ECONOMY

Cost of Cyprus’s reunification put at twice the GNP

NICOSIA (Reuters) – Cyprus is likely to face a hefty bill more than double that of its gross national product if a peace deal manages to reunite the divided island, according to an official survey published yesterday. Government technocrats expect the economic cost of reunification to hit 16.6 billion pounds ($33 billion), the Greek Cypriot daily Phileleftheros reported. Yesterday’s report is the latest in a series of estimates ranging from less than 5 billion pounds to 15 billion, stirring heated debate on the island on how reunification will be paid for and by whom. Smaller than the US state of Connecticut and with a population of under one million, Cyprus’s Greek- and Turkish-Cypriot populations live in very different economic conditions. Income disparity Greek Cypriots enjoy a gross national product exceeding 80 percent of the European Union average; Turkish Cypriots in northern Cyprus have a per capita income of roughly one third that of their southern neighbors. The island was divided in a Turkish invasion in 1974 triggered by a brief Greek-Cypriot coup engineered by the military then ruling Greece. Cyprus is one of 10 newcomers to the European Union in a historic expansion next May. Without a peace deal only the southern Greek-Cypriot areas will effectively be the EU member. Negotiations are now stalled between the two sides on a UN power-sharing blueprint that would entail large population shifts unseen in Europe since the Balkan wars which raged in the 1990s. According to the survey, more than half of the reunification cost, some 9.8 billion pounds (15.7 bln euros), would be compensation to landowners giving up territory as part of the peace deal. The ghost city of Varosha, a now abandoned resort town of five-star hotels on the eastern coast encircled by barbed wire and guarded by Turkish troops, would need a 1.2 billion pound (1.9 bln euro) cash injection, the report said. The survey was prepared by the Planning Bureau, an agency which is responsible for economic planning on the Greek-Cypriot side of the divided island.