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Funding property compensation could bankrupt new federal Cyprus

20 August 2016

Uncertainty remains as to who will fund compensations for the loss of immovable property and is said to be another problematic issue in the Cyprus negotiations.

Turkish Cypriot daily Kibris Postasi reports that it has records of meetings held between President Akinci, negotiators Ozdil Nami and Andreas Mavroyiannis and US Assistant Secretary of State Victoria Nuland which reflect this situation.

The newspaper argues that according to a presentation by the World Bank to both sides in Cyprus, “black days” lie ahead for a federal Cyprus to be established after a solution is reached.

The World Bank reports that it calculates that the total value of property left behind in the South by the Turkish Cypriots is eight billion euros, while the value of property left behind in the North by Greek Cypriots is 21 billion euros. This leaves a net figure of 13 billion euros outstanding.

Victoria Nuland said that she had thought ten billion would cover compensation costs. Meanwhile, the total predicted figure of founding a federal Cyprus, including property compensation is between 20-30 billion euros. This would take up 60% of the new federation’s GDP and bankrupt it.

Making comparisons to the time when Germany was reunified, neither side was able to pay compensation, so calculations could not be made based on existing property prices. Repayment in full at market rates would cause a crash in the property market.

Akinci and Nuland were concerned about how such a prospect could be presented in a referendum and still hope for a ‘yes’ vote, when the first few years of a new federal Cyprus’ economy looked so bleak.

Kibris Postasi

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