Cyprus

Cyprus is a small island - roughly the size of Connecticut - which has played a large role in the history of Western civilization. Because of its geographic location at the intersection of Europe, Asia, and Africa, Cyprus has been a magnet for would-be conquerors. The charms of "Aphrodite's island" include its sunny Mediterranean weather, its Crusader castles and Ottoman fortresses, its tradition of hospitality, and its extraordinary geography and flora.

Yet Cyprus is also a land of "bitter lemons," in the words of writer Lawrence Durrell. A bitter fight for independence in the 1950's against the British colonial power led to independence and a brief experiment in government shared between the Greek and Turkish Cypriot communities. Alas, in late 1963, a political crisis ushered in a period of devastating intercommunal strife, leading to the intervention of the British as a "guarantor" power - and ultimately United Nations forces. In 1974, a coup d'état against the government of Archbishop Makarios, instigated by the military junta in Greece, installed an ultra-nationalist regime in Nicosia. Within days, Turkey intervened militarily and captured approximately 34% of the island. The coup collapsed, Makarios was restored to power, and the two Cypriot communities have lived separate existences ever since.

Since 1974, the southern part of Cyprus has been under the control of the Government of the Republic of Cyprus, while the northern part has been administered by a Turkish Cypriot administration, which proclaimed itself the "Turkish Republic of Northern Cyprus" ("TRNC") and has not been recognized by any country except for Turkey. A substantial number of Turkish troops remain on the island. The United States recognizes the Republic of Cyprus as the Government of Cyprus. It is also U.S. policy to better integrate the Turkish Cypriot business community into the global economy and to promote economic growth and opportunity in the Turkish Cypriot economy in order to pave the way for a comprehensive settlement and reunification.

A buffer zone known as the "Green Line," patrolled by the U.N. Peacekeeping Force in Cyprus (UNFICYP), separates the Turks in the north and Greek Cyprus in the south. For many years the 108-mile east-to-west "green line" between the two communities afforded almost no movement of goods, persons, or services between the two parts of the island. At first, tensions were high along the buffer zone, which extended for 180 kilometers across the island and was in most places 3-7 kilometers wide (although as narrow as 20 meters in the center of Nicosia). Sporadic exchanges of gunfire across the lines and infiltrations by Turkish patrols gradually subsided. By the close of 1978, the UN reported that the cease-fire lines were almost completely stabilized. During most of the 1980s, cease-fire violations were confined mostly to occasional incidents of misbehavior by individual soldiers.

In April 2003, then-leader of the Turkish Cypriots Rauf Denktash relaxed many restrictions on individuals crossing between the two communities leading to relatively unimpeded bi-communal contact for the first time since 1974. Since the relaxation, there have been over 16.5 million buffer zone crossings in both directions. Under the current regulations, Greek Cypriots must present identity documents to cross to the area administered by Turkish Cypriots, something many are reluctant to do. They are able to drive their personal vehicles in the area administered by Turkish Cypriots, provided they first obtain a policy from a Turkish Cypriot insurance provider. Turkish Cypriots are permitted to cross into the government-controlled area upon presentation of a Turkish Cypriot ID card or other identity documentation acceptable to Republic of Cyprus authorities. They must also obtain car insurance from an insurer in the government-controlled area to drive their personal vehicles there.

Until recently, visitors choosing to arrive at non-designated airports and seaports in the area administered by Turkish Cypriots were not allowed to cross the United Nations-patrolled "green line" to the government-controlled area. In June of 2004, however, Cypriot authorities implemented new EU-related crossing regulations that allowed Americans (and citizens of most other countries) to cross freely regardless of their port of entry into Cyprus. Visitors arriving in the government-controlled area are normally able to cross the green line without hindrance, although on occasion they encounter difficulties at both the Greek Cypriot and Turkish Cypriot checkpoints. The Government of Cyprus considers ports in the area administered by Turkish Cypriots to be illegal. Policy and procedures regarding such travel are subject to change.

Cyprus is one of ten countries to have joined the European Union (EU) on May 1, 2004. Even though the entire island entered the union, the EU acquis communautaire -- the body of common rights and obligations - applies only to the government-controlled areas and is suspended in the area north of the Green Line which is administered by Turkish Cypriots. The process of harmonization with the EU in the run-up to accession has transformed the economy of the government-controlled area, making it more open, liberal, and competitive. Among the many reforms which have already taken place are the following: liberalization of trade and interest rates, abolition of investment restrictions for EU residents and liberalization of the general investment regime for all non-EU investors, abolition of price controls, introduction of private financing for the construction and operation of infrastructure projects, and gradual liberalization of utilities.

Cyprus was a member of the Eurozone since January 1, 2008, when it replaced the Cyprus Pound with the Euro. Joining the Eurozone was a major accomplishment for the Cypriot economy, initially resulting in such benefits as a higher degree of price stability, lower interest rates, reduction of currency conversion costs and exchange rate risk, and increased competition through greater price transparency. The final conversion exchange rate between the Cypriot pound and the Euro was one Euro per 0.585274 Cyprus pounds.

Cyprus officially applied to the European Union and the IMF for financial aid in mid-2012 in the hope of shoring up its banking sector, which had been battered by the eurozone sovereign debt crisis as local banks had to write-down billions of euros in “voluntary” Greek debt restructuring.