2001 was an opportunity for Turkey. We seized that opportunity. 2011 is an opportunity for Northern Cyprus. Let us wait and see what the Turkish Cypriots do.

It is emancipating to face the truth. This was the case for Turkey. It was 2001 when Turkey faced its reality. 2011 similarly must be the year Northern Cyprus faces its own reality. What they need is the courage to look in the mirror. The economic crisis of 2001 taught us that what we thought to be sustainable was not. Now it is the Northern Cypriots' turn. 2011 must be for them what 2001 was for us. Let me explain why.

I remember reading two comprehensive studies on the Northern Cypriot economy. The first was a study by a team including Barry Eichengreen conducted for the Central Bank of Southern Cyprus to assess the economic impacts of the Annan Plan. The study was issued on the eve of a referendum. The second was an economic review of Northern Cyprus by the World Bank. I read an early draft of this study. Upon that report, TEPAV prepared an evaluation note to be submitted to the Presidency of the Northern Cyprus Turkish Republic (NCTR). It was 2005. It is no coincidence that none of these comprehensive studies were conducted by Turks. Let this be the first point to state.

Since then, one point has stayed in my mind: A regime under which persons can move freely but goods cannot is an economic system that reinforces regional disparities. In a system where the free movement of persons is allowed, Northern Cyprus automatically enters into a process of economic integration with Southern Cyprus. To open up to the world, earn their livelihoods and the freedom of movement, Northern Cypriots have to acquire the passports of Southern Cyprus or migrate there as workers. I am not trying to argue that this is good or bad; what I am trying to do is present the structural phenomenon here. You cannot fight reality. This is the second point to state.

Since 2003, the Turkish Cypriots have been undergoing a critical process of political transformation. They have rearranged the politics in Northern Cyprus. They have done away with the old. In the referendum for the Annan Plan, they stated that they were ready to forego the NCTR and get involved in the formation of a new state on the island. However, they failed to take steps in one key area: they failed to take concrete steps to revise the economic system of the island. Since 2003 they have tried all of the parties, but while the political projects have changed, the economic structure and course have remained intact. I guess everyone was convinced that what was definitely unsustainable could be sustained. Let this be the third point to state.

Then, did the Turkish Cypriots have the chance to determine their own faith in economic terms? Actually, they did. Beginning in 2005, Turkey supported the NCTR via mixed budget practices. It transferred a certain amount of funds to Northern Cyprus and let them decide how, to whom and to which projects to allocate the funds. The freedom of the Northern Cyprus to decide the expenditure items and identify the priorities was expanded in tandem with the rising political freedom Northern Cyprus enjoyed. The island had fiscal autonomy. But this practice was terminated in 2008. Three years of autonomous budget practice had brought a period of fiscal irresponsibility to the island. Increases in budget deficits, the expansion of the size of the public staff and public enterprises on the edge of bankruptcy were all the fruits of this period. This is the fourth point to stress.

And then we came to the present. The current tendency of the Aid Committee to intervene in how the island allocates its resources within the framework of an expenditure-based budget system is the result of the three year period of fiscal irresponsibility. Building the public finance system of the island upon a solid structure is an essential precondition for the Turkish Cypriots to determine their future freely by themselves. Let this be the fifth point to emphasize.

2001 was an opportunity for Turkey. We seized that opportunity. 2011 is an opportunity for Northern Cyprus. Let us wait and see what the Turkish Cypriots do.

This commentary was published in Radikal daily on 01.03.2011