating bonds between the Cypriots and the Cypriot state, while agitating
them to certain ends. The fear argument is constructed by the rhetoric of “we”
that strengthens the bonds of the in-group – the Cypriot identity while it creates a
collective self-image of the innocent victim. Moreover, by identifying the rescue of
the banking sector to the rescue of the Cyprus state, it creates a false generalisation
exploiting the essence of the nation feelings (values of the group) in order to fulﬁ l
the goal of the banking sector rescue: “…we went to Brussels just to save our country
through the stabilization of the banking sector.”
In contrast, after the Memorandum decision, (yes to Memorandum – 19 April) we
observe clearly reduced levels of strategic fear appeal and propaganda practices.
The limited fear appeals of this period interconnect the desirable decision (yes to
Memorandum) to the reassuring resolutions (economic stability, political safety): “…
We should be stand united in front of our European associates, having a realistic and safe
proposal, that will lead us to a stable political environment.“
Indeed, the Presidential address of 19th April de-escalates the levels of fear by
promoting hope feelings enhancing the “right” decision: “for Cyprus, for all of us
and for each of us, for the future of the new generations.” The rhetoric is more imposing
promoting that the threat is now under control.
In the Parliamentary discussions of 19th April the Cypriot President, Anastasi-
adis, presents himself as the innocent victim of the Eurogroup, who had no option
but to agree with the Memorandum terms in order to save the country. Thus the
President’s responsibilities are presented as limited. This constitutes a post crisis
image restoration strategy that aims to shift away the blame to an external force.
The main conclusion of the qualitative content analysis of Cypriot domestic
discourse is that when the political options are presented as strictly limited and
speciﬁ c, the political rhetoric intends to argue through emotional appeals instead of
logic arguments. In such cases the governmental rhetoric exercises power through
the diﬀ usion of fear that is based on managing the ontological instincts of the
people (Dogani et al 2014). During crises fear appeals in the political argument are
employed as instruments to exert power at the domestic level. At the same time
they operate as signs of the state’s disempowerment. The incapacitation to manage
external realities fuels and legitimises the employment of fear appeals in the home
front. This seems to formulate a common theme: the rhetoric of the “Memorandum
dilemma” is structured by fear appeals and shifting of the blame to external actors.
The Politics of Blame for Cyprus Financial Crisis in the
German Domestic Political Discourse
A central issue for every “memorandum country” is its perception of the coun-
try within the political system of the lender countries. The image of the worthy
or unworthy victim is critical for the mobilisation of support and the legitimation
of the ﬁ nancial support. The so-called Bailout Crisis made the perceptions of the
German party political actors critical for Cyprus. Images of foreign countries are
domesticated within party political discourse since they are rhetorically employed
in domestic political games.
For almost two months, the German political parties debated on the Cyprus
Bailout Crisis. The German domestic political discourse shaped the image of Cy-
prus. The Cyprus ﬁ nancial crisis was perceived as a continuation of the Greek crisis,
which was in its peak, and drew all the negative frames, aspects and stereotypes
from it. As a result Cyprus was treated with a very strict way. The construction of
the image of Cyprus in the German political discourse was being made through
the use of contradicting dipoles, strategies of apology and the operation of the
blame game. The induction of these means of strategic communication in the
political discourse marked the parties’ campaign mode in the domestic and the
international political level.
This part of the paper explores the image of Cyprus that was built during the
party political debates in Germany on the Cyprus ﬁ nancial crisis. It covers the
period from the beginning of the Cypriot ﬁ nancial crisis until the ﬁ nal decision
that was taken on the issue (25/02/2013 to 18/04/2013). Parliamentary discussions
and political press releases of the German parliamentary parties were examined
by using the methodology of qualitative content analysis (Aspriadis et al 2013).
The blame game is a process in which agents associated with negative events
aim to deﬂ ect or downplay their own responsibility (Knobloch-Westerwick and
Taylor 2008, 724), the at ribution of responsibility has the power to build images
through the depiction of events as a violation of fundamental public values, as
operational coincidences or as a result of systemic problems and as a result that
was caused by an actor or group of people (Brändström, Kuipers and Daléus 2008).
