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Cyprus

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Deadlock in Cyprus

There is only one village in Cyprus where Greek-Cypriots and Turkish-Cypriots live side-by-side. It is called Pyla and the only reason that the two ethnic groups there continue to live together is that it is in the United Nations Buffer Zone that separates the Republic of Cyprus from the “Turkish Republic of Northern Cyprus” (TRNC). It would be in real trouble if the United Nations pulled out.

That could happen. UNFICYP (United Nations Peacekeeping Force in Cyprus) is 53 years old, and patience is running out. Former UN Secretary-General Ban Ki-Moon warned in 2011 that “UNFICYP’s continued presence on the island cannot be taken for granted”, and the current secretary-general, Antonio Guterres, has said quite plainly that this cannot go on forever.

But he may have been bluffing. He said that just before the umpteenth conference seeking to reunify the island opened in the Swiss resort of Crans-Montana on June 28. Everybody reckoned that it had a good chance of success – but now that it has failed, we will find out whether Guterres meant his threat or not.

It should have succeeded, because President Nicos Anastasiades of the Republic of Cyprus and President Mustafa Akinci of the TRNC were very close to a deal and it looked like the two communities on the island were both willing to vote for it. (Referendums on both sides would have been required to ratify any deal.) But the talks fell apart at the last hurdle.

When Cyprus got its independence from the British empire in 1960, three countries were given the job of guaranteeing the constitution that laid down how power should be shared between Greek-Cypriots and Turkish-Cypriots: the United Kingdom and the two “mother countries”, Greece and Turkey. These guarantors had the right and duty to intervene if the terms of the deal were violated.

The power-sharing deal collapsed in 1963, mainly because a large number of Greek-Cypriots wanted union with Greece. The Turkish-Cypriot minority fled into dozens of isolated enclaves and in 1964 the United Nations sent in the UNFICYP peacekeeping mission to protect them. But none of the guarantors intervened.

Ten years later, in 1974, the colonels who ruled in Athens organised a bloody coup in Cyprus that overthrew the elected government and installed a regime committed to unite the island with Greece. When Britain, the other guarantor, refused to act against the coup (Britain had military bases on the island), Turkey sent troops on its own.

Greek-Cypriot resistance collapsed in a few days and Turkey occupied more than one-third of the island. All the Greek-Cypriots in the Turkish-occupied zone fled south and all the Turkish-Cypriots in the rest of the island abandoned their besieged communities and fled north. And that is how it has remained for the past 43 years, with UNFICYP patrolling the buffer zone between the Republic of Cyprus and the TRNC.

Finally, four years ago, both parts of the island managed to have governments that were in favour of reunification at the same time. There was broad agreement between them on a federal republic with wide autonomy for the two communities and so the conference in Switzerland began last month with high hopes.

Why was the Greek-Cypriot side finally ready for a deal? (The last time a roughly similar deal was on the table, in 2004, the Turkish-Cypriots voted in favour by two-to-one – and the Greek-Cypriots voted against it by three-to-one.) The answer is probably money.

A reservoir of natural gas worth an estimated US$50 billion has been discovered on the seabed off Cyprus’s coast, but it cannot be developed so long as the seabed rights are potentially in dispute. Turkey itself has no claim, but it could certainly provide powerful backing if the Turkish Republic of Northern Cyprus were to demand a share of the revenue.

It was Turkey that killed the hopes for a final deal in Switzerland last weekend. In past years it was never an obstacle to a deal: the various previous attempts at a permanent settlement died for other reasons. But it is a different Turkey nowadays – one ruled by a mini-Vladimir Putin called President Recep Tayyib Erdogan.

Erdogan holds absolute power only by grace of a referendum in April that he won by a mere 1% margin – and he only got that by monopolising the media coverage and fiddling the results.

The 49% of Turks who voted “No” against expanding Erdogan’s powers see him, quite rightly, as the end of real democracy in Turkey, so he needs to wrong-foot them and keep his own supporters mobilised by inflaming public opinion with various nationalist grievances. This time it is Cyprus.

Turkey refused to give up its right to intervene in Cyprus under the 1960 agreement, or to withdraw the 35 000 soldiers it keeps stationed in the TRNC. So the deal collapsed and it will be a long time before anybody tries again.

If ever. But in the circumstances, it is very unlikely that the UN will pull its peacekeepers out.

