Cyprus, the culturally and politically divided Mediterranean island, is a microcosm for the region’s financial, political and humanitarian dilemmas.
It also could become a model for solving them.
The island has been split between the Greek-speaking southern half, which is a member state of the European Union, and the Turkish conrolled north.
As one of the smallest but strategically most important members of the 28-member bloc, Cyprus is uniquely positioned to help heal the divisions in the region by uniting itself first.
“The geostrategic position of Cyprus today is more significant than ever,” Cyprus' President Nicos Anastasiades said in an exclusive interview with Handelsblatt from his palace in the capital of Nicosia. “Our neighbors are afflicted by unprecedented, bloody conflicts that threaten world peace. A united Cyprus could be a model for peaceful coexistence between Christians and Muslims.”
The Cypriot president said he believes an end to the island’s more than four-decade-old division between culturally Greek southern Cyprus and Turkish northern Cyprus is possible before the end of this year.
Cyprus can be a base for the fight against terrorism. The E.U. and NATO, as well as Greek-Turkish relations, would benefit from a solution to the Cyprus problem. Nicos Anastasiades, President of Cyprus
“If both sides can show understanding for the other community’s concerns and if Turkey contributes to a fair solution, we could be successful this year,” Mr. Anastasiades said.
The two communities have been politically divided since 1974, when nationalist Greek Cypriots staged a coup d’état in the young Cypriot state and Turkey responded by invading and occupying northern Cyprus, eventually carving out the Turkish Republic or Northern Cyprus as a separate state – which only Turkey recognizes.
Negotiations over a potential reunification started after the election of Mustafa Akinci as president of Northern Cyprus last April.
“We have been in a very intense dialogue since May 2015 that has led to advances on many important topics,” Mr. Anastasiades said. “There is a mutual understanding for the reservations and difficulties on both sides.”
Given their history – which included more than a decade of inter-communal violence after Cyprus gained independence from Britain in 1960 – some serious hurdles to reunification remain.
“The most difficult points are the question of property and compensation for displaced members of both communities, territorial corrections within the framework of the planned federal state, as well as the topic of security and guaranties,” said the president.
“The best guarantee for the security and rights of both communities is membership in the E.U.,” he added.
The current reunification bid is the first such effort since a 2004 plan drafted by Kofi Annan, Secretary General of the United Nations at the time, failed in a referendum. While Turkish Cypriots voted in favor of the Annan Plan, Greek Cypriots overwhelmingly opposed it – largely because of the 16.6 billion Cyprus pounds, about $30.8 billion, in reunification costs that experts estimated would have been borne largely by Greek Cypriots.
But Alexander Apostolidis, an economic historian at the European University of Cyprus, says it’s not about “costs” or “victims,” but rather about an “investment” in the future of Cyprus.
Mr. Apostolidis is one of three co-authors of a 2014 study "The Cyprus Peace Dividend Revisited" that predicts a “likely boost to economic activity” for both parts of the island through “a settlement of the Cyprus problem.”
The study found that reunification in 2016 could generate a €20 billion, or $21.7 billion, “peace dividend” over the next 20 years by accelerating economic growth to an average rate of 4.5 percent, compared to an estimated 1.6 percent without a political solution.
This would also boost individual incomes, especially in Turkish Cyprus, and help to eliminate the wide income disparity between the two communities, according to the report.
But a reunited Cyprus could bring dividends beyond the island’s own borders, President Anastasiades said.
“Cyprus can be a base for the fight against terrorism,” he said. “The E.U. and NATO, as well as Greek-Turkish relations, would benefit from a solution to the Cyprus problem.” Such a solution could also help secure Europe’s energy supply with the country’s vast natural gas resources, he added.
Mr. Anastasiades also called on the European Union to support Greece, one of the major transit countries for the scores of refugees fleeing the civil war in Syria. Recent decisions by some Eastern European states to close their borders to refugees have only increased the burden to be shouldered by Greece, he added.
In response to Athens’ requests for help, the European Commission on Wednesday unveiled a €700 million emergency aid package aimed at helping Greece and other nations deal with refugees from Syria and other war-ravaged countries.
The European Parliament and member states must approve the measure, which calls for €300 million to be spent this year and €200 million in each of the next two years.
The refugee crisis poses a threat to Europe’s Schengen area of open borders and the sustainability of European social security systems, the Cypriot president said.
“It would be unrealistic to deny that this humanitarian crisis has triggered a real earthquake. It is putting Europe’s cohesion to a tough test.”
Mr. Anastasiades said his own country has emerged stronger from a major financial crisis that forced the island to be bailed out by the European Union in 2013. The European Union’s three-year aid program for Cyprus will end this month.
“The crisis forced us to finally modernize the structures of our government, which had been basically unchanged since independence in 1960,” he said. Since its financial crisis, the country has implemented long-overdue reforms, such as reducing the size of its bureaucracy, battling corruption, improving financial oversight and fiscal discipline.
“We are emerging stronger from the crisis,” Mr. Anastasiades said.
Gerd Höhler is Handelsblatt's correspondent in Athens. To contact the author: [email protected]