Lira slump hurts Turkish Cypriots but…

The four-way left-right coalition of Northern Cyprus has been facing some serious problems ever since it was established some eight months ago. The challenges the coalition government has been facing quadrupled with the value of the Turkish Lira drastically collapsing against most foreign currencies particularly over the past several weeks.

Turkish Cypriot analysts often comment that if Turkey suffers from cold, Northern Cyprus is confined to bed with influenza. Of course, there might be some exaggeration in that saying, but it reflects the reality of the strong dependence of the Turkish Cypriot northern third of Cyprus, which is cut off from the international community because of inhumane economic, social and political blockade imposed by the internationally-recognized Greek Cypriot-administered Republic of Cyprus.

From time to time some leftist groups demand Northern Cyprus to give up the Turkish Lira and, like the Greek Cypriot state in Southern Cyprus, accept the euro as the “official currency” of the Turkish Cypriot state. Such naïve demands ignore the fundamental reality that Northern Cyprus is under a blockade and is a state recognized only by Turkey even if it has commercial relations with several dozen countries. Would moving on to the euro restrict the impact on Northern Cyprus of an economic crisis in Turkey? If a certain percentage of the budget and almost the entire investment budget have been heavily subsidized by Turkey – on an average about $900 million a year – whatever happens in Turkey will have a reflection on the Turkish Cypriot economy as long as it cannot achieve self-sufficiency. Self-sufficiency, on the other hand, cannot be achieved unless somehow the Turkish Cypriot state is integrated with the international community. Direct flights from Northern Cyprus to EU territory and lifting restrictions on exports of Turkish Cypriots might be a way. Similarly, Turkey undertaking some drastic measures, putting aside restrictions emanating from its customs union deal with the EU and fully opening the market to Turkish Cypriot products might help to bring about a self-sufficient Northern Cyprus.

Unfortunately, while time is wasted with fictional hopes that one day there will be a Cypriot federal solution, Northern Cyprus is succumbing more and more in a pathetic defeatist mood. As if Greek Cypriots will ever be ready to accept sharing governance on the basis of political equality or as if establishing a federation will magically solve the bad governance and labor unions hegemony, unfortunately there is a lack of awareness of the need for administrative reform.

It was a disaster for a country, the economy of which is largely dependent on tourism as well as higher education revenues, that for almost three days all flights to and from its sole operational airport were cancelled because of the strike of air controllers and airport personnel. With hundreds of people stranded at the airport, in the peak period of tourism and when universities were preparing for the new semester, the fragility of the four-way coalition hampered quick governmental action. While it is a fact that cost of living increased considerably because of the collapse of the lira’s value, even without the currency crisis – largely exploited by some leftist groups to bolster anti-Turkey sentiments among Turkish Cypriots – an administrative reform was a must. Indeed, the current – and rather sick – four-ay coalition has become the first-ever left-led government which has been trying to achieve some structural reforms.

This week, the Turkish Cypriot prime minister as well as the foreign defense and the education ministers were in Ankara for a “discussion of remedies.” President Mustafa Akıncı is expected to make a study visit soon on the way to U.N. contacts in New York. These high-level visits might help soothe complaints in Northern Cyprus that Ankara has turned a blind eye on the rampant economic crisis in the Turkish Cypriot state. Still, can there be any betterment in Northern Cyprus before things return to some sort of normalcy in Turkey or in a miraculous way northern Cyprus achieves self-sufficiency?