Cyprus Country Brief
Introduction/Overview
Relations between Australia and the Republic of Cyprus are underpinned by strong people-to-people links. The essence of the relationship stems from the ties developed by Cypriot migration to Australia, common British institutional inheritances, joint membership of the Commonwealth and Australia's support of efforts to find a just and permanent solution to the Cyprus dispute.
Australian Policy on Cyprus
Australia supports the sovereignty and territorial integrity of the Republic of Cyprus and recognises the Republic as the only legitimate authority on the island. The Australian Government urges all parties to continue constructive efforts aimed at resolving the Cyprus dispute.
Since 1964, Australian police officers have served continually as part of the United Nations Peace-keeping Force in Cyprus (UNFICYP), making a valuable contribution to the maintenance of peace and stability on the island. There are currently 15 Australian Federal Police officers serving with UNFICYP.
Political Overview
The government of the Republic of Cyprus comprises an executive President - who is directly elected for a five-year term - and a unicameral legislative arm, the House of Representatives. The current President, Mr Dimitris Christofias, was elected in February 2008. The President appoints the Council of Ministers, who may not be members of the House of Representatives.
The House of Representatives consists of 80 members, elected by a form of proportional representation for a five year term. Fifty-six seats are occupied by Greek Cypriots, with the remaining 24 reserved for representatives of the Turkish Cypriot community (although not occupied since 1963). Elections held in May 2006 saw the left-wing Party of the Progressive Working People (AKEL) and the opposition Democratic Rally Party (DISY) emerge as the largest parties with 18 seats each and the, centre-right Democratic Party (DIKO) securing 11seats. The Social Democrats (EDEK) won 5 seats, the European Party (EVROKO) 3 seats and the Ecologists and Environmentalists (Greens) 1 seat.
The Cyprus Dispute
The final period of British rule in Cyprus saw a bitter struggle against British colonialism and the deterioration in relations between the Greek Cypriot and Turkish Cypriot communities. In 1960 the Republic of Cyprus became independent under a power sharing arrangement between Greek Cypriots and Turkish Cypriots. Britain, Greece and Turkey became the guarantors of Cyprus' independence and territorial integrity. Friction between Greek Cypriots and Turkish Cypriots intensified in 1963 after President Makarios, claiming Turkish Cypriot obstructionism, sought to amend the Constitution. This was viewed by the Turkish Cypriots as an attempt to destroy their guaranteed community rights. Intercommunal fighting broke out and the Turkish Cypriots withdrew to segregated enclaves. An uneasy truce was maintained by the establishment in 1964 of a UN peacekeeping force (UNFICYP).
The succeeding years saw little decrease in tensions. A coup against President Makarios on 15 July 1974 organised by the Greek military junta, aimed at uniting Cyprus with Greece, was the trigger for Turkish troops to land in Cyprus and occupy the northern part of the island (37 per cent) where Turkish Cypriots were living. The island has remained divided ever since. In 1975 Turkish Cypriot authorities unilaterally declared the so-called ‘Turkish Federated State of Cyprus’. This was renamed in November 1983 the ‘Turkish Republic of Northern Cyprus (TRNC)’.
The United Nations made extensive efforts over the intervening years to broker a peace settlement to reunite the island. Under a good office mission commencing January 2002, the UN Secretary-General brokered a settlement plan, the 'Annan Plan', which was put to a referendum on both sides of the island on 24 April 2004. The settlement proposals were approved by 65 per cent of voters in the Turkish Cypriot community, but rejected by 76 per cent in the Greek Cypriot community. Subsequent efforts to restart a settlement process have not been successful, although both communities are committed to a bicommunal, bizonal federation. Cyprus thus remains divided and the status quo remains.
Economic Overview
Since 1990, the Republic of Cyprus economy has experienced sustained growth, but remains heavily dependent on tourism, real estate, construction, and maritime and other business/financial services. Economic policy is dominated by efforts to align the economy with those of other EU members and the longer term Lisbon Agenda to improve competitiveness. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The Republic of Cyprus joined the Eurozone on 1 January 2008.
The Republic of Cyprus GDP for 2007 was A$20.5 billion, with an annual growth rate of 3.8 per cent. Inflation was 2 per cent for the year. The government’s austerity program has kept fiscal deficit under the 3.0 per cent Maastricht limit, notwithstanding pressure for increased social welfare expenditure in the run-up to the 2008 presidential election.
