In Northern Cyprus, the public budget mainly means taking financial aid from Turkey and distributing it to Turkish Cypriots.

The Eastern Mediterranean island of Cyprus is still divided in two. There are separate elections and governments in the south and in the north. Every public service is organized by two different administrations in each. Recently in Bosnia and Herzegovina, I was surprised when I saw that each ethnic group uses different buses. I guess the Cypriot case escaped my mind then. Ethnic clashes lead to such nonsense. Once the clash begins, wisdom leaves the room. Cyprus has Turkish Cypriots in the north and Greek Cypriots in the south. These two groups with their own hands destroyed the joint state they once had established together. The Greek Cypriots still pretend that the old state exists. They are trying to live a lie. The Turkish Cypriots, on the other hand, built a new state of their own. For the last thirty years, they have been deciding their governments via democratic elections. No matter if the world recognizes Northern Cyprus or not. They have organized their own public services bodies. They have moved on.

The south of the Island lately has been suffering from a deep-rooted sustainability problem. The global economic crisis of 2008 finally has arrived on the island. The banks have gone bankrupt. After the Lebanese civil war, Beirut lost its position as an international financial center and an important volume of financial activity moved to Southern Cyprus. The South came to the fore as a center for banking and banking transactions. It’s all gone now. The business model of Southern Cyprus is irreparably damaged. Its latest decision was to confiscate deposits in excess of a certain volume.

The problem of sustainability holds also for the north. I was in Kyrenia this week. It is more or less twenty minutes by car from Nicosia to Kyrenia. Currently it takes more than twenty minutes since they have put automatic traffic cameras all along the road. Actually, this was a big surprise for me. Normally they would have policemen everywhere, which also would help increase public employment. Replacing policemen with automated cameras seems to be inconsistent with the business model of Northern Cyprus. About 26 percent of the Turkish Cypriots in the labor force are public employees. Of the public budget, 40 percent goes to personnel payments and 45 percent to current transfers. In other words, Turkish Cypriots per se have direct call on 85 percent of the budget expenditures. The state just takes from one and gives it to another. In Northern Cyprus, the public budget mainly means taking financial aid from Turkey and distributing it to Turkish Cypriots. Per capita income of the Island is $30,000 in the South and $15,000 in the North. The gap has been narrowing since 2002 because the amount of financial aid flowing from Turkey to Northern Cyprus tripled from 2002 to 2010.

At one stage, they decided even where to spend the aid. In the end Turkish Airlines of Cyprus went bankrupt. The company's building stands like a decayed tooth. There used to be a strikers’ tent in front of it. Even that is gone today. TEPAV recently completed a project which reviewed every single component of the state apparatus in the Turkish Republic of Northern Cyprus. If you ask me, the problem of the Turkish Cypriots is that they take the pre-1980 era Turkish state model as their own. Northern Cyprus needs a comprehensive public sector reform. Finally, there is a program-based framework for relations between Turkey and Northern Cyprus. Turkey’s experiences tell us that with a little help, some countries can achieve more easily what they have been striving for. Turkey-Northern Cyprus relationships finally seem to have come to a healthy starting point.

Sustainability used to be an issue only in the northern part of Cyprus. Now it is a fundamental issue for the entire island. I think this could be a chance for the solution of the Cyprus issue. The problem of Turkish Cypriots is that they take Turkey’s public administration system as a role model. Turkey changed that model entirely after 1980. Northern Cyprus also has to adapt itself to the change.

This commentary was published in Radikal daily on 30.04.2013