U.S. Department of State

Background Notes: Cyprus, September 1997

Released by the Bureau of European and Canadian Affairs 

Official Name: Republic of Cyprus 

PROFILE 

Geography 

Area: 9,251 sq. km. (3,572 sq. mi.); about the size of Connecticut. 
Cities: Capital--Nicosia (pop. 164,400). 
Other cities--Limassol, Larnaca, Famagusta, Paphos, Kyrenia, Morphou. 
Terrain: Central plain with mountain ranges to the north and south. 
Climate: Mediterranean with hot, dry summers and cool, wet winters. 

People 

Nationality: Noun and adjective--Cypriot(s).
Population (1996 est.): 827,000. Greek area: 657,000; Turkish area: 
170,000.
Annual growth rate: 1%.
Ethnic groups: Greek (78%), Turkish (18%), Armenian and other (4%).
Religions: Greek Orthodox, Muslim, Maronite, Roman Catholic, Armenian. 
Languages: Greek, Turkish, English.
Education: Years compulsory-- 6 in elementary; 3 in high school. 
Attendance--almost 100%. Literacy--about 99%.
Health: Infant mortality rate--9/1,000. Life expectancy--73 yrs. males; 
78 yrs. females. 
Work force (1996): Greek area--304,000: business and social 
services--31%; trade and tourism-- 26%; agriculture--12%; manufacturing 
and utilities--16%; construction and mining--9%; other--6%. Turkish 
area--76,000: agriculture--22%; public services--22%; industry--11%; 
trade and tourism--11%; other--34%. 

Government 

Type: Republic.
Independence: August 16, 1960.
Constitution: August 16, 1960. 
Branches: Executive--president elected to 5-yr. term. Legislative
--unicameral House of Representatives, members elected to 5-yr. terms. 
Judicial--Supreme Court; six district courts.
Administrative subdivisions: six.
Political parties: Greek Cypriot Community--Democratic Rally (right); 
Democratic Party (center-right); AKEL (communist); EDEK (socialist); 
United Democrats Movement (center-left). Turkish Cypriot Community
--National Unity (right); Democratic party (center-right); Republican 
Turkish (leftist); Communal Liberation (left); New Dawn (right); 
Democratic (center). 
Suffrage: Universal at age 18.
Central government budget (1996): Total revenue--$2.9 billion; Total 
expenditure--$3.3 billion. Expenditure profile (1995)--defense (10%), 
social services (24%), payment of interests (15%), education (11%), and 
health (6%). Development spending--$342 million. Fiscal deficit forecast 
to reach $257 million (2.9% of GDP) in 1996 from 1.3% of GDP in 1995.
Defense (1995): $290 million, (3.4% of GDP) funded from the general 
budget and a special defense fund.
Flag: Against a white background, island's shape in gold above two 
crossed olive branches. 

Economy 

GDP (1996): $8.8 billion.
Annual real growth rate (1996): 2.2%.
Per capita GDP income (1996): Greek Cypriots--$13,500; Turkish Cypriots
--about $3,300.
Agriculture and Natural Resources (6.0% of GDP): Products--Potatoes and 
other vegetables, citrus fruits, olives, grapes, wheat, carob seeds.
Resources--Pyrites, copper, asbestos, gypsum, lumber, salt, marble, 
clay, earth pigment.
Industry and Construction (24.3% of GDP): Types--mining, cement, 
construction, utilities, manufacturing, chemicals, non-electric 
machinery, textiles, footwear, food, beverages, tobacco. 

Services and Tourism (69.7% of GDP): Trade, restaurants, and hotels 
21.6%; banking, insurance, real estate, and business 17.5%; transport 
and communication 11%; government services 12%; social and personal 
services 8%. 

Trade (1996): Exports--$1.4 billion: citrus, grapes, wine, potatoes, 
clothing, footwear. Major markets--EU (especially the U.K.), Middle 
East. Imports--$4.0 billion: consumer goods, raw materials for industry, 
petroleum and lubricants, food and feed grains. Major suppliers--EU, 
U.S. Japan. (U.S. trade surplus $450 million.) 
Fiscal year: Calendar year. 

