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SEMINAR ON ECONOMIC CONVERGENCE AND A CYPRUS SETTLEMENT

SEMINAR ON ECONOMIC CONVERGENCE AND A CYPRUS SETTLEMENT. LONDON SCHOOL OF ECONOMICS 6th Feb. 2007. ECONOMIC TRANSFERS ACROSS THE GREENLINE Costas Apostolides Member of Economic Committee in Cyprus Talks. ECONOMIC CONVERGENCE …1.

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SEMINAR ON ECONOMIC CONVERGENCE AND A CYPRUS SETTLEMENT

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  1. SEMINAR ON ECONOMIC CONVERGENCE AND A CYPRUS SETTLEMENT LONDON SCHOOL OF ECONOMICS6th Feb. 2007 ECONOMIC TRANSFERS ACROSS THE GREENLINE Costas Apostolides Member of Economic Committee in Cyprus Talks

  2. ECONOMIC CONVERGENCE…1 • The evolution of the European Union from the Steel & Coal Community (1951) to the European Economic Community(1957) to today’s European Union demonstrated: • How economics can be used to achieve PEACE • That mutual interest facilitates the peace process • That economics can contribute to the Peace process through the creation of mutual interest (business, trade, economic exchange)

  3. ECONOMIC CONVERGENCE…2 • The term ECONOMIC CONVERGENCE is used here in four different ways: • The establishment of mutual interest through trade, economic interaction and cooperation • Macroeconomic convergence especially in relation to per capita GDP, tax revenues, inflation • Institutional Convergence primarily adoption of the Acquis Communautaire • Economic Convergence in relation to a Cyprus settlement and reunification of the island This presentation on Economic Transfers across the greenline refers to (1) above, but influences all four definitions / interpretations

  4. GREENLINE BACKGROUND…1 • The Greenline is the dividing resulting from the 1974 Turkish Intervention • 1974-1990 Economic interaction and movement of people across the Greenline was very difficult • 1990-2003 Movement of people was restricted, but possible thereafter under difficult circumstances • April 2003 Relative freedom of movement became possible

  5. GREENLINE BACKGROUND…2 • Economic Interaction was virtually ZERO from 1974 to 2003 except for: • Water, Electricity from G/C to T/C • Health services to Turkish Cypriots • Limited Turkish Cypriot employment (maximum 1,000), owing to crossing restrictions

  6. Movement of People Greenline Regulation Movement of Goods Economic Interaction Conclusion CONTENT The following will be covered:

  7. DATA • No comprehensive systematic studies • Estimates based on various sources • Economic transfers estimated incomes / expenditures, not GDP • Value added and GDP is not estimated • Data from ad hoc surveys, various sources from authorities, assumptions Recommend: A systematic approach to data

  8. G/C & T/C MOVEMENT ACROSS THE GREENLINE 2003-2006(ANNUAL TOTALS) Note: (1) Tourists included in G/C figures (2) From end of August to present, no SBA data

  9. GREENLINE CROSSINGS…1JUNE 2005 (6-12/6/05) & 2006 (5-11/6/06)

  10. GREENLINE CROSSINGS…2 • T/C’s cross in higher numbers weekdays • Employment (mostly) • Shopping • Visits • G/C’s cross in higher numbers weekends and holidays • Saturday (shopping) • Visits (especially Sunday / holidays) • In 2006 crossings were reduced • G/C’s minus 14% • T/C’s minus 19%

  11. T/C EMPLOYMENT SOUTH OF GREENLINE Source: Centre of Applied Research, Cyprus College, June 2005

  12. EU ACCESSION • The whole of Cyprus excluding the British SBA’s acceded to the EU on 1st May 2004 • The Acquis Communautaire is not applied to northern Cyprus, which is not under the control of the Republic of Cyprus • The British SBA’s are covered by a separate EU directive on their relationship with the EU and the Republic of Cyprus • The SBA’s are responsible for movement across the Pergamos and Strovilia Greenline crossing points • T/C’s with ROC identity cards / passports have full ROC and EU rights

  13. ECONOMIC TRANFERS…1 Estimated Value of Transfers from April 2003 (CY£mln)

  14. ECONOMIC TRANSFERS…2

  15. THE EU GREENLINE REGULATION…1 • The EU Greenline Regulation was introduced because of the situation in Cyprus, to regulate: • Greenline crossings of persons • Facilitate intra-island trade across the Greenline

  16. THE EU GREENLINE REGULATION…2 • Movement of People • EU citizens may enter Cyprus from any point of entry without consequences • Third country citizens need a VISA which they cannot get at crossing points • Turkish nationals cannot cross Greenline at crossing points but can enter through Larnaca airport or Larnaca / Limassol ports and they cross the Greenline

  17. THE EU GREENLINE REGULATION…3 • Greenline Trade • Facilitates intra-island trade in: • Items produced wholly in Cyprus • Items imported but processed • Prohibits intra island trade in: • All livestock products • Fish and Honey • All imports Similar rules were introduced by the TCC

  18. THE EU GREENLINE REGULATION…4 Source: EMS Economic Management Ltd., on data from CCCI and TCCI Note: TCC Sales began in August 2004 and GCC sales in May 2005

  19. CONCLUSION • Economic interaction is significant but needs to b further developed and encouraged • Movement across the Greenline is falling • Economic interaction is significant • Trade has disappointed but grew rapidly in 2006 from low base Recommendation: Economic interaction should be encouraged given that the policy of the GCC, TCC, Greece, Turkey and the EU is that economic convergence in Cyprus facilitates a solution to the Cyprus Problem

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