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Economy

Study: Cyprus Peace Deal would See Economy, Incomes Grow

February 18, 2020

NICOSIA (AP) — A so-far elusive deal to reunite Cyprus would mean more money in pockets on both sides of the ethnically divided island, a World Bank and U.N.-funded report said Monday.

Presenting the study’s results, authors Enrique Aldaz-Carroll and Reena Badiani-Magnusson said a peace accord could boost the incomes of Greek Cypriots and Turkish Cypriots by 7% within a decade.

They said economic growth could mark an extra annual increase of 0.4 percentage points in the country’s south — where the internationally recognized government is seated — and 1.8 percentage points in the breakaway north.

Cyprus was split in 1974 when Turkey invaded following an abortive coup by supporters of union with Greece. Only Turkey recognizes a Turkish Cypriot declaration of independence in the north and only the south enjoys full benefits from the country’s European Union membership.

UN-backed talks to reunify Cyprus as a federation are now at a stalemate and hopes for a quick return to negotiations look dim. The last effort to resolve the issue at the highest level was in 2017.

The economy is projected to grow this year by 2.9% in the south and 1.8% in the north.

The economic benefits of an accord would be greater for Turkish Cypriots whose income could reach 75% of that of Greek Cypriots in 10 years — 8% more than if division remains.

The two officials said energy, water and transport infrastructure upgrades could generate 1.1 billion euros ($1.19 billion) of investment opportunities within 2-3 years of reunification.

Greek Cypriot economic output could increase by 3.4% by 2035 through exports to Turkey like financial services, shipping and tourism. Within the same span, Turkish Cypriot exports of goods and services to the EU could jump by 12.2% of their current gross domestic product.

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