OVERVIEW 

Cyprus has been divided since the Turkish military intervention of 1974, 
following a coup directed from Greece. Since then, the southern part of 
the country has been under the control of the Government of Cyprus and 
the northern part under an autonomous Turkish-Cypriot administration 
supported by the presence of Turkish troops. In 1983, that 
administration proclaimed itself the "Turkish Republic of Northern 
Cyprus," recognized only by Turkey. UN peacekeeping forces maintain a 
buffer zone between the two sides. Except for occasional demonstrations 
or infrequent incidents between soldiers in the buffer zone, there had 
been no violent conflict since 1974 until August 1996, when violent 
clashes led to the death of two demonstrators and escalated tension. 
There is essentially no movement of goods, people, or services between 
the two parts of the island. Efforts to reunite the island under a 
federal structure continue, however, under the auspices of the United 
Nations. 

PEOPLE AND HISTORY 

Greek and Turkish Cypriots share many customs but maintain distinct 
identities based on religion, language, and close ties with their 
respective motherlands. Greek is predominantly spoken in the south; 
Turkish in the north. English is widely used. Cyprus has a 
well-developed system of primary and secondary education. The majority 
of Cypriots earn their higher education at Greek, Turkish, British, or 
American universities. Private colleges and state-supported universities 
have been developed by both the Turkish and Greek communities. 

Cypriot culture is among the oldest in the Mediterranean. By 3700 BC, 
the island was well inhabited, a crossroads between East and West. The 
island fell successively under Assyrian, Egyptian, Persian, Greek, and 
Roman domination. For 800 years, beginning in AD 364, Cyprus was ruled 
by Byzantium. After brief possession by Richard the Lion-Hearted during 
the Crusades, the island came under Frankish control in the late 12th
 century. It was ceded to the Venetian Republic in 1489 and conquered by 
the Ottoman Turks in 1571. The Ottomans applied the millet system to 
Cyprus, which allowed religious authorities to govern their own 
non-Muslim minorities. This system reinforced the position of the 
Orthodox Church and the cohesion of the ethnic Greek population. Most of 
the Turks who settled on the island during the three centuries of 
Ottoman rule remained when control of Cyprus--although not 
sovereignty--was ceded to Great Britain in 1878. Many, however, left for 
Turkey during the 1920s. The island was annexed formally by the U.K. in 
1914 at the outbreak of World War I and became a crown colony in 1925. 

Cyprus gained its independence from the U.K. in 1960, after an 
anti-British campaign by the Greek Cypriot EOKA (National Organization 
of Cypriot Fighters), a guerrilla group which desired political union 
with Greece, or enosis. Archbishop Makarios, a charismatic religious and 
political leader, was elected president. 

Shortly after the founding of the republic, serious differences arose 
between the two communities about the implementation and interpretation 
of the constitution. The Greek Cypriots argued that the complex 
mechanisms introduced to protect Turkish Cypriot interests were 
obstacles to efficient government. In November 1963, President Makarios 
advanced a series of constitutional amendments designed to eliminate 
some of these special provisions. The Turkish Cypriots opposed such 
changes. The confrontation prompted widespread intercommunal fighting in 
December 1963, after which Turkish Cypriot participation in the central 
government ceased. UN peacekeepers were deployed on the island in 1964. 
Following another outbreak of intercommunal violence in 1967-68, a 
Turkish Cypriot provisional administration was formed. 

In July 1974, the military junta in Athens sponsored a coup led by 
extremist Greek Cypriots hostile to Makarios for his alleged 
pro-communist leanings, and for his perceived abandonment of enosis. 
Turkey, citing the 1960 Treaty of Guarantee, intervened militarily to 
protect Turkish Cypriots. 

In a two-stage offensive, Turkish troops took control of 38% of the 
island. Many Greek Cypriots fled south while many Turkish Cypriots fled 
north. Another large-scale population transfer later occurred. 

GOVERNMENT 

Since 1974, Cyprus has been divided de facto into the 
government-controlled southern two-thirds of the island and the 
Turkish-controlled northern one-third. The Government of the Republic of 
Cyprus has continued as the internationally recognized authority; in 
practice, its power extends only to the Greek Cypriot-controlled areas. 