Cyprus: Waiting for Edogan

It would be an excellent thing to reunite the island of Cyprus after 42 years of heavily armed partition, but it’s probably not going to happen this year.

They’re all meeting in Geneva this week – President Nicos Anastasiades of the Republic of Cyprus and President Mustafa Akinci of the Turkish Republic of North Cyprus, plus the new UN secretary-general, Antonio Guterres, and representatives of all three countries that guarantee Cyprus’s independence, Britain, Turkey and Greece. The talk is all upbeat:
“Best and last chance for peace,” says Guterres. But don’t hold your breath.

There are three reasons why reunification is probably not about to happen, and the first is that Greek-Cypriots simply don’t want it as badly as Turkish-Cypriots. The Greek-Cypriot majority has twice the average income of the Turkish-Cypriot minority, mainly because the Greeks live in a universally recognised country that belongs to the European Union. They can trade and travel everywhere.

The Turkish-Cypriots live in utter isolation, their ramshackle state recognised by no country except Turkey. And although they are a well-educated, secular population, they may already be outnumbered by the ill-educated, socially conservative immigrants who have been flowing in from Turkey. No wonder the Turkish-Cypriots voted two-to-one in favour of reunification in 2004, the last time a peace deal was attempted.

The Greek-Cypriots, by contrast, voted three-to-one against the deal – not because it was really such a bad deal, but because many of them don’t feel much need to compromise. The status quo is quite bearable, and the United Nations troops will be happy to stick around and enforce the ceasefire for another 42 years if necessary. Or so the Greek-Cypriot ‘no’ voters seemed to believe last time.

Then there is the sheer complexity of the negotiations to put the country back together again, but this time as a bi-national federal republic. How will the territory be divided up? (The Turkish-Cypriots currently hold 37 percent, but the maps the two side have tabled give them between 28.2 percent and 29.2 percent.) Will there be a ‘rotating’ presidency, held sometimes by a Greek and sometimes by a Turk?

How many of the refugees who fled during the 1974 war (an estimated 165,000 Greeks and 45,000 Turks) will be allowed to return to their former homes in the “other” part of the island? Will they be allowed to evict the current occupants?

And above all, who will guarantee that both sides will observe the terms of the deal? This is the point at which things fell apart in 1974.

Cyprus got its independence from the British empire as a bi-national republic in 1960. The power-sharing constitution was guaranteed by Britain and by Greece and Turkey, the two “mother countries” of the local populations – but then there was a military coup in Greece.

The Greek military regime conspired with a local Greek-Cypriot terrorist organisation called EOKA B to carry out a bloody coup in Cyprus in 1974 and unite the island with Greece. So the Turkish prime minister flew to London to beg Britain (which has military bases on the island) to carry out its duty as guarantor, stop the carnage and roll back the coup.

When London refused to act, Turkey itself invaded to protect the Turkish-Cypriot minority, and the territorial division it imposed on the island in 1974 has lasted ever since. Getting the right kind of guarantees this time is crucial to a successful deal, but it’s probably not going to happen this year.

The deal itself is ferociously complex, and the fine print certainly cannot be settled this week. With enough good-will on both sides, it could be done in the next few months, but the real obstacle now is Turkish politics.

Nobody knows what Turkey’s President Recep Tayyip Erdogan really wants in Cyprus. But his one fixed goal is to change the Turkish constitution in order to turn his office into an all-powerful “executive” presidency. Like Putin’s in Russia, for example.

That is politically tricky. It takes 60 percent of the votes in Turkey’s parliament to change the constitution, and on the first reading he barely scraped through. In the final vote, he might lose. And even if Erdogan gets the change through parliament, he must then win a national referendum on the question next autumn.

Since Erdogan restarted his war on the Kurds last year, he has lost the votes of pious Kurdish voters. The only way he can replace them is by winning the votes of right-wing nationalists.

So Erdogan can’t afford to back the Cyprus deal right now. It would alienate Turkish ultra-nationalists who just want to annex northern Cyprus. Maybe next year, after he has total power. But not now.
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To shorten to 700 words, omit paragraphs 7 and 15. (“How…occupants”; and “Since…nationalists”)

Reunification of Cyprus?

It was not so much a straw in the wind as a cheese in the wind. It’s a chewy, salty cheese that is delicious grilled: halloumi, as they call it in the Greek-speaking Republic of Cyprus, or hellim, as it is known in the Turkish Republic of North Cyprus.

