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Economy

Turkish-Cypriots on Occupied Land Feel The Pain of Lira’s Plunge

February 28, 2022

NICOSIA – Isolated from the rest of the world, with few tourists, global prices for most products and energy jumping, and reliant on Turkey for aid, Turkish-Cypriots are being hit with with a confluence of harsh economic effects.

In a feature, Agence France-Presse (AFP) detailed how tough life is on the northern third of the island that’s been occupied since unlawful 1974 Turkish invasions, and with  35,000-strong standing army still there.

“Everything has become more expensive — bread, milk, water, electricity bills,” Mehmet Cobe, a tailor in the self-declared Turkish Republic of Northern Cyprus (TRNC) told the news agency.

Only Turkey recognizes that government and hopes for reunification were dashed when hardline nationalist Ersin Tatar – a zealous devotee of Turkish President Recep Tayyip Erdogan – said he wants the United Nations and world to accept the occupied side.

The Turkish-Cypriots are mostly dependent on Turkey and have seen fortunes fall even further and faster during the lingering COVID-19 pandemic that limited tourism and its seaside resort and casino attractions.

With Turkey’s lira plummeting during its own economic difficulties, the boomerang is hitting the Turkish-Cypriots too even as Tatar has ratcheted up tough talk and defiant rhetoric.

The Turkish lira lost half its value against the US dollar – the international standard – in 2021 and with fewer tourists bringing dollars and euros, the occupied land is feeling the pinch.

The lira’s slide, alongside surging global energy and food prices, sent inflation on the occupied territory jumping 46 percent in 2021, leaving some people and households unable to make ends meet because of inflation’s effect too.

“Two days after receiving my salary, I’m left with nothing,” said a hotel worker who asked not to be named, said AFP of the plight of growing numbers of people with Tatar concentrating on politics, not the economy.

Despite holding down jobs at two separate hotels, the 6,000 lira she brings home each month is now equivalent to barely $430, the worker said, leaving her dependent financially on her grown-up children.

The self-declared premier of the self-declared government, Faiz Sucuoglu said  the economy was a “priority” for his government, a coalition of right-wing nationalists who want outright secession from Cyprus, the report noted.

DON’T BANK ON IT

The plunging lira, soaring inflation and unemployment rate of 10 percent have created a maelstrom of disaster for the economy, said Turgay Deniz, head of the Chamber of Trade and Industry.

The economy shrank 16.2 percent in the first pandemic year of 2020 when international air traffic all but balted, and its continued to fall in 2021 when most countries were seeing a partial economic economy, if slowly.

“The TRNC can only sign agreements with Turkey,” which funds 15 percent of the budget, said Deniz, using the name only Turkey and the self-declared government uses, reliant on Turkey for up to a third of its budget.

The occupied land is an “aid-dependent economy,” said Mustafa Besim, an economist at the publicly funded Eastern Mediterranean University in Famagusta, unable to sustain itself otherwise

“The only source of external funding for Turkish-Cypriots is financial support from Turkey,” which provides an annual package, he added, but Turkey is hurting now too, including its citizens.

That led to only half the promised amount for 2021 being sent, owing to “the economic problems in Turkey,” leaving infrastructure projects and businesses short of money they had counted on, Besim said.

Erdogan insisted on reduced interest rates from the central bank, which spiked inflation and made the economic problems worse and Vargin Varer, Managing Director of the freight transport company Armen Shipping told AFP that the falling lira “is a parameter that we can’t control.”

It “is controlled by the Turkish government – or even the Turkish President, we should say,” he said, with Erdogan essentially the law in an autocratic regime which has seen its hopes of joining the European Union stall.

The plunge in the value of the lira has made imports, upon which the the occupied side is mostly dependent, even more expensive, unaffordable and unattainable by many living there.

Varer said he hoped tourists would come because they bring in up to 20 percent of the revenues that residents depend on, although Russia’s invasion of Ukraine has sent economic shocks around the world for now.

 

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