By initiating the blame game, the German government aimed to shift the
blame away. By blaming the ﬁ nancial and political institutions of Cyprus, the
German government manages to build the image of systemic fault transcending
the responsibility to an outside actor. The German government put blame for the
crisis of the Banks on Cyprus as a State by accusing it for mismanagement, the
Cypriot parliament for voting against the memorandum and the ﬁ nancial system
for making Cyprus a tax heaven and a center for money laundering. In addition,
responsibility was transferred to the Greek ﬁ nancial crisis with the accusation of
having a big inﬂ uence in the Cypriot markets.
In the governmental public and parliamentary discourse, Cyprus is the main
culprit and bears most of the blame for the crisis. The image projected is that of
the unworthy victim that deserves all that has unfolded. The Greek ﬁ nancial crisis,
the stereotypes and the negative frames it produced helped to justify this to the
public perception. The German government produced the international political
oppositional dipoles of “Cyprus solution vs. German tax payer” and “Cyprus bad
management vs. German economic organization.”
The opposition parties in Germany, on the other hand, at ributed the blame to
the Russian maﬁ a, to the Chancellor of Germany, Angela Merkel, for not get ing
involved in the European Crisis sooner and to Cyprus for its deﬁ cient system.
After the rejection of the memorandum in Cyprus, the main opposition party
(SPD) mainly blamed Merkel and the government for ineﬀ ective management and
political failure. Finally, the minor opposition party (Die Linke) blamed the Troika
and the EU for its hegemonic policy and German manipulation and the government
for bad crisis management capabilities (Aspriadis et al 2013).
The main opposition plays in the intra-state level and at ributes blame to the
government in order to produce an interparty political conﬂ ict frame for gaining
support by polarisation. In a similar context the minor opposition is trying to re-
frame the at ribution of blame and initiate the interparty political game with the
aim of achieving political support. The oppositional narrative constructs the image
of the worthy victim for Cyprus since the responsibility returns to the German
government. This way, Cyprus returns to its previous image projection, namely
that of a victim of imperialism and now bad crisis management of foreign actors.
Inside Germany, however, the government aimed to construct a narrative of the
unworthy victim for Cyprus by making strong connections of its governmental,
political and ﬁ nancial institutions with the economic failure of the country. The
Greek ﬁ nancial crisis helped at making, negative aspects and frames of corruption
and bad management bet er understood in the German public. The interstate con-
ﬂ ict frame was bet er perceived in the domestic audiences and turned to a rally
eﬀ ect against Cyprus.
The oppositional narrative was not so strong thus making reframing less ef-
fective. The interparty conﬂ ict frame did not work well at that time because of the
long term usage of patriotic agenda and metaphors of power used by the German
government during the European economic crisis. Finally, the image of Cyprus
changed from a victim of the Turkish occupation to a corrupted European member
that was worthy of suﬀ ering. The image constructed for domestic use in the Ger-
man political scene aﬀ ected Cyprus and Europe in general in terms of perception
International Image of Cyprus
In this part of the paper we explore the impact of the news coverage of the Cy-
prus Bailout Crisis upon the image of Cyprus. The image of a country in the news
is produced by the combined operation of the news making process, the strategies
of actors and domestic and international events. Negative events have the capacity
to make particular topics or aspect of these topics more accessible to the audience
(Iyengar 1991). The impact of an event upon the international image of a country
is a combined eﬀ ect of the valence and the volume of the news coverage (Manheim
and Albrit on 1984). Events with negative valence and high volume tend to under-
mine nation image. They disassociate a countries image from positive cultural and
historical connotations and deﬁ ne it in terms of current ﬁ nancial and socio-political
problems (Avraham and Ket er 2008).
Prior to Cyprus Bailout, the international image of Cyprus in news media had
been shaped by the vitality of its banking sector and its tourist industry as well as
by the “Cyprus Issue” as an issue of invasion and occupation. As it will be demon-
strated in this part the Cyprus bailout as a news topic redeﬁ ned the meaning of the
“Cyprus Issue” and aﬀ ected the overall image of the Republic of Cyprus.
