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Roundup: IMF, World Bank to work out cost of Cyprus reunification settlement

Xinhua, February 9, 2016 Adjust font size:

The International Monetary Fund (IMF) and the World Bank (WB) are working on estimating the cost of an expected agreement leading to the reunification of Cyprus, a government official said on Monday.

Government spokesman Nicos Christodoulides, commenting on statements that the IMF and the WB are getting involved in the process for a settlement, said that groups of experts from the two international organizations paid an unannounced visit to Cyprus between Dec. 12 and 18 to collect data.

Cypriot President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci are negotiating under the auspices of the United Nations for the past eight months on a solution to end the long standing division of the eastern Mediterranean island.

Cyprus was partitioned along ethnic lines when Turkey sent its troops in 1974 to occupy the northern one third of the island, reacting to a coup organized by the military rulers of Greece at the time.

Christodoulides said the IMF has been tasked to prepare a report on the macroeconomic framework of a unified country, public finance policies and taxation practices.

The WB is engaged in studies related to the functionality of a solution, the cost of the functioning of a federal administration and in providing technical support on the properties issue and the overall financing of a solution.

However, UN Secretary-General's special adviser on Cyprus problem Espen Barth Eide has said that no estimate would be accurate at the time given the fact that the elements involved in a solution have not yet been agreed by the negotiators.

Most of the money needed will go towards paying compensation to the owners of properties, mostly Greek Cypriots, who were driven out of their homes during the 1974 Turkish action.

The issue is closely connected to the territorial adjustments as Turkey will be called to return part of the areas under occupation, amounting to 37 percent of Cyprus's total territory.

Governing DISY party leader Averof Neophytou has said that territorial readjustment allowing the return of about 100,000 refugees out of a total of about 170,000 would minimize the cost of compensations and would make a solution economically viable.

Cypriot President Nicos Anastasiades said on Sunday that burdening the state with the cost of a solution is out of the question, as it would raise the sovereign debt sky-high.

Sovereign debt now stands at about 107 per cent of the annual GDP, as Cyprus is preparing to exit a three-year bailout program which added 7.5 billion euros (8.40 billion U.S. dollars) to its external debt.

The high cost of the solution proposed by the United Nations in 2004 was one of the main reasons behind its rejection by the Greek Cypriots.

They voted down the UN plan in a referendum by a three-quarters majority, saying they it would add insult to injury as Greek Cypriot taxpayers would be made to pay reparations for Turkey's 1974 military action. Endit