Bilateral Relationship
The Hon Mike Rann MP, Premier of South Australia visited Cyprus in May 2007. A parliamentary delegation led by Senator George Brandis visited in July 2006. Former Ministers for Justice and Customs, Senator Hon Chris Ellison and then Senator Hon Amanda Vanstone visited in April 2003 and April 2000 respectively.
President Christofias, in his former position as Speaker of the House of Representatives, visited Australia in March 2005 at the invitation of the Australian Parliament Presiding Officers. The late Mr Pefkios Georgiades (Minister for Education and Culture) led the Cyprus delegation to the Melbourne Commonwealth Games in March 2006. Mr Christos Taliadoros (then Minister for Labour and Social Insurance) visited Australian in July 2005 as a guest of the Australian Cypriot community. Mr Ioannis Kasoulides, then Republic of Cyprus Foreign Minister, visited Australia in March 2002 for the Coolum Commonwealth Heads of Government Meeting.
The Cypriot community in Australia is thought to be the second largest outside Cyprus after the United Kingdom. The 2006 census recorded 18,381 Cyprus-born people in Australia, concentrated predominantly in Victoria and NSW. Greek Cypriots migrated to Australia in three waves: during the nineteenth century gold rushes; between 1924 and 1964; and after the 1974 Turkish intervention. Turkish Cypriot migration began in the mid-twentieth century.
Bilateral Economic and Trade Relationship
Trade between Australia and Cyprus is small, due to a combination of distance, lack of direct freight linkages, and the small size of the Cypriot market. Cyprus’ accession to the EU in 2004 also resulted in loss of markets for lamb and beef. However, Australia has successfully established a foothold in such niche markets as wine, processed foodstuffs and pharmaceuticals. Efforts continue to develop markets in education services, tourism and other services.
In 2006-07, the value of Australian exports was A$14 million, while Cypriot exports to Australia were A$5 million. In recent years, our largest export items have been medicaments, electrical equipment, recreational/sporting goods and chemicals, while major Cypriot exports are cheese and curd products, medicaments and pharmaceutical products.
Bilateral investment is also small, with the principal areas of activity being mining and banking. The Mafin Popular Bank Group and the Bank of Cyprus have established branches in Australia.
The ‘Turkish Republic of Northern Cyprus (TRNC)’ - Political Overview
The ‘TRNC’ is a mixed presidential/parliamentary system with political power shared between the ‘President’ and ‘Prime Minister’. The ‘President’ is elected for a five-year term and has the power to propose legislation or return it to the 50-seat ‘National Assembly’. The current ‘TRNC’ President’ is Mehmet Ali Talat, elected in April 2005.
For much of its existence, the ‘TRNC's’ principal foreign policy objective has been to secure international recognition as a sovereign state, and to consolidate ties with Turkey (which is the only country to accord diplomatic recognition). Under ‘President’ Talat, the regime has declared its support for reunification and a solution of the Cyprus problem, subject to the political equality and separation of the two major communities. The ’TRNC’ has embarked on an active campaign to develop its ties with the outside world, and has established representative trade and/or tourism offices in a number of countries, including Brussels, London and New York. It has observer status at the Organisation of the Islamic Conference (OIC) sends two observers to meetings of the Parliamentary Assembly meetings of the Council of Europe (PACE).
The ‘Turkish Republic of Northern Cyprus (TRNC)’ - Economic Overview
The ‘TRNC’economy is much smaller and more narrowly based than its southern counterpart. GNP for 2007 was less than A$2.7 billion, growth running almost 8.0 per cent. Due to fluctuations in the value of the New Turkish Lira (YTL), the currency used in the north, the inflation rate was over 9 per cent. Per capita incomes in the north average A$ 12,000, and are 50 per cent less than those in the south.
The ‘TRNC’ is heavily dependent on Turkey for credits, grants and trade. Reliance on the Turkish Lira also means there is no effective local control over monetary policy. The economy has therefore vulnerable to currency shocks from Turkey. Exports are. thin, and likely to remain so even with direct trade with the EU and other markets. As well as fiscal transfers from Turkey, the economy is sustained by a real estate and construction boom, tertiary education services tourism, gambling and related services. The local authorities see tourism development as a major hope, but the lack of direct airlinks to potential markets is a major constraint. One positive development was the EU’s release in June 2007 of EUR 259 billion for economic assistance to the Turkish Cypriot community over five years.
Last reviewed date: 29/02/2008