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From MSNBC

NORTHERN CYPRUS: Stymied by 30 years in the wilderness

Over the past 30 years, the residents of the self-styled Turkish Republic of Northern Cyprus (TRNC) have lost control of their fate. This is true most of all in the economic sphere. Although this part of the island of Cyprus is fertile and has a climate that appeals to sun-worshippers and retired Britons, its agriculture and tourism industries are moribund after three decades of embargoes by the rest of the world, Turkey excepted.

But even Turkey's patronage is a mixed blessing, if not a downright disadvantage. In the years since Turkish troops invaded in 1974, Turkey has experienced a series of political and economic crises that have reverberated in the TRNC, where the official unit of currency is the Turkish lira. TRNC residents like to boast, and some Turks concur, that living standards are higher in the TRNC than in large parts of Turkey. But that is not a high bar to jump. TRNC officials know that if they could have commerce with the rest of the world, the natural attractions of their part of the island of Cyprus, and the private enterprise that would presumably arrive to develop them, could provide a comfortable living for its residents.


In the absence of such private enterprise, much of the working population of the TRNC is employed by the state, which is heavily dependent on Ankara for subsidies. These subsidies have amounted to about $400m a year at their peak, and one reason why Turkey has been so anxious to get the TRNC into the international trading community is because it wants to reduce or even eliminate them. For now, however, cash continues to flow across the north-eastern Mediterranean, cementing the sense of dependency on others that is pervasive in the TRNC today.

Erdil Nami, president of the Turkish Cypriot Chamber of Commerce, says this dependency on the state "is the biggest threat to us – bigger even than the Greek Cypriot threat. It is our number one problem". The perverse consequence of the state's role as the main employer is that it competes with private enterprise, offering employment conditions that few in the private sector could afford. Mr Nami lists them – slightly higher wages, 45 days' holiday, 45 days of sick leave, and a working day from 7.30am to 2pm between May and September, when the heat and humidity in Cyprus are at their most energy-sapping.

Mehmet Ali Talat, president of the TRNC, says public sector reform is a priority. Yet the picture is not entirely bleak. The start of cross-border trade two years ago, though it appears to have slowed considerably since then, and the emergence of certain enterprises in the TRNC, are giving employment to locals and helping to raise living standards. Officials say up to 20 casinos have opened, and they cite the development of a $100m marina by a British investor, a $100m golf course by an Israeli consortium, and hotels in Famagusta and elsewhere on the northern and eastern coasts, which have fine beaches, as evidence of investment that is occurring despite the lack of progress in ending the TRNC's economic isolation.

The hotels are especially important, Mr Nami says, because existing facilities are too small. He also believes that the TRNC can successfully compete with the south in the tourism sector "because our wage costs are lower". Still, he claims that annual per capita income in the TRNC has risen from $4,000 to $10,000 in that period, compared with a rise from $16,000 to $20,000 in the Greek Cypriot south of the island in the same period.

Whether tourism is the best hope for the viability of the TRNC, with or without a solution to the division of the island of Cyprus, is open to question, however.

Mr Talat says the sector performed below expectations in 2006, partly because of the international situation. But even inside the TRNC, there is evidence of environmental degradation despite the lack of tourist numbers on the scale of the south.

There is a widely held notion abroad that Cyprus is a beautiful island, yet it is mostly remarkably ugly. This ugliness is exacerbated in the TRNC by the prevalence of garbage across the landscape, by the poor state of much of the urban environment, and by the extraction of stone from mountains along the north coast to build homes.

The sight of garbage strewn across the countryside is one sign of the lack of confidence of this tiny state in its own abilities and talents after years of dependence on others. As one weary resident observed recently: "What are we doing going around the world looking to be recognised when we can't even collect our own rubbish?"

http://www.msnbc.msn.com/id/16279337/