By Esra Aygin
The Turkish Cypriot administration, financially dependent on
Turkey, has not received any funding from Ankara for more than a year and is
increasingly reliant on bank borrowing.
The unprecedented stoppage is being viewed as blackmail from
Ankara to put political pressure on the ruling coalition.
The four-party coalition – Republican Turkish Party (CTP),
People’s Party (HP), Democratic Party (DP) and Social Democracy Party (TDP) –
which came to power in February 2018, has been relying on domestic borrowing to
keep the system running. It currently has an internal debt of about 6 billion Turkish
lira (about 980 million euros).
Although in recent years the Turkish Cypriot administration
has largely been able to pay salaries through local revenues, it depends on
financing from Turkey for infrastructure investments, defence expenses,
incentives and private sector support.
Economists warn that without investments and private sector
support the economy will be faced with stagnation in a matter of months. The
lender banks are also expected to go under pressure since the administration
does not have the capacity to pay even the interest, let alone repaying the
loans, said economist Erdal Guryay.
“I don’t know how much longer this system can continue. It
is not sustainable as it is. Imagine, you borrow but you can’t even pay the
interest,” he said.
The devaluation of the Turkish lira, which lost almost 40
per cent of its value against the dollar in 2018, has added to the ruling
coalition’s woes.
According to the 2019 budget, the Turkish Cypriot
administration expects 695 million Turkish liras (about 113 million euros) in
financial aid and 575 million TL (about 94 million euros) in loans from Ankara.
It also needs an additional 825 million TL (about 135 million euros) to
compensate for its budget deficit forecasted for the year 2019 – which bring the
total amount of resources expected from Ankara to 2, 095 million TL (about 342
million euros).
Unless funds start flowing, it will be very difficult for
the ruling coalition to sustain stability until the middle of the year, says
economist Vargin Varer.
“Not only because it will have difficulty in payments but
because the drop in public spending will cause stagnation in the economy and
cause a reaction in the people.”
The official explanation is that the delay is a technical
glitch caused by the system change in Turkey as the country finalised the
process of adopting an executive presidency replacing the parliamentary system
of government last June. This has interrupted transfers to the northern part of
Cyprus and delayed the preparation and signing of an economic protocol to
regulate grants and loans from Turkey for the years 2019-2021.
Despite repeated statements by coalition partners, that the
problem would be overcome soon, the delay continues, prompting sources to think
that Ankara is using funding as leverage to impose political control on the
ruling coalition.
“The problem cannot be technical,” said a source close to
the administration. “Turkey is blocking the money due to political and social
problems it has with the government.”
Back in December, former Turkish Cypriot leader Mehmet Ali
Talat had stated that he did not believe what he called “a financial crisis
with Turkey” is due to technical reasons. “Especially now that the system has
changed and the powers of the president have increased, this would be something
that could be solved with one instruction,” Talat said.
The ruling coalition officially denies that the problem is
other than technical. Kudret Ozersay of HP, responsible for foreign affairs,
told Yeniduzen newspaper in December: “What the Turkish officials are telling
us is that they are having problems due to the change in the system and that
the reasons are technical… This problem will be overcome. I believe that there
are no bad intentions or political ulterior motives.”
“The problem is that they are not happy with this
government,” said a member of the coalition, who asked to remain anonymous.
“Ankara has two main expectations from us: Respect for its authority, and
compliance with its Sunni Islam policies. And it is trying to make us conform
through financial pressure.”
The infamous Afrika newspaper incidents were the first
challenge for the Turkish Cypriot ruling coalition.
Ankara was open about the fact that it expected the Turkish
Cypriot administration to punish Afrika after the newspaper first published a
cartoon in December 2017 titled “Through Greek eyes” which showed an ancient
Greek statue urinating on the head of President Recep Tayyip Erdogan.
Then, in January 2018, it ran a front-page article
criticising Turkey’s military operation in Afrin, Syria, calling it a ‘second
occupation after Cyprus’.
The publication enraged Erdogan, who called Afrika a “sleazy
newspaper” and called on his “brothers in northern Cyprus to give the necessary
response”. The newspaper’s offices were largely destroyed the next day by an
ultranationalist mob while the riot police stood by.
“Ankara believes that the coalition did not back President
Erdogan enough against Afrika,” said the source. “And the logic goes: why
should Erdogan back a government that did not back Erdogan?”
The Turkish Cypriot coalition’s resistance against pressure for
increased Islamic policies in the north is also a continuous cause of tension,
according to the source. “For example, Ankara demands to directly control the
Hala Sultan Mosque. We refuse and say if it is opened it has to operate under
Turkish Cypriot control. This is why the mosque remains closed” although it was
completed in mid-2018.
The monumental mosque, which is one of the biggest in the
Eastern Mediterranean, has come to be widely seen as a symbol of Ankara’s
religious and cultural pressure on Turkish Cypriots.
Last month, in what was widely seen as a big change in
Turkey’s handling of relations with the Turkish Cypriots, it was declared that
President Erdogan would personally be responsible for Cyprus, including being
the sole authority for its financing. Turkey, in the past, managed its Turkish
Cypriot affairs through a state minister.
“This means that now everything is now up to one person,
whereas in the past relations were more horizontal,” said the source.
“Erdogan’s approval will be sought for everything.”
The lack of any development to resume the flow of Turkish
funds is also leading to speculation that soon the ruling coalition will be
replaced by a right-wing National Unity Party (UBP)-People’s Party (HP)
coalition, which would be more preferable for Ankara as traditionally,
right-wing administrations are more compliant and conform to Ankara’s demands.
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