Businesses need open encouragement from both political and business leaders in order to have the courage to trade across the divide, according to research published by the Cyprus Centre of the International Peace Research Institute, Oslo (PRIO).
The research, by Mete Hatay, Fiona Mullen and Julia Kalimeri, found that intra-island trade is only a tiny proportion of each community’s trade with the rest of the world and that businesses on both sides face psychological barriers in engaging in trade.
Sales of goods across the Green Line have risen from just under EUR 475,000 in 2004 to EUR 4.9 mln in 2007, while total transactions including shopping and casino spending amounted to EUR 31.7 mln. The flow of money is in favour of Greek Cypriots but it tips in favour of Turkish Cypriots when estimated remittances of those working in the south are included. With this included, the value of total intra-island business including salaries is estimated at EUR 85.3 mln.
There has been some acceleration in trade growth in both directions in 2008. Yet in comparison with other trade, it remains low.
The authors found that psychological barriers do indeed exist and are reinforced by political leaders and the media. The main psychological approach among Greek Cypriots was denial and among Turkish Cypriots it was a fear of being treated as inferior.
The researchers found that even those who do conduct business feel compelled to deny the existence of their clients or hide their identity by trading only in non-labelled goods. For many Greek Cypriots, therefore, doing business with Turkish Cypriots is taboo. Turkish Cypriots, meanwhile, do not trust that the Greek Cypriots are really serious about trade and fear that it is merely a means of controlling them.
The authors recommend three broad principles: to openly encourage trade; to tackle the practical obstacles to trade; and to improve the dissemination of information.
The practical suggestions include an annual Business for Peace Award, lifting of all telecoms barriers and implementing roaming agreements, and rules on taxation.