The Cyprus Problem-Georgios Stavris

The Cyprus Problem & The Economy Complex: “It’s the economy stupid!”

Cyprus is definitely a comparatively, small country and state tugged away in the eastern corner of the Mediterranean. In economic terms its current size and potential is even further constrained by the de facto partition resulting from the massive 1974 military operation and presence by Turkey that continues to date with the perennial Cyprus Problem still unresolved. Thus, even though Cyprus has indeed a rich history and culture throughout the ages spanning more than 3,000 years of recorded history, it is infamously best known globally for its long-running history of ethnic conflict between the two biggest ethnic communities, Greek and Turkish living on the island. 

Greeks (Hellenes) arrived on the Island in the aftermath of the long Trojan War at around 1,100 BC when Evagoras son of the King of Salamis a small Island kingdom in the Saronic Bay, landed on the eastern coast of Cyprus and established the namesake of his Island as an important and thriving city- kingdom, Salamis of Cyprus.

Due to various reasons and upheavals the modern city of Varosha was built south of both the ancient city of Salamis and the medieval Venetian city of Famagusta.

After the establishment of the nascent Republic of Cyprus in August 1960 and due to the vastly different aspirations of the two major communities, i.e. Greek and Turkish Cypriots over their common homeland, union of the Island with Greece or partition of the Island between Greece and Turkey, clashes of various degrees of intensity and scale ensued.

By virtue of these, the Turkish Cypriots withdrew to fortified positions and in the case of old Famagusta, most of them into the old Venetian City just adjacent to the modern city of Varosha with its lengthy beach. The unique combination of the Republic of Cyprus’ largest and deepest port in the Eastern Mediterranean that of Famagusta as well as the outside walls where Varosha lied with a thriving agricultural sector and a prosperous new tourism industry, created a long-running economic boom for the area up to the 1974 conflagration without parallel. Contrasting this area to the rest of Cyprus at the time was like dealing simultaneously with two contrasting universes, i.e Varosha and the rest of Cyprus.

The ensuing economic and social shock of the loss of Varosha and its veritable entombment since 1974 to this date almost fifty years after the Turkish military intervention and occupation, imposed new development plans for the rest of Cyprus by the Republic of Cyprus administered by the Greek Cypriots.

New dormant areas of the Island’s southern part still governed by the Greek Cypriots under the mantle of the Republic of Cyprus, were boosted thus having reached today enviable levels of development across old and new sectors of a fast-changing economy, i.e tourism, banking, foreign investments, funds management, real estate being prevalent. The 2004 accession of the Republic of Cyprus as a full member of the burgeoning European Union and later, of its Eurozone, have indeed placed its economy and society on a new plateau in the important indices of growth and risk management and thus, its enhanced attraction of foreign investments.

The passing of generations since the 1974 events coupled with a massive social/economic shock that divided society into separate groups of refugees and not, created an explosive cocktail among Greek Cypriots that has been increasingly affecting all.

What has not received any attention to date in the literature, is the new “industry” that has been created by the long-running political problem, i.e. the notorious “Cyprus Problem” that has affected all activity in almost all important activities in the Republic of Cyprus nowadays constrained since 1974 only to the southern part of the Island.

Due to its lengthy and seemingly never-ending presence, the Cyprus Problem has inevitably become an industry unto itself with thousands of people engaged in it and living off the “Problem”.

Add to that the fact that the “Problem” is in the hands of self-proclaimed “politicians” who operate both in the executive as well as in the legislative branches of government. This means they both, make laws and operate within them as they see fit. Thus, political parties in the RoC basically, never need to monitor, contain or punish themselves for what would seem to others in politically-mature countries, as substantive transgressions. Thus, the same modus operandi to the careful strict gaze of a mature political/governmental observer would have all the essential ingredients of pseudo-institutional “corruption” beyond control!

The long running Problem has become notoriously, a way of life in Cyprus affecting all Cypriots with each major community having its own narrative on why the urgency of a resolution has subsided.

Generations affected by the grave impact of the Cyprus Problem and markedly so after the 1974 Turkish military operation have come and gone with great numbers knowing no other reality but that of division.

