Tuesday, 22 September 2015

EU must lift TRNC trade embargoes to make Cyprus settlement work, says business leader

Middle three: Fikri Toros (l), Commissioner Cretu (c) & Phidias Pilides (R)

By John Oakes
The economic disparity between the Turkish and Greek Cypriot communities “poses a serious threat to the sustainability of a federal Cyprus”, said Mr Fikri Toros, President of the Cyprus Turkish Chamber of Commerce (KTTO).

He was addressing an audience including MEPs in Brussels alongside his Greek Cypriot counterpart, Mr Phidias Pilides.

Mr Toros highlighted the importance of CBMs (Confidence Building Measures) that are currently under way using European Union money and expertise. These include the joining of the two national electricity grids, and the interlocking of the island’s two currently separated mobile phone networks, to give islanders the freedom of communication enjoyed throughout the rest of the world. 

He said these developments would help to create a “stable reinforced Cyprus and bring “vast opportunities” through the creation of “synergies, competitiveness and growth enhanced by economies of scale”. But he emphasised that both Turkish and Greek Cypriot Chambers of Commerce believed a continuation of the present division of the island would prevent this happening.

EU funding will help integrate Cyprus' two electricity systems
Both chambers, he said, have been trying to increase the part played by the Cypriot business community in the settlement process by strengthening economic ties, as a way of removing the “fear, mistrust and deprivation of the last 53 years and bringing communities closer to each other and enhancing faith in the peace process.”

Both Chambers were determined to see that any settlement was “transparently and objectively explained to each community”, and they expected the European Union to support their economically-driven efforts.

But Mr Toros warned that it was essential that any settlement should be sustainable, and that “steps should be taken to minimise the disparity between the two economies on the island.”

He continued: “disparity of the current magnitude poses a serious threat to the sustainability of a Federal Cyprusand called on the EU to speed up the harmonisation process and “enable the TRNC to trade directly with the EU ….without delay.”

He added, “A stronger and more competitive Turkish Cypriot economy would only contribute positively to the efforts of finding a viable and sustainable settlement.”

The KTTO President’s comments were echoed in a statement issued by Corina Cretu, the EU Commissioner for Regional Policy, after their meeting on 16th September: “I believe the economic development of the Turkish Cypriot community is crucial for the reunification of Cyprus.”
Currently Turkish Cypriots forced to pay higher costs to trade
in the EU than businesses from South Cyprus
Following the Turkish Cypriot ‘yes’ vote in the 2004 UN-backed Annan Plan referendum to unite Cyprus, EU leaders pledged to end their international isolation. A direct trade regulation was passed to enable businesses in North Cyprus to trade directly with the rest of the EU. However, following the entry of South Cyprus as a full EU member, Greek Cypriots used their veto to block this measure.

As a result, Turkish Cypriot businesses who seek to trade directly with the EU are subject to higher taxes as northern Cyprus is excluded from EU trade rules. Alternatively, they can trade using the Green Line Regulation, which means approved goods can enter the EU via South Cyprus. Both options add time and cost to Turkish Cypriot businesses, making goods more expensive and less attractive to EU buyers.

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