This week, the island’s two rival governments jointly applied to the European Union to give halloumi/hellim “Protected Designation of Origin” status, like French champagne or Greek feta, so that no other producer can use the name. It was a small miracle.

Cyrus has been divided since 1974, when a bloody coup backed by the generals’ regime in Athens, intended to unite the island with the “mother country”, was answered by a Turkish invasion to protect the Turkish-Cypriot minority. Turkey ended up holding the northern third of the island, and Greek-Cypriots who lived in that part of Cyprus fled south while Turkish-Cypriots in the southern part of the island fled north.

When the dust settled, there were two Cypruses: the internationally recognised Republic of Cyprus, now almost exclusively Greek-speaking, and the Turkish Republic of Northern Cyprus (TRNC), recognised by nobody except Turkey. Forty-one years later, Cyprus is still divided – but maybe not for much longer.

The Greek-Cypriots have done much better since the split. With a legitimate state that is now a member of the European Union, they can trade and travel freely, and per capita income on the Greek side is twice what that of the Turkish side. But it hasn’t all been roses: the Greek-Cypriot banks ran wild during the boom years, and the country is just emerging from an EU-backed bail-out that hurt a lot.

For the Turkish-Cypriots, time is running out. There are only 120,000 of them, and they are already outnumbered by the Turkish immigrants, most of them ill-educated and unskilled, who have flooded in since 1974. In the past ten years, with a conservative Islamic government in Turkey, they have also been facing the creeping Islamisation of their traditionally secular society.

So the Turkish-Cypriots have good reason to seek a deal that gives them their own state within a reunited, federal Cyprus. For Greek-Cypriots a deal is less urgent, but with 30,000 Turkish troops still on the island and neighbours whose identity is becoming more Turkish and less Cypriot their future is uncertain. The problem is that presidents come and go, and there are rarely presidents on both sides willing to make a deal at the same time.

Now there are. Mustafa Akinci was elected president of the TRNC in April, and immediately asked to start reunification talks with his opposite number, President Nicos Anastasiades – who immediately agreed. “The passage of time is not helping a solution,” said Akinci. “The more time passes, the more the division becomes consolidated.”

After three months of talks, including seven personal meetings between the presidents, the talks seem to be going well. Well enough, in fact, that they both showed up on Tuesday night, together with 700 guests from both sides of the divide, for an evening of Cypriot music performed by the bi-communal group ‘Kyprogenia’ at the Othello Tower in Famagusta.

There was a lot of symbolism in this, because Famagusta was a Greek-Cypriot city, famed for its beaches, that ended up empty and on the wrong side of the ceasefire line in 1974. It has been quietly crumbling away ever since, but the Othello Tower, a 14th-century fortress, has just been renovated by a group of Greek and Turkish Cypriots working together to restore the island’s shared heritage.

There is much optimism about these talks, because both leaders understand that there can be no going back to the good old days before 1974 (good for the Greek-Cypriots, at least, although many Turkish-Cypriots were living under siege in barricaded ghettoes). Most of the refugees of 1974 (or their descendants) will not be going “home” again. Too much has happened, and even now Turkish-Cypriots would not feel safe in a unitary state.

But a federal republic with two states, each largely but not exclusively communal, is perfectly possible. It would free Turkish-Cypriots from their long isolation, and expand economic opportunities for people in both communities. The Turkish army would go home, the barbed wire and entrenchments of the “Green Line” would vanish, and Nicosia, the world’s last divided capital, would be one city again.

It is just good sense, and Presidents Akinci and Anastasiades will probably make the deal – Akinci reckons they will be there before the end of the year. There is just one problem. A very similar reunification was negotiated in 2003-04 with the help of the European Union and the blessings of both the United Nations and the United States.

In the 2004 referendum, the Turkish Cypriots voted for it by a two-to-one majority, but the Greek-Cyriots rejected it by a crushing three-to-one majority. After all, they greatly outnumber the Turkish-Cypriots and they are far richer. Things are peaceful right now, so why should they compromise?

Because Cyprus lives in a very dangerous neighbourhood, and it’s a really bad idea to keep the old domestic hostilities going as well.
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To shorten to 725 words, omit paragraphs 5, 9 and 10. (“The Greek…lot”; and “After…heritage”)

Cyprus Bank Robbery

20 March 2013

Cyprus Bank Robbery

By Gwynne Dyer

Could a failed bank robbery in Cyprus cause the collapse of the euro? It’s hard to imagine how anything that happens in Cyprus, with less than one million people, could bring down the common currency shared by three hundred million Europeans, but there are few human behaviours as infectious as a run on the banks.

