Calls for Turkish Cyprus to join in euro adoption

Published on Thursday 27 December 2007 20:46

WHEN the former British colony of Cyprus ditches its pound and joins the euro next week, it could be a step towards bringing together the economies of the divided island – even if no political solution is in sight.

Merchants in the Turkish enclave of northern Cyprus have survived decades of isolation by accepting whatever currency they can. Some now suggest the north should unilaterally adopt the euro in line with Greek Cypriots in the south.

"We already use the euro widely. Turkish Cypriots know the euro well and would have no objection to using it even more," said Ali Erel, the head of the European Union Association in northern Cyprus.

The north officially uses Turkish lira and declared itself independent in 1983, nine years after Turkey invaded the island in response to an Athens-backed coup in Nicosia.

The enclave of about 250,000 is recognised only by Turkey, which props it up financially and has some 30,000 troops there.

Cyprus joined the EU in 2004, but hopes that the island could be reunited were shattered when Greek Cypriots voted against a UN peace plan just before EU membership.

Although the currency issue was not such a major obstacle to a deal as sovereignty or the rights of thousands of displaced people, euro entry could remove questions over adopting a neutral currency and the responsibilities of the central bank.

The central bank's powers, subject of strong disagreement at the past UN-brokered talks, will now be largely taken over by the European Central Bank in Frankfurt.

"It would make things easier," said Costas Apostolides, a Greek Cypriot economist.

"Bringing the two sides together is a matter of having the right negotiation framework, but this would make the negotiation process easier," he said.

Turkish Cypriots said euro adoption in the south would have little immediate effect on the north's informal economy.

"We've been using the euro for years," says shop owner Cemil Bagcioglari, adding that he also uses the Cyprus pound, the British pound, the dollar and the Turkish lira.