It is not surprising that being a “politician” has become a favourite career track for many Cypriots on both sides ranking high on the income/productivity index. Aside from that, laws in Cyprus are a very malleable concept. Their outright application is also a theory rather than regular practice. Known and unknown “politicians” in both communities have created large fortunes almost overnight without any “authorities” pursuing them. Application of laws on the Island is an unusual slow process even if it actually happens.

The very spirit and letter of the Constitution of the Republic of Cyprus the only internationally-recognized state in Cyprus to date, result in such extreme privileges bestowed upon the President that he appears and is in practice actually, almost the absolute “monarch” with a permanent net of impunity along with it.

The extensive bureaucracies engaged in both communities in administering order and daily tasks of government are an inalienable part of the labyrinth-like Cyprus Problem. Their monthly incomes and also status depend on the continuation of the Cyprus Problem even if its resolution would reunite the Island with all its attached benefits in the years to come.

Add to the above the fact that citizens’/bureaucrats’ rights etc. are supported by the political parties etc. who are the agents that offer them due to lack of any major changes.

The criteria of becoming engaged in the above are definitely not meritocratic as the case would be in an environment imbued with criteria of productivity and marked tasks achieved.

In all fairness and maintaining balance in the above analysis of present day divided Cyprus the above vicious cycle needs to be broken somehow creating a real impetus based on profound incentives in order to achieve a veritable resolution of the ever complex Cyprus Problem.

The addition to the above mayhem of considerable reserves of natural gas in the internationally accepted Exclusive Economic Zone (EEZ) of the Republic of Cyprus has brought upon Cyprus and its People the real prospect of a long-running bonanza for many, many years. In catching up with the rest of the EU an arrangement through a solution can be established on the special needs of the Turkish Cypriot community for it to have an enhanced absorption of the natural gas income  in order to speed up all  needed investments, works etc. This will significantly accelerate the needed investments in the Turkish Cypriot economy that will allow it to aim for parity with the Greek Cypriot Economy.

Having witnessed the recent

Presidential Elections in the Republic of Cyprus with candidates and political parties collecting votes without the natural vigour for a workable and fair solution that would allow Cypriots to understand the merits of a rational compromise, one remains sceptical and pessimistic over the voters’ free will allowed to take its due weight and make its impact felt.

At the end, the matrix of a solution in Cyprus consists of, (a) Security via the arbiter of the presence of active and  bona fide peacekeepers, i.e UN & EU (b) the economy boosted by the solution and massive reconstruction effort, (c) through a new institutional architecture, a loosening of the tight grip of the existing political structure in a representative federal democracy with all the requisite checks and balances over the political economy of a post-solution Cyprus so that the old sins of the past, i.e. extreme nationalism on either side or imported cannot derail again the long-tormented Island state and all of its people.


The phrase, “It’s the economy stupid” originated amidst the 1992 American Presidential Election with President Clinton seeking election and was coined by his campaign strategist  James Carville when Clinton was running against the incumbent George H.W Bush.

Although, the catchy term was really intended to be used by the campaign staff among themselves only, it became so specific and accurate in substance that its second phrase became instantly a de facto slogan for the Clinton Election campaign. Its beauty and effectivenes was its accutely effective mode of delivering to the electorate audiences the substance of the real issues at hand.

As aforementioned the long-running and well-rooted by now Cyprus Problem, in the minds of politicians of the sides involved after sixty long years  has truly become an industry unto itself consisting of politicians, bureucrats and the public that come and go in all countries involved. This “industry” delivers a way to be upstaged to politicians involved. It has created and sustains to this day  large bureucracies in each country engaged in the many and perplexing disputes that come to the fore for many decades to date. Generations have been born from both communities into the frozen conflict and the perennial “Cyprus Problem” has become their complete universe within which they live and function. Most people are directly or indirectly affected by the 60-year old Problem in many different ways from their employment to their very lifestyles.

To drive this point further, consider the thousands of public servants, politicians in government, Parliament, political party cadres and many other Greek Cypriots who are to varying degrees  engaged with the Cyprus Problem for their livelihood for many years.

Thus, what is purposely never mentioned are the economic aspects of the never-ending dispute which is also purposely and almost singularly portrayed as only a political issue par excellence. It is sadly not so!

The list of the beneficiary agents of the eternal Cyprus Problem “Industry” is unfortunately very long indeed. Particular reference is here made to the areas controlled and governed by the Republic of Cyprus.

