For a long time politics amongst Cypriots concerning the national question – the Cyprus problem has remained an economics-free zone. While focusing on the political details of a Cyprus solution, Cypriots time and again overlook the economic factors. But up to date research by International Peace Research Institute of Oslo (PRIO) reveals the extent of the economic benefits of reunification for all Cypriots and the wider regional benefits it will have.  

THE ECONOMIC BENEFITS OF A SOLUTION

PRIO researchers recently estimated that the benefits to Cypriot businesses of a reunited island would amount to Euro 1.8 billion a year for the first seven years after re-unification, which is equivalent to 5,500 Euros per household per year. The report, entitled "The day after: Commercial opportunities following a solution to the Cyprus problem," was based on a research sponsored by the International Peace Research Institute in Norway and is the first such study aimed at highlighting the economic benefits of a Cyprus solution. Research conducted by a group of Greek and Turkish Cypriot researchers found that the reunification of Cyprus would bring each Cypriot family thousands of Euros of dividends in the first seven years.

With a focus on five key sectors, the report recognized that a solution will chiefly afford benefits for the tourism, construction, university education sectors, finance and legal service and trade companies.  The report made its calculations on two scenarios, the first of a reunified Cyprus and the other of continued division. In terms of construction which has almost come to a halt in northern Cyprus and which is shadowed by a string of legal cases, reunification is predicted by PRIO’s report calculated that reunification would bring €393 million per year in new business for Cypriot construction companies and €155 million per year in new business for Cypriot real estate companies. In terms of education, a reunified Cyprus would provide €162 million per year for the Cypriot university education sector. Imagining that 2009 is the first post-reunification year, the boost to the economy for that year would amount to €283 million, according to the report. By the seventh year, 2015, this would rocket to €3.9 billion, equivalent to 10 per cent of the island GDP or an average of €1.8 billion per year.

For the economically depressed north of Cyprus the financial dividends of reunification would be felt the most as much needed infrastructure would be built without the spate of legal cases. The economy of the north will speedily harmonise with the south putting an end to Turkish Cypriot isolation, while opening up Turkish Cypriots to the global market. With equal opportunities to trade within the EU and beyond, Turkish Cypriots could invest and lay the foundations of their future as a community.

Correspondingly, in the areas of the Republic, the economy would continue to grow and would in fact be strengthened by reunification, while the north would become a fertile ground for Greek Cypriot investors, and Turkish Cypriots potential labour force as well as consumers for existing Greek Cypriot businesses. In addition, Greek Cypriot property owners like Turkish Cypriot ones would finally receive their property or compensation for them allowing Cypriots to get on with their lives. The re-opening of Varosha / Maras would be a great asset to the tourism industry, providing jobs and increasing the volume of tourists. Numerous franchises and multinational companies would also greatly benefit from an additional 262,000 northern customers. In the case of international furniture store IKEA, over a quarter of a million northern Cypriots who are currently barred from buying IKEA goods for home delivery would boost sales.

THE GREECE-TURKEY EXAMPLE

To calculate its findings, the PRIO report focused on recent commercial relations between Greece and Turkey as its model for Cypriots. Increased trade has transform relations between Greece and Turkey; two countries that were on the brink of war during the 1996 Kardak / Imia crisis. In an article entitled “Trade mends Greece-Turkey ties” by the Daily Turkish News, it was reported that Alexis Alexandris, consul general of Greece in Istanbul, said “the periods of political crises between his country and Turkey have been overcome.”  “Through economic and trade exchanges and through the development of tourism as well as cultural exchanges, we arrived at a point where traditional fears, suspicion and lack of trust can become a thing of the past,” said Alexandris. As trade continues to flourish between Greece and Turkey with a total volume of direct investments reaching $2.8 billion for the years 2002-2006, investors have become “less and less” cautious about investing in Turkey explained Alexandris.    
 

TURKEY: A FUTURE TRADING PARTNER

The report predicted that trade in goods and services with our neighbour Turkey would thrive. According to the report, the reunification of the island would add over 7 years on average, €700 million per year in new tourism business, including €385 million from Turkey and a further €184 million in new foreign direct investment (FDI) into Cyprus, not including the already substantial investment in construction. The Greek Cypriot shipping sector, the world’s third largest would benefit tremendously from the opening of Turkish ports following a Cyprus solution, which would trigger the beginning of a flourishing trade with Turkey. Turkey, which is one of the principal emerging markets in the Eastern Mediterranean offers labour and affordable services and goods produced to EU standards. Turkey by virtue of its proximity to Cyprus, its path to EU accession and the huge market it represents that is still somewhat unexplored by Cypriots would rapidly become one of Cyprus’ main regional trading partners. Logically, during such a process investment will provide dividends to Cypriot investors increasing interaction while the learning of Greek and Turkish will become routine for all entrepreneurial Cypriots.  

A SOLUTION MAKES ECONOMIC SENSE

In response to the research carried out by PRIO, Michael Moller, the UN Secretary General's Special Representative to Cyprus rightly points out: "A just settlement will mean increased security for the people of Cyprus, greater stability for the region, increase in trade and provision of services, the creation of conditions that will allow culture and art to flourish, and the emergence of Cyprus as a model of peaceful coexistence in a world riven by division.”   The PRIO report and lessons from increasing commercial ties between neighbouring Greece and Turkey reveal real economic benefits that a Cyprus solution would provide not just to Cyprus but to its citizens. On a regional level, new economic partnerships with countries long associated as ‘enemies’ could flourish leading the way to greater trust.  Cypriots united could reap huge benefits from the Baku-Ceyhan oil pipeline, cheaper energy from Turkey’s planned 2015 nuclear power stations to meet Cyprus’ growing energy needs, while a water pipeline with Turkey could even provide much needed water to deal with Cyprus’ age old problems with drought.

But while economic considerations alone should never dictate policy by themselves neither should policy be formulated in ignorance of economics.  Cypriot leaders trying to sell the idea of a Cyprus reunified should make use of the findings of PRIO and even commission other researchers to contribute to PRIO’s findings. After all to negotiate for a reunified Cyprus requires our leaders and politicians to market the idea of a reunified Cyprus to the Cypriots, why a Cyprus solution makes economic sense to ordinary people and their lives must be revealed.