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ISRS Senior Researcher, Jas Mahrra provides an assessment of Cyprus – a strategic country connecting three continents.

 

Cyprus

Cyprus is a strategic country connecting three continents. It also has the possibility of reigniting an EU financial contagion if decisive action is not taken. Following our Net Assessment Bulleting (NAB) warning in November 2011 this is a slightly updated assessment:

 

~  Cyprus: Reigniting the contagion

Its exposure to the Greek debt and lending to the Greek private sector, as well as fiscal and structural problems within the island’s economy resulted in all three major credit rating agencies downgrading Cyprus to junk status.

The Cypriot taxpayer faces the prospect of a possible bank bailout package in the region of €10 billion, the equivalent to over 50% GDP of Cyprus. As a proportion of GDP it is one of the largest bailouts ever.

Russia offered a rescue package of a €2.5 billion loan to the Cypriot Government. As one of the main foreign direct investors into Cyprus, this loan is seen as a means of continuing investment.

 

~  UK & Russian Presence: geo-strategic positioning

Cyprus is a key financial centre for many Russian business elites but a large number of Russian nationals reside in Cyprus (estimates are between 8,000 and 40,000). The incentives for Russia rescuing Cyprus are obvious, less so, is the geo-strategic advantage. Russia’s only naval base in the Mediterranean is the Syrian port of Tartus which is no longer assured. Russia will do its utmost to maintain its only foothold in the Mediterranean. Cyprus could be the answer.

Although Cyprus gained independence in 1960, the UK has retained two Sovereign Base Areas indefinitely. These two sites provide the gateway to the Middle East. If tensions mount with Turkey and the Middle East, the UK could find itself at the interface of yet another uprising.

 

~  Economic / energy conflict: beyond Turkish-Cypriot dispute?

Cyprus until recently had no proven natural resources. The discovery of potentially 122 trillion cubic feet of gas in the Levant Region of the Mediterranean changes the regions energy zone. Cyprus is a bridge between three continents and has the potential to become a major destabiliser as tensions go beyond a Turkish-Cypriot dispute.

Israel has deepened its ties with Greece and has agreed with Cyprus on delimiting respective Exclusive Economic Zones and co-operating in oil and gas exploration. This energy find is a real revenue prospect for Cyprus but political policy decisions mean that funds are unlikely to materialise as quickly as Cyprus needs. Rather than building a pipeline to Turkey the plan is to export via an LNG terminal, which has not been built.

Turkish-Israeli relations have soured since the flotilla crisis where Turkish citizens were killed and tensions were raised soon after the first test drilling started last year. Turkey also started its own drilling exploration as they looked to enhance their own energy and economic agenda.

Turkish citizens no longer support the country’s EU membership. Turkey is moving eastwards, towards closer Turkish-Arab relations. It has much to occupy its attention with concerns for political demands from the Kurdish community (Iraq Kurdish Region may have been overplayed and the assassination of three Kurdish women in Paris derailing Turkish Government and Kurdish talks) and a civil war neighbouring on its border, in Syria.

The EU won the Nobel Prize for peace and can ill-afford Turkey disengagement. If Turkey moves away from democratisation at the same time that EU countries close off the nuclear power option, (Turkey is an energy corridor which the EU can ill-afford to lose), then this becomes a dangerous situation just as the Arab awakening is reshaping the balance of power in the region.

 

~  Germany: What is their decisive move?

Much of Germany’s wealth has been accumulated over the years through trade deficits other (mostly periphery) countries have run with Germany. Products have been dumped and the Landers Banks have provided credit to countries that could not be sustainable.

Germanyand its citizens are loath to bail out yet another government or foreign bank. Much depends on the outcome of the next general election. Whilst Angela Merkel retains much of her popularity, her premiership is not guaranteed as the prospective SPD dominated coalition is no longer certain.

The recent leaked report by its intelligence service which estimates that Russian’s oligarchs and ‘Mafiosi’ will be the prime benefactors of any bailout make any appeal to its citizens to support financial assistance unlikely. Angela Merkel has been steadfast in her decision that the EU must be saved at all costs. Will it stretch to supporting the investments of Russian oligarchs?

June 2012,Cyprusturned to the troika of EU, the ECB and the IMF for emergency aid of €10 billion. In turn, the troika have demandedCyprusreform its economy. Germany is insisting that the EAC (Electricity Cyprus) is sold off to pay Cypriot debts.