The 1960 Cypriot Constitution provided for a presidential system of 
government with independent executive, legislative, and judicial 
branches, as well as a complex system of checks and balances, including 
a weighted power-sharing ratio designed to protect the interests of the 
Turkish Cypriots. The executive, for example, was headed by a Greek 
Cypriot president and a Turkish Cypriot vice president, elected by their 
respective communities for 5-year terms and possessing a right of veto 
over certain types of legislation and executive decisions. 

Following the 1974 hostilities, the Turkish Cypriots formally set up 
their own institutions with a popularly elected president and a prime 
minister responsible to the National Assembly exercising joint executive 
powers. In 1983, the Turkish Cypriots declared an independent "Turkish 
Republic of Northern Cyprus" (TRNC). In 1985, they adopted a 
constitution and held elections--an arrangement recognized only by 
Turkey. 

POLITICAL CONDITIONS 

Both the Republic of Cyprus and the "TRNC" held active multi-party 
elections in 1993. Greek Cypriots narrowly elected Glafcos Clerides, a 
seasoned politician from the conservative Democratic Rally Party, as 
president of the Republic of Cyprus. Once elected, he quickly resumed 
UN-sponsored negotiations. 

The Democratic Rally party formed a coalition government with the 
center-right Democratic Party following Clerides' victory and holds 6 of 
11 cabinet positions. There are three other major Greek Cypriot 
political parties--communist AKEL, socialist EDEK, and center-left 
United Democrats. None has been able to elect a president by itself or 
dominate the 56-seat House of Representatives. The 165,000 Greek Cypriot 
refugees are also a potent political force, along with the independent 
Orthodox Church of Cyprus, which has influence in temporal as well as 
ecclesiastical matters. 

Turkish Cypriots also voted for change in 1993, removing the long-ruling 
National Unity Party in favor of a coalition of the Democratic and 
Republican Turkish parties. However, in August 1996, a new coalition was 
formed between the two main rightist parties, the National Unity Party 
and the Democratic Party. "TRNC President" Rauf Denktash won re-election 
in 1995 after an unprecedented second round of voting. He defeated the 
current "Prime Minister," Dr. Dervis Eroglu. 

UN-sponsored negotiations to develop institutional arrangements 
acceptable to both communities began in 1968; several sets of 
negotiations and other initiatives followed. Turkish Cypriots desire 
bi-zonality, security guarantees, and political equality between the two 
communities. Greek Cypriots emphasize the rights of movement, property, 
settlement, and the return of territory. Turkish Cypriots favor a 
federation of two nearly autonomous societies living side by side with 
limited contact, while Greek Cypriots envision a more integrated 
structure. 

The last face-to-face meeting between the leaders of the two 
communities, President Clerides and Mr. Denktash, took place in October 
1994. Since then, the UN and other international mediators have tried to 
assist the sides in finding greater common ground on settlement issues 
and in creating a more auspicious atmosphere for negotiations. These 
efforts have been complicated by the tragic killing of four Greek 
Cypriots and one Turkish Cypriot along the cease-fire lines in 1996 and 
mounting military tensions on and around the island. 

Principal Government Officials 

President of the Republic--Glafcos Clerides
Foreign Minister--Yiannakis Cassoulides
Minister of Finance--Christodoulos Christodoulou
Minister of Commerce, Tourism and Industry--Kyriacos Christofi 
Minister of Communication and Works--Leontios Ierodiaconou
Minister of Justice--Alecos Evangelou
Ambassador to the United States--Andreas Nicolaides
Ambassador to the United Nations--Nicos Agathocleous 

Cyprus maintains an Embassy in the United States at 2211 R Street NW, 
Washington, DC 20008 (tel. 202-462-5772) and a Consulate General in New 
York City. Cyprus also maintains a trade center at 13 East 40th Street, 
New York, NY 10016 (tel. 212-686-6016). Turkish Cypriots maintain 
offices in Washington and at the Republic of Turkey's Mission to the UN. 


ECONOMY 

Cyprus has an open, free-market, serviced-based economy. The industrial 
sector is fairly diversified. Cypriots are among the most prosperous in 
the Mediterranean. Internationally, Cyprus promotes its geographical 
location as a "bridge" between West and East, along with its educated 
English-speaking population, moderate local costs, good airline 
connections, and telecommunications. 

