Economic outlook bright for Northern Cyprus despite East Med turmoil – Turkish economist

The Turkish Republic of Northern Cyprus has flourished against the odds to become an economically viable state, a rare positive among the many disputes in the eastern Mediterranean, Turkish academic Güven Sak wrote on his blog on Monday.

The Economic Policy Research Foundation of Turkey (TEPAV) managing director said the state enjoyed a current account surplus of 7.4 percent, and that this is more down to booming tourism and education sectors than reliance on aid from Turkey, as one might expect.

“I was looking at the TRNC ‘s balance of payments figures lately. It appears to have a trade deficit of 42 percent of its GDP. This is financed by Turkish aid and service sector revenues reaching 49.4 percent of the GDP”, said Sak.

“Of the 49.4 percent invisible earnings, Turkish direct aid represents less than 10 percent, mind you. More than 40 percent comes from tourism revenues and more than 40 percent from university earnings. That’s what I call viability, mind you. Good for Turkish Cypriots. They made a living out of nothing”, he said.

“The strategic bet Ankara made around 15 years ago to turn Northern Cyprus  into a viable entity seems to be working out against all political odds … About 2 million tourists are visiting the northern part of the island and there are more than 100,000 university students with about a third coming from third countries (neither from Turkey nor Cyprus.)”, he said.

Turkey is the only country that formally recognises Northern Cyprus, and has maintained a military presence in the northern part of the island since launching an invasion in 1974 to oppose a Greek nationalist coup that aimed to unite the island with mainland Greece.

Recent disputes over hydrocarbon wealth around the island of Cyprus has seen Turkey threatened with sanctions from the EU.

Ankara says any exploitation of natural resources around the island by the Greek Cypriot republic that control’s the south of the island is an infringement on Turkish Cypriots’ rights, and Turkish surveying vessels have begun searching for hydrocarbons around the island.

The Greek Cypriot administration says resources will be shared fairly once the island is reunited. The EU maintains Turkey’s drilling is illegal and is preparing measures against Ankara in response.

“The EU decision to bring sanctions against Turkey regarding the situation in Eastern Mediterranean simply does not make sense. The EU is the major culprit in the unsustainable situation on the island today. It is about to make things worse by making Cyprus part of the broader Middle East dispute”, Sak said.