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Turkish investment more likely if Cyprus re-united

21 April 2013

Turkish daily ‘Zaman’ reports that a prominent European Parliament lawmaker remonstrated with South Cyprus’ bailout creditors last Wednesday because they failed to insist on the reunification of Cyprus; a development he says that could create growth through stronger business ties with neighbouring Turkey.

Co-president of the European Greens–European Free Alliance, Daniel Cohn-Bendit, said a sustainable economic recovery for Cyprus could only be achieved through closer ties with the region’s biggest and most dynamic economy, Turkey.

South Cyprus faces years of economic hardship after a protracted crisis that has seen it become the fifth European Union country that uses the euro to accept financial assistance from international creditors. They estimate that the country’s economy will contract an enormous 13 % over the next two years, in marked contrast to the International Monetary Fund’s predictions for Turkey. On Tuesday, the IMF said Turkey would likely grow 3.4 % this year and 3.7 % next.

“Turkish investors will only invest in Cyprus when there’s a reunification,” said Cohn-Bendit. “The business model must come through reunification; a reunification within the European Union.”

He said Turkey, whose long-running talks for possible EU membership have made little progress in years, would have a much greater incentive to work with a reunified Cyprus. The country joined the EU in 2004 and the monetary union four years later, but only South Cyprus benefits from EU membership

Cyprus was split into an internationally recognized Greek-speaking south and a breakaway Turkish-speaking north in 1974 when Turkey intervened in the island after a coup by supporters of union with Greece. Turkish Cypriots declared an independent northern state in 1983, which is only recognized by Turkey, which maintains 35,000 troops there.

The last UN-brokered attempt to reunify the island, which began in 2008, has stalled. Cyprus came closest to a peace deal in 2004, when a UN-drafted agreement was approved by Turkish Cypriots. But the agreement was rejected by Greek Cypriots, who considered it weighted against them.

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