In the past 20 years, the economy has shifted from agriculture to light 
manufacturing and services. The service sector, including tourism, 
contributes 70% to the GDP and employs 62% of the labor force. Industry 
and construction contribute 24% and employ 25% of labor. Manufactured 
goods account for approximately 69% of domestic exports. Agriculture is 
responsible for 6% of GDP and 12% of the labor force. Potatoes and 
citrus are the principal export crops. 

After robust growth rates in the 1980s (average annual growth was 6.1%), 
economic performance in the 1990s has been mixed: Real GDP growth was 
9.7% in 1992, 1.7% in 1993, 6.0% in 1994, 5.0% in 1995, and 1.5% in 
1996. This pattern underlines the economy's vulnerability to swings in 
tourist arrivals (i.e., to economic and political conditions in Western 
Europe and the Middle East) and the need for restructuring the economy. 
Lack of competitiveness in tourism and especially in manufacturing will 
act as a drag on growth until structural changes are effected. 
Overvaluation of the Cypriot pound has kept inflation in check in recent 
years (3.0% in 1996) and is forecast to continue to do so in the 
foreseeable future. Economic prospects are good over the long term, but 
real growth in 1997 is expected to rise by an anemic 2.0%. 

Trade is vital to the Cypriot economy--the island is not self- 
sufficient in food and has few natural resources--and the trade deficit 
continues to grow. Exports rose by about 13% in 1996, while imports rose 
by 11%, resulting in a trade deficit of 9.5% in 1996. Cyprus must import 
fuels, most raw materials, heavy machinery, and transportation 
equipment. More than 50% of its trade is with the European Union 
(especially the U.K.); the Middle East receives 19% of exports. Cyprus 
signed an Association Agreement with the European Union (EU) in 1972, 
which calls for the abolition of all barriers to trade by establishment 
of a Customs Union between the two sides by 1998. Cyprus applied for 
full EU membership in 1990, and has since linked the Cyprus pound to the 
European Monetary Unit (ECU). In 1991, Cyprus introduced a Value Added 
Tax (VAT), which is currently 8%. Cyprus ratified the new world trade 
agreement (GATT) in 1995 and began implementing it fully on January 1, 
1996. 

Cyprus has the fourth-largest ship registry in the world, with 2,766 
ships and 26.8 million gross registered tons (GRTs). It is an open 
registry and includes ships from more than 43 countries, including 
Greece, Germany, and Russia. 

Export Opportunities 

Cyprus has been liberalizing its trade regime by eliminating import 
quotas and licenses and lowering tariffs on most products as a result of 
its obligations under the new world trade agreement and its Customs 
Union agreement with the European Union. As a result, U.S. products are 
becoming more competitive in Cyprus and prospects for further expansion 
of bilateral trade ties are excellent. 

Government computerization and telecommunications development, two of 
the priorities of the Governments' five-year development plan 
(1994-1998), provide excellent opportunities for U.S. exports. Sales of 
computer-assisted design systems, new capital equipment for textile, 
clothing, footwear production, medical equipment, environmental 
equipment, and services are also expected to grow. U.S. pressure 
resulted in the adoption of a new copyright law in 1994, and the U.S. 
continues to work with the government for a new patent law. 

Investment Climate 

The government offers tax incentives to encourage foreign direct 
investment. Majority ownership by foreigners is rarely approved, 
although exceptions occur. Cyprus has concluded treaties on double 
taxation with 23 countries, including the U.S., and has removed exchange 
restrictions on current international transactions. Non-residents and 
foreign investors may freely repatriate proceeds from investments in 
Cyprus. 

Offshore Sector 

The 1,180 full-fledged offshore companies--which are located in Cyprus 
but conduct business abroad only--qualify for various tax-and duty-free 
concessions. Foreign exchange earnings from offshore companies rose to 
$364 million in 1996. There are about 40 U.S.-owned firms in Cyprus; 
about half operate on an exclusively offshore basis. 

