Can Cyprus’ economic crisis end long division between Turkish north and Greek south?

McClatchy NewspapersApril 4, 2013 

— When Cyprus’ banking system imploded last month, dooming the country to economic contraction and years of depression, Turkish Cypriots who dominate the northern part of the island had a distinctly more upbeat reaction than the Greek Cypriots who dominate the south.

Where Greek Cypriots saw only despair – as many as 10,000 businesses are expected to close, driving unemployment beyond anywhere else in Europe – Turkish Cypriots saw a moment of opportunity that might lead to economic cooperation and eventually a political breakthrough.

Cyprus has been ruled by two different governments since the Turkish army invaded the island in 1974. The Turkish Republic of Northern Cyprus, comprising mostly Muslim Turkish Cypriots and settlers from mainland Turkey, is recognized only by Turkey, while the Republic of Cyprus, where the Greek Orthodox Church has long played an outsize role in politics, is a member of the European Union. A fence and buffer zone patrolled by U.N. peacekeeping forces still separate the two. Nicosia’s once-famed hotel, the Ledra Palace, lies in the buffer zone; it now houses U.N. troops.

Cypriots and foreigners, other than Turks from Turkey, can walk across the “green line” dividing the two communities in Nicosia after showing identity papers or passports. A visitor flying into Ercan, the bustling Turkish Cypriot airport north of Nicosia, can taxi to a hotel in the south – provided the driver is 39 years old or older; that is, born before the invasion, and can prove he was born on the island.

Unemployment is low in north Cyprus, thanks to Turkish government subsidies of the public sector, but per capita income is less than half that of the Republic of Cyprus. And after decades of living in near-pariah status -- the south has blocked from its ports and airports, from international recognition and from EU trade -- the mood is one of: “nowhere to go but up.”

Still, with air links only to Turkey and no acceptance anywhere else, it is “an open prison,” said Gunay Cerkez, president of the Turkish Cypriot Chamber of Commerce. “We cannot continue on this path forever. Either we identify and adopt a federal system or we should accept separate states,” he told McClatchy.

Whether this is the right moment is the question.

No one knows if Greek Cypriots, who number 860,000 by a CIA estimate, are ready to abandon their romantic quest for a permanent link with Greece in favor of an island identity with an autonomous Turkish sector that would have about 200,000 residents.

There’s no question that Turkish Cypriots are ready for a deal. Lying just 70 miles from mainland Turkey – mainland Greece is 700 miles away – Turkish Cyprus has a scenic coast with towering crusader castles, a modest tourist sector, and trades in Turkish liras, rather than the euro, whose adoption by the Greek Cypriots in 2008 opened the way to their economic collapse.

Mehmet Ali Talat, a former president of Northern Cyprus, calls the south’s economic collapse “unexpected and unwanted” and said it’s likely to be bad news for the Turkish Cypriot economy. But he also sees it as a development that “we have to utilize,” not just to unify the island but to give Turkish Cypriots international legal status.

Every glimmer of hope is tempered by a harsh reality. Nicos Anastadiades, a Greek Cypriot politician who took over the presidency on the eve of the bank collapse, has signaled that he is determined to make every effort to reach a compromise with Turkish Cypriots. But it could be months before he can take any such initiative – assuming the country does not “just slip into a bottomless hole . . . that will end up sucking the air out of this government,” said one Western diplomat, who asked not to be identified because he wasn’t authorized to speak on the record.

Others say it isn't the moment. “I am a pro-solution person. I want a solution yesterday,” said Andreas Christou, the mayor of Limassol, the island’s second biggest city. But, he told reporters, “It is not just a question of desire. I don’t see the solution to be connected with the crisis. They are different things.”

Unlike most Greek Cypriot politicians, Anastadiades can claim a track record in resolving the Cyprus problem. He backed the last international effort, a 2004 plan named for Kofi Annan, then the United Nations’ secretary-general, that would have created a federal state that would have allowed autonomy for the Turkish Cypriot portion of the island. Some 65 percent of Turkish Cypriots voted in favor, but 76 percent of Greek Cypriots voted no. After that outcome, the EU admitted the Greek Cypriot-dominated south as a member the following week, an action that gave Greek Cypriots a veto on integrating the Turkish north into the EU as well as on Turkey’s bid for EU membership.

The vote was a major setback for Recep Tayyip Erdogan, Turkey’s prime minister, who’d endorsed the Annan plan and was hoping to win EU membership for Turkey. Nine years later, Turkey is still not an EU member, but its economy is thriving.

During the current crisis, Turkey has shown little patience for the problems of the Greek Cypriot south. When the south attempted to use future proceeds from natural gas sales as collateral to obtain loans from Russia, Turkey came down hard, condemning the ploy as “a dangerous manifestation of the illusion of being the sole owner of the island.” It warned that Turkish Cypriots are “co-owners of the islands” and “will never become a minority in a Greek Cypriot state.”

Greece charged that Turkey was behaving like a colonial power and said the two communities could find solutions for themselves. And the Greek Cypriot government here said the starting point for any talks should be the removal of Turkish troops from north Cyprus.

Turkish Cypriot leaders, while insisting on preserving their rights to Cypriot natural gas fields, have taken a low-key approach to inter-communal talks. They favor starting with confidence-building measures, among them: reciprocally opening ports to each others’ trade, allowing Cyprus airlines to fly through Turkish airspace, and opening Turkey and Cyprus to each others’ tourists.

As for exploiting offshore natural gas deposits, Turkish Cypriots point out that a pipeline to Turkey, which has a voracious need for fossil fuels and is the nearest big customer, would be far cheaper to build than one to Greece.

The big fear among Turkish Cypriots is a nationalist backlash from Greek Cypriots, blaming Germany or Europe for their woes.

The dream of “Enosis,” or union with Greece, is still in the hearts and mind of many on the Greek Cypriot side of Nicosia, and Greek Independence Day, March 25, is celebrated as a national holiday with a military parade.

Enosis has been behind many of Cyprus’ troubles. A drive for union by the then-military government in Athens led to a coup in Nicosia in 1974 and provoked the Turkish military invasion.

Two years ago, in what amounted to financial Enosis, the two biggest Greek Cypriot banks, with almost certain government knowledge, purchased billions of Greek government bonds that fell in value, causing the enormous losses that led to financial collapse.

Some Cypriots, particularly in the younger generation, think it’s time for a change.

“People insist on celebrating Greek Independence Day because they love the idea of having a national identity,” said Stephanie Lambrou, 27, who studied in France and Britain and works as a translator in Limassol. “We have the language and the religion from Greece. But we are nothing like the Greeks. I would like to have a Cyprus identity.”

Email: rgutman@mcclatchydc.com; Twitter: @RoyGutmanMcC

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