The Turkish Cypriot ruling coalition signed an interim economic protocol which will see the Turkish occupied north receiving an emergency injection of TL 750 mln (EUR 118 mln) for the rest of the year while agreeing to a number of economic reforms.
The interim protocol, essentially a memorandum of understanding, was signed by the head of Turkish Cypriot ruling coalition Ersin Tatar and Turkey’s Vice President Fuat Oktay during Tatar’s visit to Ankara during the weekend. The Turkish Cypriot premier was heavily criticised for acting in secrecy, not informing the opposition of his intensions.
Coalition leader and head of the National Unity Party (UBP), Tatar presented the interim protocol at a press conference on Tuesday. He called the protocol a “life jacket” for the economy thrown by Turkey. His words were interpreted as criticism to the previous coalition which did not sign a protocol with Turkey due to suggested disagreements over economic reforms.
The previous coalition made up of four parties ranging from the left to the centre right, had ruled for 15 months without any financial aid from Turkey.
According to the protocol, the Turkish Cypriot coalition made up of UBP and the conservative People’s Party (HP) led by the Turkish Cypriot former negotiator Kudret Ozersay, has promised Turkey a number of economic reforms in return for the cash injection.
The memorandum signed between the two sides foresees a 10% saving in spending in the public sector. According to Tatar, public servants’ wages will not to be affected. As he announced, a freeze on new recruitments will be imposed. New civil servants will only be hired to replace those who retire.
The UBP-HP has also undertaken the responsibility to oversee the split of the Turkish Cypriot electricity authority (Kibt-Tek) into two entities which will be in charge of electricity production and distribution with essentially the creation of a transmission system operator (TSO).
Furthermore, the public telecommunication department, which currently has the monopoly on landlines in the north, is to be partly privatised and will function as a quasi-state organisation.
Other reforms stated in the interim protocol include “control over collective agreements made with workers of entities such as municipalities and local councils.” Any collective agreement must be approved by the finance office in the north.
The Turkish Cypriot ruling coalition will also have to draw up a strategic plan regarding a road map towards setting up a general health system.
Tatar announced that a more comprehensive economic protocol will be prepared after consultations with Turkey by October which will cover the three-year period of 2020-2022.