U.S. firms are mainly engaged in the regional marketing of computers, 
computer graphics, telecommunications, printing equipment, household 
products, and soft drinks. Since 1994, re-entry visa provisions have 
been streamlined and three-year work permits have been introduced for 
offshore employees. 

Trade Between Cyprus and the United States 

The U.S. embassy in Nicosia sponsors a popular pavilion for American 
products at the annual Cyprus International State Fair, hosts the 
Commercial Awards dinner, and organizes other events to promote U.S. 
products throughout the year. Total U.S. exports to Cyprus were about 
$650 million in 1996 (compared with $480 million in 1995), making the 
U.S. Cyprus' number-one supplier of total imports. Exports include 
American tobacco and tobacco products, automatic data processing and 
other machinery, and cereals. Principal U.S. imports from Cyprus consist 
of clothing, footwear, steel tubes and pipes, dairy products, and 
various food items. 

Turkish Cypriot Economy 

The economic disparity between the two communities is pronounced. The 
lack of private and governmental investment, shortages of skilled labor 
and experienced managers, inflation, and the devaluation of the Turkish 
lira continue to plague the economy. The European Union has been the 
primary destination of exports, principally citrus and textiles. 

Assistance from Turkey is the mainstay of the Turkish Cypriot economy. 
Under the latest economic protocol (signed January 3, 1997), Turkey 
undertakes to provide Turkish Cypriots loans totaling $250 million for 
the purpose of implementing projects included in the protocol related to 
public finance, tourism, banking, and privatization. Fluctuation in the 
Turkish lira, which has fallen to just 50% of its 1995 value, continues 
to exert downward pressure on the Turkish Cypriot standard of living. 

Turkish Cypriot authorities have instituted a free market in foreign 
exchange and authorize residents to hold foreign-currency denominated 
bank accounts. This encourages transfers from Turkish Cypriots living 
abroad. 

DEFENSE 

Since independence, the Republic of Cyprus has been a neutral country 
and a member of the Non-aligned Movement. Troops of five official 
military organizations, however, are based on Cypriot territory: Greek 
Cypriot, Turkish Cypriot, mainland Greek, mainland Turkish, and the UN 
Force in Cyprus (UNFICYP). In addition, U.K. forces are stationed at two 
Sovereign Bases on the southern coast of the island. The Republic signed 
a joint defense pact with Greece in 1993. 

The Greek Cypriot community requires compulsory military service for 
males following secondary education. The Greek Cypriot National Guard 
numbers about 11,000 with 100,000 reserves. The commander and many 
senior officers of the Greek Cypriot National Guard have traditionally 
been Greek army regulars. A separate mainland Greek military contingent 
is stationed in the Republic of Cyprus, under a provision of the 1960 
Treaty of Alliance. 

The 4,500-troop Turkish Cypriot Security Force, originally designed to 
protect Turkish Cypriot enclaves before 1974, is also based on 
compulsory military service for Turkish Cypriot males. In addition to 
the estimated 30,000 Turkish military forces stationed on Cyprus, 
Turkish regulars provide a significant portion of the leadership of the 
Turkish Cypriot Security Force. 

UNFICYP has about 1,200 troops with major military contingents from the 
U.K., Austria, and Argentina; smaller units from Finland, Ireland and 
Hungary; and civilian police from Australia and Ireland. The UN force 
patrols the cease-fire buffer zone and performs humanitarian tasks 
between the two communities. The U.S. has been a major donor to UNFICYP, 
contributing 48%--$234 million out of a total $490 million--of the total 
voluntary UNFICYP account since its creation in 1964. UNFICYP changed to 
a system of both voluntary and assessed contributions in 1993; that year 
Cyprus and Greece paid slightly less than half of the force's $42.8 
million annual costs. 

FOREIGN RELATIONS 

The Government of Cyprus has historically followed a non-aligned foreign 
policy, although it increasingly identifies with the West in its 
cultural affinities and trade patterns and maintains close relations 
with Greece. 

Since 1974, the foreign policy of the Government of Cyprus has sought 
the withdrawal of Turkish forces and the most favorable constitutional 
and territorial settlement possible. This campaign has been pursued 
primarily through international forums such as the United Nations and 
the Non-aligned Movement. Turkey does not recognize the Government of 
Cyprus. 

