Turkish Cypriots: Solidarity tinged with relief

[April 03, 2013]  NICOSIA, Cyprus (AP) -- Barbed wire-topped walls stretch across the narrow, twisted streets of Nicosia's walled medieval city, where abandoned buildings extend across a no-man's land. On the other side, Turkish Cypriots have been watching with fascination -- and consternation -- as the economy of their long prosperous southern neighbors implodes.

Separated by a militarized border, Greek Cypriots and Turkish Cypriots had no contact for the best part of 30 years from the mid-1970s onwards; they have only been able to cross from one side to the other for the last decade. Torn apart by inter-ethnic strife that climaxed in a 1974 Turkish invasion, the two sides have much to be bitter about.

But bitterness is not the dominant sentiment in northern Nicosia, as the southern side that once proudly trumpeted its membership in the euro currency goes into meltdown.

"I am very sorry about it," said Selcuk Ekendal, a soft-spoken Turkish Cypriot pensioner watching friends play cards in a coffee shop, not far from the barricades dividing north from south. This is not just a southern affair, he insists: "The crisis is everywhere."

But the truth is, the crisis doesn't directly affect Turkish Cypriots. Without any financial ties to the south, and outside of the eurozone, the north has not been touched by the Greek Cypriot economic disintegration.

Unrecognized by any country apart from Turkey, the breakaway Turkish Cypriot state has no direct trade partners apart from Turkey -- making it almost entirely dependent on the large emerging power. That was once a curse but these days it's looking increasingly like, if not a blessing, at least a safety net.

To be sure, the north has long languished as an economic backwater, while the Greek Cypriots in the south enjoyed a post-invasion financial boom that many dubbed an 'economic miracle' and led to decades of sustained growth, eventually allowing them to clinch coveted EU membership.

For Greek Cypriots, being part of the euro club now seems in many ways a shackle -- because of the harsh conditions imposed on staying inside, and the even more frightening consequences of leaving. The Turkish Cypriot economy is so dependent on Turkey that it even uses the Turkish lira as its de facto currency. But these days, there's an element of relief, although remarkably little gloating, in being able to watch the euro turmoil as a spectator.

It's a remarkable reversal of fortune.

Although the 1974 invasion left northern Cyprus with most of the country's fertile agricultural land and rapidly growing tourist sites, the breakaway state's political isolation came with a huge economic cost. Hundreds of thousands of Turkish settlers flowed into the island. Ankara spent billions sustaining them, and the newly formed government. It quickly became clear that the statelet depended for its survival on Ankara, both economically and politically.

To the south of the dividing line, the Greek Cypriot economy recovered fast from the invasion, eventually turning its part of the island into an off-shore banking hub that grew to dwarf the island's gross domestic product by eight times -- something economists had long warned was unsustainable.

And unsustainable it was: Greek Cypriot banks tottered as they became overexposed to Greek debt that became toxic when that country's economy crumbled over the last few years. Their collapse would have dragged down the entire economy and raised fears that Cyprus could end up becoming the first country to leave the 17-nation eurozone. European officials rushed to patch together some kind of rescue, but insisted that ordinary Greek Cypriot savers had to contribute, too.

While politicians tried to work out what would work, banks in the south were shut down for nearly two weeks to prevent people draining their accounts. A new last-minute bailout agreement sparing ordinary savers averted disaster -- but for Greek Cypriots, the economic pain is probably just beginning. Turkish Cypriots, on the other hand, have slowly seen their tourism industry blossom.

But Turkish Cypriots said they knew exactly how the people of the south were feeling in their crisis.

"We have experienced what Greek Cypriots have experienced a long time ago, about 12 years ago, when a lot of banks went bankrupt and people lost a lot of money," said Hassan Chirakli, an affable Turkish Cypriot who runs a shop selling traditional Turkish sweets.

Turkey suffered a deep financial crisis in 2001 that forced the country to overhaul its banking system by restructuring and recapitalizing failed banks. Turkish authorities took over more than a dozen struggling banks -- and with the Turkish Cypriot economy so closely linked to that of its protector nation, the effects in impoverished northern Cyprus were brutal.

The closest the two sides have come to resolving the island's division came a few years later, in 2004, with a peace plan brokered by then-UN Secretary General Kofi Annan. With hopes high, the deal was put to separate votes in the north and the south. The Turkish Cypriots accepted the plan, but the Greek Cypriots rejected it.

Chirakli says the answer to the financial woes on either side lies with reunifying the island.

"If the Greek Cypriots had said yes to the Annan plan, it would have been completely different," he said. "This is what I wanted all the way, and I still want it. Some sort of a solution to this country."

[Associated Press; By ELENA BECATOROS]

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