 

 

 

(From the wonderful http://xkcd.com/)

 

 

By Vinay Gupta, ISRS Associate Fellow.

We need a new method for producing housing. The evidence of this is all around us. The mortgage fiasco exists because housing costs ten times what it should. This problem is not just an access-to-land issue, it goes right into the roots of why housing is expensive.

Residential construction is the last truly inefficient great industry. Every house is built by hand, on site, by skilled laborers. If we built cars that way, a BMW would cost half a million dollars. The result of untransformed residential building practices is that there is no advanced technology base to trickle down to the developing world, as happened with the cellphone in the communications sector. So housing languishes.

The standard modern house of the poor is cinderblocks and a flat sheet metal roof. This design re-asserts itself everywhere because it has good capital management properties – the blocks remain valuable, and can be purchased piecemeal. Little skill is required to build it. It’s sturdy, but not terribly pleasant. It is slow to build and has terrible logistical features for rapid rebuilding after a disaster. But it is what the poor live in.

Open source, perhaps more accurately called commons based peer production, has revolutionized the production of software. The GNU/Linux ecosystem has been estimated to be worth more than ten billion dollars. It is an entire industry built on voluntary cooperation to create value, which is then used to support conventional (financial) business processes. The software is Free in every sense of the word, and yet still intensely valuable and efficient.

This is the real terrain in which a global revolution in the availability of affordable housing could exist. Something which is Free, in the open source sense. Something which uses highly available commodities. Something which collects together great ideas from many contributors to create a design which is both global and yet evolved into place as localized variations arise. These design parameters for a process to produce radically cheaper housing work whether the target home costs $50,000, or $300. These are the underlying trends which could give us housing which gets cheaper to build with every passing decade, like computers, rather than more and more expensive. Real estate is an industry ripe with the potential for revolution.

The hexayurt is about the simplest and cheapest imaginable dwelling. It was originally designed as a replacement for the ubiquitous disaster relief tent. A disaster relief tent costs about $400, and a very basic hexayurt costs $100 for about the same amount of space.

Instead of being made of canvas, the hexayurt is made of wood – ideally exterior-grade oriented strand board or marine ply, but it will work in any standard 4’x8′ (1.2×2.4m) rigid material. Anywhere you see concrete buildings, plywood was used to form the concrete. Anywhere within a few days drive of a city has a plywood supply chain.

The construction process is absurdly simple:

1. Cut six 4’x8′ panels in half diagonally and make into large triangles.
2. Screw the panels together into a shallow conical roof.
3. Make six more sheets into a low hexagonal wall.
4. Put the roof on the walls and fasten.

The complete list of required materials: 12 sheets of wood, 3 pieces of 2×4, 200 screws. Add glue and waterproofing agents as needed.

Because the capital cost is below the price of a tent, the hope is to transform disaster relief. Instead of shipping in tents to places like Haiti, ship plastic sheet to meet immediate needs, and start training local builders how to make hexayurts. As funds are raised and supplies for rebuilding flow into the area move people directly from their tarp shelters to their small, but perfectly serviceable, new homes. Low labor costs, simple logistics, easy to acquire and localise basic shelter technology could permanently revolutionize disaster relief.

The difference between being poor and being a refugee or disaster victim is small. The hexayurt may well be used in areas with sudden influxes of disaster relief capital, but once deployed, nobody is going to forget how to build them. In the areas where the design is affordable, suits local needs and tastes, and the materials are available, it may simply become another indigenous building style. That is as good an outcome as any housing innovator could wish for.

Infrastructure for water purification (biosand filters), cooking (rocket stoves) and many other basic needs can also be managed in this way. I think that with a budget of $300 it is quite plausible to build a long-life hexayurt with the critical infrastructure required to support long and healthy life. The most important thing you can do to spread the hexayurt is let people know it exists.

The Hexayurt Project has one final, peculiar property: we are not incorporated, nor do we accept donations or have a bank account. We did this initially to avoid competing with the charities who are the natural vehicles for deploying the technology, and as imitation of many open source software projects. But what we have learned over the years is that it inspires trust in our motives like nothing else – to say clearly “this is for you, we derive no benefit from it” enables improbable collaborations of many kinds. The “clean hands” approach has enabled us to collaborate with the Red Cross and the Pentagon with equal ease.

Sometimes the most effective marketing and communications come from being trustworthy, and waiting.

Vinay Gupta is an ISRS Associate Fellow and creator of the Hexayurt project. He tweets at @leashless and @hexayurt.