Cyprus' 1990 application for full EU membership caused a storm in the 
Turkish Cypriot community which argued that the move required their 
consent. In March 1995, the European Union undertook to start accession 
negotiations with Cyprus within six months of the conclusion of the EU's 
1996 Intergovernmental Conference (IGC) in exchange for Greece lifting 
objections to the Turkey-EU Customs Union Agreement. Accession 
negotiations are thus expected to begin in 1998, regardless of whether 
or not a Cyprus settlement has been achieved. 

The Government of Cyprus enjoys close relations with Greece. Cyprus is 
expanding relations with Russia, Israel, and Syria, from which it 
purchases most of its oil. 

Cyprus is a member of the UN and most of its agencies as well as the 
World Bank, International Monetary Fund, Council of Europe, and the 
Commonwealth. In addition, the country has signed the General Agreement 
on Tariffs and Trade (GATT) and the Multilateral Investment Guarantee 
Agency Agreement (MIGA). 

U.S.-CYPRUS RELATIONS 

The United States regards the status quo on Cyprus unacceptable. 
Successive administrations have viewed UN-led intercommunal negotiations 
as the best means to achieve a fair and permanent settlement. The United 
States will continue actively to support and aid the UN Security 
Council's efforts. In 1994, the U.S. appointed Richard I. Beattie as a 
Special Presidential Emissary for Cyprus. 

The United States has channeled $305 million in assistance to the two 
communities through the UN High Commissioner for Refugees and the Cyprus 
Red Cross since the mid-1970s. The United States now provides $15 
million annually to promote bicommunal projects and finance U.S. 
scholarships for Greek and Turkish Cypriot students. 

Principal U.S. Officials 

Ambassador: Kenneth C. Brill
Deputy Chief of Mission: Deborah E. Graze
Chief Political Officer: Donald Shemanski 
Economic/Commercial Officer: Clark Price
Defense AttachŽ: Col. David Fetter
Public Affairs Officer: Dr. Judith R. Baroody
Consular Officer: William Carlson
Administrative Officer: Jeffrey Levine 

The U.S. Embassy in Cyprus is located at the corner of Metochiou and 
Ploutarchou Streets in Engomi, Nicosia, Cyprus mailing address: PO Box 
4536, Nicosia Cyprus.
U.S. mailing address: PSC 815, FPO-AE 09836-0001. Tel. [357](2)476-100; 
Telex: 4160 AMEMY CY; Fax: [357](2)465-944; Consular Fax: 
[357](2)366-841; Web Page: http://www.spidernet.net/~amcenter


TRAVEL AND BUSINESS INFORMATION

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15250-7954; telephone: 202-512-1800; fax 202-512-2250. 

Emergency information concerning Americans traveling abroad may be 
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Travelers can check the latest health information with the U.S. Centers 
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(404) 332-4559 gives the most recent health advisories, immunization 
recommendations or requirements, and advice on food and drinking water 
safety for regions and countries. A booklet entitled Health Information 
for International Travel (HHS publication number CDC-95-8280) is 
available from the U.S. Government Printing Office, Washington, DC 
20402, tel. (202) 512-1800. Information on travel conditions, visa 
requirements, currency and customs regulations, legal holidays, and 
other items of interest to travelers also may be obtained before your 
departure from a country‰s embassy and/or consulates in the U.S. (for 
this country, see ‹Principal Government OfficialsŠ listing in this 
publication).

U.S. citizens who are long-term visitors or traveling in dangerous areas 
are encouraged to register at the U.S. embassy upon arrival in a countr 
y (see ‹Principal U.S. Embassy OfficialsŠ listing in this publication). 
This may help family members contact you in case of an emergency.

Further Electronic Information: 

Department of State Foreign Affairs Network. Available on the Internet, 
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the Superintendent of Documents, U.S. Government Printing Office, P.O. 
Box 371954, Pittsburgh, PA 15250-7954. To order, call (202) 512-1800 or 
fax (202) 512-2250.

National Trade Data Bank (NTDB). Operated by the U.S. Department of 
Commerce, the NTDB contains a wealth of trade-related information. It is 
available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the 
NTDB Help-Line at (202) 482-1986 for more information. [end of document]
 
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