A united Cyprus, with a unified economy and a common currency, would lead very quickly to economic growth on the island, even though there is now economic discrepancy between the Greek Cypriot and the Turkish Cypriot communities, the head of working group on economic issues and former Minister of Finance, Michael Sarris believes.
He stressed that the viability of the solution would be hampered, if real unification of the economy is blocked in any way.
In an interview with CNA to mark the end of the first round of direct negotiations, which started in September last year between the leaders of the two communities, Sarris said that on the technocrats level there has been very good cooperation with the Turkish Cypriots and there was convergence on many issues.
As discussions at the working group moved on, the Turkish Cypriot side tended to present ideas that promoted separate financial institutions, a move he described as “not a pleasant surprise”.
“A unified market will have significant beneficial for all Cypriots, but under certain conditions,” he explained, which relate to the four basic freedoms, namely free movement of goods, services, labour force and capital, effective monitoring of the financial system, an institutional framework to guarantee the continuation of macroeconomic stability, a wise fiscal policy and the right structural reforms.
Sarris believes that the institutions – within a negotiated settlement – regarding the EU must be under the authority of the federal government and must not include permanent derogations from the aquis communitaire.
The best way to achieve convergence between the two future component states, in a future federal Cyprus, is fast economic growth, free movement of goods, services, labour force and capita and funding of development projects through the federal budget, he said. Initially, the Turkish Cypriot component state will draw more funds from the federal government, he added.
“I believe that convergence between the two component states can be achieved in a decade,” he said.
He pointed out that the federal government cannot be burdened with the cost of re-settlement of those who will be affected by territorial adjustments, compensation and reconstruction and for this reason he believes that the more people return to their properties, the better for the economy of the country.
Sarris does not expect huge donations from international organisations and foreign governments because of the global financial crisis. He believes though that free market, the peace dividend, savings from expenditure on defence and double infrastructure can provide the economy with the necessary funds.
Replying to questions, the former Finance Minister allayed the fears of the Greek Cypriots about the cost of the solution, saying that “all Cypriots will become richer” with a viable and functional solution which will actually reunite economy.
Cyprus has been divided since 1974 when Turkey invaded and occupied 37 per cent of its territory. Cyprus President Demetris Christofias and Turkish Cypriot leader Talat have had 40 meetings during the first round of the UN-led direct negotiations. The leaders of the two communities are expected to meet again on September 3rd to start the second round of the negotiations, aiming to find a solution which will reunite the island.
Six working groups and seven technical committees, comprising experts from both communities, were established in April 2008, following an agreement between Christofias and Talat, to help prepare the ground for the resumption of the talks.
