Reunification has already divided Cypriot economy

If reunification deal on Cyprus is approved by both Greek and Turkish Cypriots in referendums, this will not come to mean its problems are over

Updated Mar 4, 2016

According to the President of the Turkish Cypriot Chamber of Commerce, there are a whole series of other issues to be dealt with – mainly connected to the economy.

The average income in the internationally recognised "Republic of Cyprus" is about 50 percent higher than in the Turkish Republic of Northern Cyprus (TRNC) – and there’s a 300 percent difference in GDP.

Yet the TRNC has a lot to offer to a united island. A completed pipeline transporting water from Turkey to the TRNC for drinking and irrigation would help the sometimes parched land in Greek Cyprus.

And Greek Cypriots are coming round to the fact that they'd like access to the market of 75 million people in Turkey.

Growth in the Turkish Republic of Northern Cyprus is currently at 1.8 percent, according to Fikri Toros, and needs to be at 4.6 percent if reunification is to happen.

Because at that point the whole of Cyprus will become part of the European Union – and the Turkish Republic of Northern Cyprus doesn’t fit the typical mould of a potential EU member.

Filming at Candan Avunduk’s cheese factory. [TRTWorld]

"Because we’re not a typical accession candidate, the European Union cannot provide all its usual pre-accession tools to the Turkish Cypriot economy. They’re very much restricted in terms of programmes, funds and technical assistance and various other tools that are required. We’re left with trying to put these in place on our own with very little assistance from Europe,” Mr Toros said.

And that could create new reasons for conflict between the two communities.

Mr Toros added, “In a reunified island where there will be the basic freedoms of the European Union, freedom of movement, of people, of goods and services and capital, you need to converge these economies to remove the likelihood of one federal partner becoming dependent on the other. That is the biggest threat to a federal settlement on the island.”

Meanwhile businesses currently operating in the Turkish Republic of Northern Cyprus have a huge list of obstacles to overcome to become a success.

All imports or exports have to come via Turkey – the only country that recognises the Turkish Republic of Northern Cyprus. Ships and planes have to either dock or land on the Turkish mainland first. And there’s a lack of foreign investment.

The pedestrian border between Turkish and Greek Cyprus on Ledra Street. [TRTWorld]

Candan Avunduk, whose cheese factory is featured in the report, said, “The main difference between Greek Cyprus and us is that the process of exporting goods takes a matter of five to seven days for them, whereas it takes anywhere from 35 to 45 days for us.

“Another issue is the time it takes for our goods to enter the market. Our competitors hit the market in a matter of two weeks whereas producers in the north have to wait for their means of transportation. We are at a big disadvantage when it comes to competition in the market."

It’s this lack of competitiveness that has to be removed if reunification is to become a success, according to the Chamber of Commerce.

The whole of the island is currently part of the EU – although European laws have been suspended in the north because Brussels does not recognise the government of the Turkish Republic of Northern Cyprus.

Reunification will mean a new economic future for Cyprus, but how that is handled will be a great test for both communities.

Author: Andrew Hopkins