The Impact of Aid on the Economy of Northern Cyprus

Abstract

Since 1974, U.N. peacekeepers on the divided Mediterranean island of Cyprus have patrolled a buffer zone that divides the Greek-leaning, government-controlled south from the northern third, the self-declared Turkish Republic of Northern Cyprus (TRNC). The economy of Northern Cyprus resembles that of other small islands with negligible industrial production that rely on the service sector to generate income. What makes Northern Cyprus unique, however, is that the rest of the world does not acknowledge it as a separate political entity. This limits economic functions because the “country” cannot trade freely and depends on Turkey, the only nation to formally recognize Northern Cyprus.

De-facto States and Aid Dependence: An Analysis of the Impact of Turkish Aid on the Economy of Northern Cyprus

“…As the only country to officially recognize the self-proclaimed state of Turkish Republic of North Cyprus, 33 Turkey's existence in the political and economic domains is felt heavily by the local population. From the point of view of the classical criteria of statehood (population, territory and public authority), North Cyprus can almost be seen as an independent state.…”

Resource Dependence, Exchange and Tutelary Democracy in Unrecognized States

“…Before 1994, the main trade partner of the TRNC used to be the United Kingdom (Katircioglu, 2010). Since then, exports have decreased but imports have actually increased as a result of economic growth (Özyigit, 2008;Ozdeser and Ozyigit, 2007). Economic growth, however, was 'artificial' as it simply reflected the economic aid from Turkey (Özyigit, 2008;Ozdeser and Ozyigit, 2007).…”

“…Since then, exports have decreased but imports have actually increased as a result of economic growth (Özyigit, 2008;Ozdeser and Ozyigit, 2007). Economic growth, however, was 'artificial' as it simply reflected the economic aid from Turkey (Özyigit, 2008;Ozdeser and Ozyigit, 2007). Turkish aid was used to employ the Turkish Cypriots as civil servants.…”