BRUSSELS (AP) — A prominent European Parliament lawmaker scolded Cyprus' bailout creditors Wednesday for failing to insist on the ethnically split country's reunification — a development he says could boost growth through stronger business ties with neighboring Turkey.
Green lawmaker Daniel Cohn-Bendit said a sustainable economic recovery for the eastern Mediterranean island could only be achieved through closer ties with the region's biggest and most dynamic economy, Turkey.
Cyprus faces years of economic hardship after a protracted crisis that has seen it become the fifth European Union country that uses the euro to accept financial assistance from international creditors. They estimate that the country's economy will contract a whopping 13 percent over the next two years, in marked contrast to the International Monetary Fund's predictions for Turkey. On Tuesday, the IMF said Turkey would likely grow 3.4 percent this year and 3.7 percent next.
"Turkish investors will only invest in Cyprus when there's a reunification," said Cohn-Bendit, who is also co-chairman of the European Green's parliamentary caucus. "The business model must come through reunification. A reunification within the European Union."
He said Turkey, whose long-running talks for possible EU membership have made little progress in years, would have a much greater incentive to work with a reunified Cyprus. The country joined the EU in 2004 and the monetary union four years later, but only the Greek-dominated south of the island enjoys the benefits of membership
Cyprus was split into an internationally recognized Greek-speaking south and a breakaway Turkish-speaking north in 1974 when Turkey invaded after a coup by supporters of union with Greece. Turkish Cypriots declared an independent northern state in 1983, which is only recognized by Turkey, which maintains 35,000 troops there.
The last U.N.-brokered attempt to reunify the island, which began in 2008, has stalled. Cyprus came closest to a peace deal in 2004, when a U.N.-drafted agreement was approved by Turkish Cypriots. But the agreement was rejected by Greek Cypriots, who considered it weighted against them.
Last month, Cyprus clinched a bailout deal under which it will receive 10 billion euros ($13 billion). In return, the country is imposing extensive losses on deposits over 100,000 euros at its two biggest banks, the Bank of Cyprus and Laiki. It has also set up capital controls to avoid a bank run, the first time such measures have been introduced since the launch of the euro in 1999.