by Andreas Theophanous, Professor of Political Economy and Director General of the Center


Last year on April 24, the UN Plan for the resolution of the Cyprus question was put to two separate

referenda and was rejected by an overwhelming 76% of Greek Cypriots. The Republic of Cyprus,

whose government is the only internationally recognized entity and represents the entire island, is

now a member of the EU. There is less tension than ever before, and increased but still relative

freedom of movement.  Over 7,000 Turkish Cypriots are working in the government–controlled areas

 – and many Greek Cypriots have been visiting the areas they deserted during the 1974 events.


It is instructive to understand why the Plan was rejected – but it is even more important to see how

Cyprus can move forward to a sustainable solution that may provide benefits not only to the parties

directly involved but also to the broader area.  After all, a functional model for the coexistence and

creative cooperation between the Greek Cypriot Christians and the Turkish Cypriot Moslems in Cyprus

would serve much broader objectives.


To the vast majority of Greek Cypriots, Annal Plan V would not only have legitimized the outcome

of the 1974 Turkish invasion and occupation of the northern part of Cyprus, but would have also

worsened the status quo and indeed reversed many of the benefits of accession to the EU.  The

legitimate security concerns of the Greek Cypriots were not addressed; and the system of guarantor

powers – Britain, Turkey and Greece – was not only maintained but was reinforced.  In any case,

most Cypriots (including many Turkish Cypriots) believe that the Republic of Cyprus has matured

and does not require “guarantor powers”. 


Following the partial lifting of restrictions on free movement on April 23, 2003 and the supporting

measures of the government, more and more Turkish Cypriots have been applying for official documents

of the Republic, receiving free medical treatment in state hospitals, and securing employment in the

government-controlled areas.  Indeed, relations between the two communities at different levels have

improved; and the hypothesis that the two communities cannot live together was not confirmed.


Economics is influencing the relations between the two communities.  And it is the economy that to a

great extent will sustain the solution.  Following the 1974 debacle, the government-controlled areas of

Cyprus managed not only to recover but also to generate what has been described as an “economic

miracle”.   It was this performance that enabled the Republic of Cyprus to successfully pursue its

accession to the EU.  And Cypriots assumed that a solution of the political problem reunifying the island

would lead, at minimum, to economic gains for all and, at maximum, to a new economic miracle.  Yet

for many Greek Cypriots, the Annan Plan seemed to ignore fundamental economic principles.  A major fear

was that, in the event of its implementation, there would have been serious socio-economic deterioration

for the Greek Cypriots.  Such an outcome would have been destabilizing – adversely affecting the Turkish

Cypriots as well, even though the latter would have benefited in the short run.


The strict bizonality requirements of Annan Plan V would have effectively undermined the prospects of

a unified economy and thus of the convergence of the productivity levels and of living standards of the

two communities in Cyprus.  The Greek Cypriots also suspected that the complex constitutional arrangements

proposed under the Plan would certainly not have led to a functional system but to paralysis and breakdown.

The majority of Greek Cypriots also perceived that Annan Plan V would not lead to a cooperative political

system but instead would consolidate division and produce bottlenecks – to be resolved by non-Cypriot

judges, who would effectively assume supreme political power.


The provisions for addressing property issues were not considered satisfactory either.  There is also a

growing conviction that more integration and greater reliance on market forces may address such complex

issues much more effectively than legal provisions, the interpretation of which may not be clear even to

those drafting them.


The question is how to move forward.  The election of Mehmet Ali Talat as the new Turkish Cypriot leader

on April 17, 2005 may be indicative of sustained support for reunification – even though no major move can

occur without the consent of Ankara.


Inevitably, relations between the EU and Turkey affect Cyprus.  Turkey may be tempted to keep Cyprus

as a hostage for its own accession.  But this does not have to be the case.  Under the circumstances,

the most practical step is an essential upgrading of the confidence building measures between the two sides

on the island. That should include the return of the ghost town of Famagusta to the Greek Cypriots and

more economic opportunities for the Turkish Cypriots.  Enhanced cooperation and more tangible benefits

for both communities would pave the way for a sustainable settlement that would be to the benefit of all



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