At the Cyprus Problem pinnacle lie certain political leaders, party chiefs etc whose own effective influence is frequently of a determining impact on weighty political abd economic issues, i.e. what sizeable expenses and investments are indeed made and frequently, because of mainly self-serving, vested interests. Examples strongly supported by facts and events, abound.

The hugely expensive adventure in the 90s of Greek Cypriot politicians who rushed to order and cheerfully paid for the supply from Russia, batteries of the S-300 missiles allegedly to beef up air defenses against Turkey’s military aggression but was finally lightheartedly cancelled, remains indeed a case study in support of the argument. Simply put, the Cyprus Problem “politicians” in an extremely peculiar frenzy proceeded with their authorization to buy the above missiles exceeding a billion Euros in cost without ever bothering for a minute to ponder the feasibility of actually and realistically bringing this super weapon to Cyprus and putting it to actual use..

Remembering the depressing conclusion of this saga still infested with questions for the political “leaders” that remain unanswered, the missiles were ultimately….. donated to Greece.

Local politicians became extremely wealthy overnight in ways documented but no investigation was ever commissioned to probe all in this saga.

The list of similar heists by “politicians” is shamefully lengthy. The EU and other international organizations focused during the last few years on exposing and battling political corruption, recently launched far reaching investigations of the “Golden passports” scheme offered by the Republic of Cyprus government that literally….sold its passports (..essentially EU passports!) to some of the world’s most wanted in exchange for very large “fees!”

Simultaneously, the recently retired President of Cyprus was documented of taking lavish trips with his family on a Saudi Arabian Kingdom private jet to the Seychelles loaded with several large bags stuffed with millions of Euros obviously to avoid detection of them through the international banking system!

It is indeed shocking to fathom the extent and depth of such behavior by politicians whose raison d’etre is, supposedly, to reach a solution in the never-ending Cyprus Problem for the benefit of their peoples.

Adding also to the aforementioned the following outrageous incident whereby in March 2013 amidst the near total collapse of the banking sector in the Republic of Cyprus politicians escaped unscathed, is another telling tragic story.

Political leaders from the President down just minutes before the EU-sanctioned “savings’ haircut” but in reality, the looting of hapless citizens’ bank accounts in Cyprus who had no clue what their President had agreed to overnight, managed to get their peculiarly very large deposits out of the banking system literally, hours before they saw their lifetimes’ savings disappear in order to finance the local banks’ chennaniganisms.

Essentially, the banks’ disastrous management of their clients’ deposits and the resulting huge losses was simply passed on to their clients, i e the local citizens of the Republic if Cyprus!!!

How easily or swiftly and to what extent would these “politicians” be affected by a solution to the long-running Cyprus Problem? To a great extent indeed! Most of them have indeed very poor CVs indicating limited aptitude. All would change substantially after such a widely-ranging event and many actions below the radar that are essentially, their very livelihood, would cease along with lucrative perks and  frills attached to them.

An imminent solution would bring their inexcusably lavish and privileged  lifestyles to an end inevitably.

Thus, there is indeed a built-in kneejerk and negative reaction to a solution of the Problem that creates considerable worrying since everything in a newly-founded post solution state would change. Cronyism would cease. All perks and impunity would come to a screeching halt.

This is a major issue that is never brought to the fore and wrongly so. Levels of political corruption are indeed sizeable, measurable and documented in hapless Cyprus that remains divided after almost half a century.

An astute observer can simply look at the data and indices provided by “Transparency International” on Cyprus (“Republic of Cyprus”) on corruption and its multitude of forms it operates in. Shamefully, Cyprus ranks high on levels of political corruption and the main birthplace and sustenance of this is, without any doubt, the monster-like Cyprus Problem draped with local political colors and expediencies coupled with an almost permanent veil of impunity for the instigators.

Thus, we have our own obvious corruption-infested institutions, actors and practices that have been escaping responsibility, damaging souls and ethos as well as diminishing prospects to become a normal state that at least respects itself and its citizens and we mean, all of them! Both, Greek and Turkish Cypriots alike.

“So finally, it really is the Cyprus
Problem economics stupid!!”

Georgios Stavris

Director of Euro-Mediterranean Institute of Geopolitics

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