Twenty years on, trade across the divide remains a trickle

Earlier this month, the European Commission adopted the “2024 Annual Action Programme for the Turkish Cypriot community to facilitate Cyprus’ reunification and to support the socio-economic development of the community”.

But 20 years on, what is the actual reality of trade across the Green Line?

For 2023, the value of exports from Cyprus to the EU and UK was €1,096.3 million. Sales using Green Line Regulations (GLR) from northern Cyprus to the south amounted to €16.0m – a drop in the ocean, at 1.5 per cent of total Cyprus sales. This statistic exposes the shocking extent of the failure of the EU’s GLR regime to facilitate a meaningful volume of trade for Turkish Cypriots in 20 years.

Yet, as far back as 26 April 2004, following the “yes” vote of the Turkish Cypriots to the UN Annan Plan, the EU General Affairs Council asserted that “The Council is determined to put an end to the isolation of the Turkish Cypriot community and to facilitate the reunification of Cyprus by encouraging the economic development of this community”. It is this declaration, which informs this and previous years’ EU Aid Programmes, yet the north is as isolated now as it was in 2004.

The EU’s failure to deliver on its own policy is monumental.

Over a billion euros worth of halloumi/hellim has been sold to the EU and UK by Cyprus since 2004, yet not even a single piece of this cheese was produced by the Turkish Cypriot community.

It is not widely understood that through GLR, Turkish Cypriots may only sell their products to Greek Cypriot companies, not companies on the EU continent. So if Greek Cypriot companies, for any reason whatsoever decide not to buy, then no “EU” related business exists for Turkish Cypriot businesses. Unfortunately, this is exactly what’s happening.

Trading of foods such as olive oil, halva, tahini, jam, coffee and bulgur through GLR took 17 years to begin. The sale of these goods only amounted to a pitiful €15,000 over two years, and the Turkish Cypriot suppliers of these foods have now virtually given up on selling them.

Turkish Cypriots have completely given up on selling “shelf-products” to the south, because Greek Cypriot shop owners do not buy them for fear being accused of being unpatriotic for selling Turkish Cypriot products. For this reason, the more generic building materials are the most traded products. However, even with these, Turkish Cypriot suppliers complain that when they reach a certain level of sales, excessively complex new product standards are introduced by the authorities with little notice which result in drop of sales and creation of business uncertainty.

Nineteen years after the EU decision, coffee, dried molehiya, bikla (picalilli pickle), lemonade, frozen vegetables and frozen potatoes, black and green table olives, apple, grapefruit, pineapple, cherry, peach and apricot juices, nectars and fruit drinks have also started crossing the Green Line. However, there is little confidence that any meaningful sales of these will follow. Beer and bottled water are still banned, even though they pass all necessary inspections.

There have been no obstacles for cars crossing over to the “other side” for decades. However, for the last 20 years the Greek Cypriot authorities have banned the crossings of vehicles above 7.5 tonnes, essential for transporting commercial goods, because they do not have the “necessary” papers. This ban is challenged each year by the Commission but no remedial action is taken.

There are only three Turkish Cypriot producers who have halloumi/hellim Protected Designation of Origin accreditation, whereas 58 have obtained this in the south.

Northern Cypriot businesses are unable to open bank accounts in the south.

A One-Stop-Shop has recently been set up by the Commission to provide information about trading across the Green Line. It has generally had a positive reception by traders on both sides because, for the first time, they have an “operational” link into the EU and a practical mechanism for addressing procedural and regulatory issues. However, a 37-page presentation document produced by the unit for the use of buyers/sellers is testimony to the extent of bureaucratic obstruction in place.

In his keynote speech at the Economist summit, the UN’s Cyprus Peacekeeping Force chief Colin Stewart said: “Rather than keeping the sides separate and watching as the divide grows bigger each year for decades now, removing barriers and enlarging trade would strengthen integration between the sides of the island, strengthen interdependence between the communities, and create a far better environment for solving the Cyprus issue.”

Elisa Ferreira, EU Commissioner for Cohesion and Reforms made similar comments about trade: “Trade between the two Cypriot communities, across the Green Line, has proven to be an effective tool to bring people from the two communities together and build mutual trust.”

So, the EU and UN are united in their “carrot” approach, where increasing and integrating trade between the two communities is seen as a catalyst for win-wins for both sides, and that, in turn, creating enthusiasm for unification.

This is in sharp contrast with the “stick” approach of the Greek Cypriot government where there is clearly belief that the restriction of trade and impoverishment of the north is more likely to lead to a unification vote from the north. The UN and EU need to confront and address this contradiction if there is to be any cogency to their trade strategy for Cypriots.

Ultimately, the myriad of obstructions outlined above can only be properly addressed in the short to medium term through the Turkish Cypriot community’s direct trade with the EU continent, alongside trade with the south. This can be achieved while still adhering to EU standards, and with the appropriate approvals by the Republic through its delegated “proxy” company representatives (e.g. Bureau Veritas), working in the north alongside the Commission’s own inspectorate. The new EU Parliament will no doubt want to look at its own failure associated with GLR, and perhaps finally deliver on their 2004 promise to implement Direct Trade Regulation which has been in their in-tray, awaiting action for 20 years.

Fahri Zihni is former chair of Council of Turkish Cypriot Associations (UK), a former policy advisor at the UK’s Cabinet Office and a former president of the Society of IT Management, UK