Awakening Dead City of Varosha Could Revive Cyprus, Hinges on Talks

For the last 41 years, since a Turkish invasion that has left Cyprus still divided, the once-gleaming streets and luxury hotels of Varosha and its soft sandy beaches, once filled with the glitterati of movie stars, have sat abandoned and neglected.

The emptiness is a symbol of the sad schism that left thousands of Cypriots and Turkish-Cypriots dead or missing, and scores of thousands of others refugees in their own country, fleeing to other sides of the island.

Decades of negotiations to bring unity have gone nowhere, but a recent surge of hope that progressing talks between Cyprus’ two leaders – Cypriot President Nicos Anastasiades and Turkish-Cypriot counterpart Mustafa Akinci, has diplomats and residents alike believing that perhaps as soon as next year that the island could be one again.

Varosha is locked away in time behind barbed wire, left in its detritus by Turkey, which sealed it off, effectively cutting off the island’s lucrative internationally-renowned resort area and the nearby Famagusta, once a bustling port and carrier of trade and money.

In an analysis of what reopening Varosha could mean, and the tangential benefits to Famagusta, the New York Times reported that it could generate a boom to go along with its symbolism of finally ending the political and economic separation.

There are a myriad of problems even within the optimism, especially as Turkey still keeps a standing army of 30,000 soldiers in the northern third it occupies unlawfully and which only it recognizes, cutting itself off from trade and the benefits allocated to Cypriots with the whole island in the European Union – but the Turkish side cut off.


It all fell apart for Famagusta, Varosha and Cyprus after the Turkish invasion in 1974, which came in response to a Greek coup attempt on the island, setting off a brief and bitter war that still lingers in memory for those who were alive at the time, and is passed on to the next generations.

The invasion set off fighting between Turkish Cypriots living in Famagusta’s medieval center and Greek Cypriots living just outside in the resort suburb of Varosha.

As Turkish invasion forces neared, the 45,000 mainly Greek Cypriot inhabitants of Varosha fled south. None have returned.

“We thought we’d be back after a few days,” Despina Tsikkini, a former resident told the Times. “But now, it’s 41 years.”

Finding Varosha empty, Turkish troops sealed it off with a wall of barbed wire, turning it into a so-called military forbidden zone.

There are hopes the wire will come down, the two municipalities will be restored and bring in buckets of money, especially on the depressed Turkish-Cypriot side.

United Nations-sponsored talks are resuming and the Special Adviser on Cyprus Espen Barth Eide said there is a “prevailing positive atmosphere,” because the moderates Anastasiades and Akinci are willing to give ground on either side.

Akinci, added that it could be “a matter of months, rather than years, to solve the problem,” while Anastasiades told reporters that there was “mutual understanding” and that the parties “are on the same track.”

Akinci though must report to Turkish President Recep Tayyip Erdogan who refuses to recognize Cyprus even though he wants to join the EU, and who also bars Cypriot ships and planes from entering Turkey.


If these talks defy the odds and work, Varosha’s former inhabitants could return home as could those on either side of the island although their homes have long since been occupied, sold or demolished, leading to the thorny and expensive question of compensation.

But those five miles of soft golden sand on Varosha could bring in a bevy of tourists and celebrities again and turn on the money tap, even after the cost of rehabilitating hotels that have been abandoned and gone to see.

“With the best beach in the Mediterranean, Varosha is like Copacabana,” Costas Apostolides, a Harvard-trained economist and a former officer at the Cypriot Planning Bureau told the paper. “It’s huge. Opening it up again could by itself rejuvenate the entire island’s economy.”

A report by the Peace Research Institute Oslo, a nonprofit independent research institute, found last year that if the island were reunited, there would be a “peace dividend” of around 20 billion euros, or about $22 billion — an amount roughly equivalent to the existing gross domestic product of the Republic of Cyprus.

“The value of the land in the closed area of Varosha alone, I would say, is conservatively worth around €5 billion — very conservatively,” said Mr. Apostolides, the economist.

The financial implications are huge.  Anastasiades told a joint meeting of the Cyprus and Turkish Cyprus Chambers of Commerce in July, “There is the potential that the all-island G.D.P. could double in 20 years time.”

Two years ago he asked international lenders for a 10-billion euro ($11.23 billion) bailout to prop up an economy battered by bad bank loans. That came with capital controls that put the brakes on recovery that is only now beginning anew.


Things are far worse on the Turkish side of the island. “We have youth unemployment of around 40 percent,” said Serdar Atai of the Famagusta Initiative, a Turkish Cypriot organization that wants to reopen Varosha and reunite the two communities. “Many young people go abroad to find work, and often they don’t come back.”

Pavlos Iacovou of Famagusta, Our City, another organization committed to reunification, said: “Varosha was once home to some 60 percent of the island’s entire stock of hotel rooms, while the neighboring port of Famagusta handled some 65 percent of the island’s trade. All that went in 1974.”

Famagusta is under an international trade embargo and hasn’t recovered, while Varosha, shorn of access to beaches and luxury hotels, has similarly withered.

With a port in the Turkish Republic of Northern Cyprus, which is subject to an international trade embargo, Famagusta has withered as a trade hub and tourism has never recovered.

Nor have the towns around the two key municipalities. Deryneia, a Greek Cypriot town to the south, lost about 75 percent of its land and its beach to the Turkish military.

“With all this gone, there’s little work and we’re losing population, as people move away to find jobs and a future,” said Andros Karayiannis, Mayor of Deryneia.

Because of the embargo there is no direct foreign trade with the Turkish north, Fiona Mullen of Sapienta Economics, a private economic consultancy based in Nicosia, the capital of Cyprus, told the Times.

“To fly there, you have to go via Turkey,” she said. “Also, while the whole island is technically part of the European Union, in the north, all E.U. rules are suspended, so you don’t have E.U. regulations in place to attract investors.”

“The conflict also means they can’t properly look for oil and gas around the island,” she said.


Unification and bringing back Varosha and Famagusta wouldn’t be just a bonanza though as it will cost to restore them and then there are the property claim issues.

“The big problem,” Apostolides said, is compensating people who were forced to leave their homes. “Just this could cost €30 billion.”

In 1974, about 165,000 Greek Cypriots fled south, while 45,000 Turkish Cypriots became refugees in the north. Many of their homes are now inhabited by others or have been demolished.

At the same time, a settlement would probably mean new population movements, as Greek and Turkish Cypriot territory within the new, unified state would most likely be readjusted.

“As we’ve seen recently, there’s a distinct lack of appetite for throwing money around among international lenders,” Mullen said. “Plus, you don’t want reunification to be financed by more debt or more bail-ins.”

Mertkan Hamit of the Famagusta Initiative said, “The last time we thought there might be a settlement, back in 2004, per capita income in the north nearly doubled on the back of a boom in construction, as people thought our isolation was about to be over.”

Reopening Varosha would most likely involve rebuilding most of the abandoned area, but also a major expense.

“You’d see the biggest investment growth in an area that currently has the highest unemployment on the island,” Hamit said. “Rebuilding the place is not a cost, but gives long-term added value to the economy.”

It’s an eerie scene. “By day, you look over and see a whole city,” Mr. Hamit said. “Then, at night, you see nothing. Not a single light. It’s like we’re sleeping with the dead. It’s time to turn the lights back on.”



NICOSIA - The World Bank’s International Center for Settlement of Investment Disputes (ICSID) ruled against Greek investors who lost $600 million in bonds and deposits in Cypriot banks in 2013, the funds seized on government orders to prevent their collapse.

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