Growing hopes Cyprus can be reunified after 41 years is boosting prospects investors will be willing to take a chance on its success.
The island has been split since an unlawful 1974 Turkish invasion and Ankara still keeps a standing 30,000-man army on the norther third it occupies and refuses to recognize the Cypriot government and bars its ships and planes.
Turkey wants to join the European Union, of which Cyprus is a member. Cypriot President Nicos Anastasiades and Turkish-Cypriot leader Mustafa Akinci have been taking part in the negotiations aimed at reunifying the island amid recent optimism they will succeed although all the same major issues that have plagued past talks remain.
“This is probably the time where we have the best climate ever in negotiations,” Phidias Pilides, President of the Cyprus Chamber of Commerce and Industry, which represents about 8,000 companies, said in an interview in Nicosia with the Bloomberg news agency.
Across the United Nations-controlled buffer zone that separates the two sides of Cyprus, Fikri Toros, President of the Turkish Cypriot Chamber of Commerce, echoed that sentiment.
“There is a unique window of opportunity,” he said in a Bloomberg interview in the Turkish-occupied section of Nicosia, Europe’s only divided capital.
“Reunification will make up for a huge number of lost economic opportunities,” he said. His organization represents about 3,500 enterprises.
Economic output in a reunified Cyprus could reach 45 billion euros ($49 billion) at constant prices by 2035 compared with about 25 billion euros for the two sides together, with an annual average growth rate of 4.5 percent over 20 years, compared with just 1.6 percent without a solution, according to Fiona Mullen, director of Nicosia-based Sapienta Economics and co-author of the report The Cyprus Peace Dividend.
If both sides can reach an agreement – if – analysts believe there could be a boom in number of sectors, particularly professional services, shipping, property and tourism, although still unresolved is the thorny issue of either returning homes to Cypriots that were occupied by Turks or compensating them.
Despite the political obstacles, there’s a heady feeling on Cyprus that something is happening. “We’re seeing a lot of interest from foreign investors focused on these …areas,” Libor Kroska, head of the Cyprus office of the European Bank for Reconstruction and Development told the news agency.
“Cyprus-based professional companies would be able to provide accounting, legal and fiduciary services to Turkey, the largest and fastest-growing regional market,” he said.
Buying property in Cyprus at a time when the country is preparing to exit its international bailout program at the end of March, makes it a good investment, Stelios Haji-Ioannou, Chairman of easyGroup and founder of the Stelios Philanthropic Foundation, said in an interview in Nicosia.
“Bricks and mortar is probably a good, safe investment,” he said. “It might be too late if it’s obvious to everyone that Cyprus is out of its memorandum. Prices after reunification will go up.”
There are many obstacles yet though, although there’s the added lure of the prospect of oil and gas reserves being found off the island, a bounty in which Turkey wants to share. But Turkish President Recep Tayyip Erdogan reigns over Akinci and could be the final determinant.
But money could trump politics, especially as the memory of the invasion and its aftermath fades and newer generations of Cypriots and Turkish-Cypriots have no tie to the event.