The impact of the ﬁ nancial crisis upon the international image of Cyprus at the
early stage was addressed by the intercultural state mapping project of the Open
University of Cyprus (Iordanidou and Samaras 2012). The time frame of the analysis
was a period of one month (June 2012) and covered the press of three countries:
Greece, Turkey and the United Kingdom (UK).
The evaluation of Cyprus is negative (- 0.41) and it becomes more negative in the
economic crisis news items (-0.74). The image of Cyprus is negatively aﬀ ected not
only by the news on the ﬁ nancial crisis of Cyprus (-0.83) but also by news on the
Greek ﬁ nancial crisis (-0.56) and on the EU ﬁ nancial crisis (-0.67). Even if Cyprus
did not experience at the time of the analysis the early stages of its own ﬁ nancial
crisis, the Greek/European ﬁ nancial crisis would still undermine its international
image. What is also noticeable is that the correlation of Cyprus with the EU in the
news items increases the level of negative evaluation for the image in Cyprus.
What is noteworthy in this study is that the two main news topics, the Cyprus
issue and the ﬁ nancial crisis result to diﬀ erent framing of Cyprus. Frequently, in
the images of states, the conﬂ ict frame and the problem frame are interrelated. In
such occasions the conﬂ ict functions as a basic causal factor for the problem. This
is not the case for Cyprus, since in the Cyprus Issue news, the image of the country
is framed predominantly in terms of conﬂ ict (66.7 percent) and only secondarily
in terms of problem (33.3 percent) while in the ﬁ nancial crisis news it is framed
predominantly in terms of problem (78.7 percent) and only secondarily in terms
of conﬂ ict (13.5 percent).
Both news categories exhibit high level of fear frame (The Cyprus Issue 41.7
percent – and the Financial Crisis 28.1 percent) low association with the hope frame
and the positive impact frame. As the ﬁ nancial crisis develops the Cyprus Problem
(Turkish occupation) the predominant source of the conﬂ ict frame on the image of
Cyprus is being displaced by the ﬁ nancial crisis – which shifts the image of Cyprus
in terms of the problem frame.
The repercussions of the ﬁ nancial crisis on the image of Cyprus during the peak
of the crisis were examined by another state mapping project (Samaras et al 2013).
The time period for the analysis was one month (March 2013) and was based on
two Greek newspapers.
During this period the journalistically mediated image of Cyprus combines
very high visibility with negative evaluation. While in November 2011 Cyprus
appeared in 101 news items contributing 1.7 percent of all references to foreign
countries (Samaras 2012) and in June 2012 it appeared 144 contributing to 2.0
percent (Iordanidou and Samaras 2013) in March 2013 it appeared in 448 articles
contributing to 11.4 percent of all references to foreign countries (Samaras et al
2013). This high visibility is combined with negativity. In 59.2 percent of the news
items the image of Cyprus is negative or very negative, in 7.6 percent positive while
in 33.2 percent are neutral.
During March 2013 the image of Cyprus is framed in terms of problem (60.7
percent). The uncertainty created by the economic collapse of the ﬁ nancial system of
the country initially lead to tension in terms of the approval of economic assistance
led to relatively high levels of the conﬂ ict frame (28.6 percent). The ﬂ uid ﬁ nancial
and social environment that is constantly changing has very low percentage of
positive eﬀ ects frames (1.1 percent). The framing of Cyprus in terms of hope is rel-
atively high (12.9 percent) mainly due to expectations that the “No” of the Cypriot
parliament created to opponents of the Memorandum in Greece.
What dominates in the references to the image of Cyprus is the fear frame (38.2
percent), which is more intense in the aftermath of its ﬁ nancial system’s collapse
and the uncertainty of political actors, evidenced by the use of melodramatic frame
(23.4 percent). The fear produced impacts the international environment after the
banks’ closure and the decision to break up to the country’s banking sector. The
repercussions are wider than the national context and go far beyond it, as a conse-
quence of the depositors’ haircut. This situation eventually spreads the uncertainty
for the function of the global banking system.