Strictly speaking, the Greek-Cypriots are not having a bank run, because their banks have all been closed since last Saturday and the cash machines will only give out 500 euros (about $650) per customer. But there would certainly be a nationwide bank run if they reopened the banks without strict limits on cash withdrawals and transfers overseas.

A financial disaster in remote Cyprus will not directly affect the fate of the rest of the European Union, but any suspicion that the bail-out of a EU country might involve the actual confiscation of money in people’s bank accounts is financial and political dynamite. The terms of the Cyprus bail-out have just confirmed that suspicion.

The banks in Cyprus had certainly got too big for their boots. They had grown fat on the deposits of Russians, many of whom were using the island republic as “a gigantic washing machine” to launder illegal funds. And they had lent out far too much money, especially to Greek banks and companies: their loans amounted to eight times the entire country’s national income.

Everything seemed all right until Greece’s economy crashed and needed not one but two bail-outs. During the second one, last year, foreign investors holding Greek bonds were forced to take a “haircut”: they had to agree to a 70 percent cut in the value of their holdings. That gave Greece a little relief, but it plunged the Greek-Cypriot banks into a nearly terminal crisis.

So now it was Cyprus’s turn for a 17 billion euro bail-out – but this time it was not the bond-holders who got a “haircut”; it was the depositors.

Cyprus was ordered to raise 5.8 billion euros of the bail-out money itself. It was to do it by confiscating 6.75 percent of the money in the savings accounts of everyone with less than 100,000 euros in their account, and 9.9 percent of the money in all larger accounts. In most people’s eyes, that is just straight theft. Worse yet, people in other EU countries realised the awful truth: EU bail-outs CAN cause bank runs.

If there’s going to be a run on the banks, you want to be first at the counter. If you think there might be an EU bail-out for your country, you should get all your money out right away, just in case. And while Cyprus is too small to be significant, much bigger EU countries like Italy and Spain, with one-third of the eurozone’s population, are also potential candidates for a bail-out. Bank runs in those countries could spell the end of the euro.

How did the geniuses who designed this bail-out get it so wrong? They included the European Central Bank, the European Commission, and the International Monetary Fund, but the real culprit appears to be Germany. Wolfgang Schaeuble, the German Finance Minister, insisted on targeting bank accounts in Cyprus (although they have never been directly raided in any other bail-out), and the rest of the geniuses went along with it.

Schaeuble’s problem was that there will be an election in Germany in a few months, and German voters are deeply reluctant to see their money bailing out (as they see it) feckless Southern Europeans. They are particularly unhappy to see it being spent to save Cypriot banks, where some 40 percent of the money on deposit belongs to Russians and much of it is “dirty”.

So rather than make the Cypriot banks’ investors (mostly other banks) pay the price of their folly, Schaeuble made the depositors pay it instead. Some of them were very rich Russians – though the really big deposits were probably moved to Singapore or Dubai a year ago, at the first hint of trouble – but most of them were ordinary Greek-Cypriots who were seeing their savings taken to pay for rich people’s greed and stupidity.

So Greek-Cypriots took to the streets in protest, and they didn’t go home when the government promised to exempt accounts with less than 20,000 euros in them. Newly elected President Nicos Anastasiades urged parliament to back the bail-out, but in the vote on Tuesday not a single MP supported it.

The whole deal is dead, and Schaeuble is now warning that the banks in Cyprus may never reopen if it is not resurrected in some form. Cyprus’s finance minister is off in Moscow to see if the Russians will bail the country out. But the real crisis may be happening in other EU countries that are vulnerable to a bail-out, including Italy and Spain.

The geniuses swore that the Cyprus bank heist was a one-off, and that no such measure would ever be imposed on another EU country. Nobody in Spain or Italy believes them, of course, and the wealthy and well-informed will already be moving their euros to accounts in other countries. The less rich and knowledgeable will just be taking their money out of the bank and hiding it in socks under the mattress.

Could all this end up with bank runs that bring down the euro itself? It’s still unlikely, but it’s certainly not impossible.

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To shorten to 700 words, omit paragraphs 8, 10 and 11. (“If…euro”; and “Schaeuble’s…stupidity”)