Finally, one other research project (Samaras et al 2014) examined the impact of
the ﬁ nancial crisis on the international image of Cyprus for the post crisis period in
three channels CNN News, FOX News (USA) and BBC (UK). Every news item con-
taining reference to Cyprus was analysed for a period of six months (28 March–30
September 2013). Cyprus appeared in 243 news items in BBC, 242 in Fox news and
47 at CNN. The economic crisis is the dominant news category contributing to
the image of Cyprus. The economic crisis shapes the image of Cyprus as the vast
majority of the articles referring to Cyprus are connected to the economic crisis.
The evaluation aspect of Cyprus image is still negative but more moderately: in
39.3 percent of the news items the image of Cyprus is negative, in 2.1 percent very
negative, in 1.1 percent positive while in 57.5 percent is neutral.
Negativity has been fuelled by the ﬁ nancial crisis problem, the collapse of its
banking system, the uncertainty of the economy’s path as well as the aftermath of
the crisis in the international environment. In particular, the closure of the banks
and the subsequent “haircut” of deposits inﬂ uenced the international economic
system by aﬀ ecting foreign investors, mainly Russian. At the same time, the eﬀ orts
of the Cypriot government and the strategies followed in order to handle the crisis
produce negative evaluations.
The interpretative frames that form Cyprus’ image describe a typical case of
a country that has faced a hard hit, in the form of crisis, on its image. The more
often employed schema of interpretation is the problem frame (51.7 percent of all
depictions of Cyprus). The cost frame receives 27.8 percent, the strategy frame 24.4
percent while the fear frame 19.7 percent.
In contrast, the positive frames have very low frequency distribution: beneﬁ t
frame is rated at 2.6 percent and hope frame at 4.2 percent. The combined appear-
ance of the three frames: strategy, problem and cost could be explained by the
conditions that are created during a crisis (Samaras et al 2014).
The framing of Cyprus in terms of problem during the Cyprus bailout news
items interferes with the pre-existing deﬁ nition of the Cyprus Issue/Problem. Three
alternative deﬁ nitions of the terms Cyprus Issue/Problem were examined: (a) the
issue of Invasion and occupation of Cyprus by Turkey as well as of intercommunity
conﬂ ict; (b) the economic problem of Cyprus and (c) internal social and political
problems. Of the 532 news items coded in the three channels 306 (57 percent) incor-
porated some short of working deﬁ nition of the Cyprus problem. In 91.5 percent
(280 out of 306 items) the Cyprus problem was deﬁ ned as the economic problem
of Cyprus while in only 5.6 percent of the cases (17 of 306) the terms still referred
to the invasion and occupation of Cyprus while in 1.7 percent (9) to social and
political problems (Samaras et al. 2014). This is a process of extensive redeﬁ nition
with serious repercussions for Cyprus.
This paper addressed key political and discursive aspects of the Cyprus Bailout
Crisis. At the core of the analysis stands the process of displacement of the Cyprus
Problem as an issue of invasions and occupation with the rise of the ﬁ nancial crisis
as the dominant factor aﬀ ecting domestic politics, political rhetoric and international
image. In terms of domestic politics the early stages of the ﬁ nancial crisis aﬀ ected
the result of the 2012 presidential election: retrospective voting due to negative
economic performance handicap the candidate of the left, while the displacement of
the Cyprus Issue by the Financial Crisis from voters’ agenda worked to the beneﬁ t
of the elected president Anastasiades.
In terms of political rhetoric, the “memorandum dilemma” and the strategic
communication supporting the imposition of the memorandum is structured by
fear appeals and shifting of the blame to external actors. The processes surround-
ing the Bailout Crisis rendered the perceptions of German party political actors
critical of Cyprus. The image constructed for domestic use in the German political
scene was that of an unworthy victim. This was further elaborated in the analysis
of Cyprus image in the news.
The Cyprus Problem news and Financial Crisis news result in two distinctively
diﬀ erent images of Cyprus. The displacement of the former by the lat er in the
news agenda indicates a change in the international image of Cyprus. The domi-
nant image has shifted from that of a victim of the Turkish occupation to that of a
corrupted European member that is worthy of suﬀ ering. This is further enhanced
by the shift of the meaning of the term “Cyprus Issue/Problem” in international
media from an issue of invasions and occupation to one of ﬁ nancial problems and
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