Trading our way to a solution

FOR centuries political philosophers have argued that trade can cure social ills and bring about peace within and between nations.

As French social philosopher Alexis De Tocqueville said in the 19th century, “Trade is the natural enemy of all violent passions. Trade loves moderation, delights in compromise, and is most careful to avoid anger. Trade makes men independent of one another and gives them a high idea of their personal importance: it leads them to want to manage their own affairs and teaches them to succeed therein. Hence it makes them inclined to liberty.”

If what Tocqueville says is true, then thriving free trade between the Greek and Turkish Cypriot sectors of Cyprus would have immense benefits. It would increase the embryonic social ties between the two communities by bringing about interdependence and would help bring about the economic parity that many, including the EU, argue would help bring about the as-yet-only-dreamt-of political union between the two sides. It would also help bring about the economic integration, and later political integration of a community, namely the Turkish Cypriots, that has, because of its exclusion from international trade and politics, sought refuge in its only benefactor, Turkey.

In theory, free trade could do as much, if not more, than politicians seeking to “unite” or “reunite” two peoples who have sold virtually nothing to one another for decades.

But theories alone are not enough to instigate trade relations across the UN buffer zone, or “Green Line”, that separates the two. As Irish political philosopher Edmond Burke said: “Free trade is not built on utility, but on justice”.

If one believes that “justice”, or in other words, a fair environment, is necessary for business to thrive between individuals or societies, then it is easy for anyone who knows Cyprus to understand why so little is traded between the two. Whether one is Greek or Turkish Cypriot, there are numerous reasons not to trade across the divide, and they all stem from a mirrored perception of injustice.

Last month, social scientists from the Nicosia office of the Peace Research Institute of Oslo launched a book entitled, Intra-island trade in Cyprus – Obstacles, oppositions and psychological barriers. In the book, they describe how trade with Turkish Cypriots “reminds Greek Cypriots of the 1974 trauma”, and how Turkish Cypriots are reminded of the “trauma of the 1960s” when they try to sell in Greek Cypriot markets.

In the wake of Cyprus’ entry to the EU in 2004, Brussels decided that Turkish Cypriot businesspeople, although not under the Cyprus government’s or the EU’s jurisdiction, ought to be allowed access to markets in south Cyprus and the EU. For this to happen, the EU Commission devised the Green Line regulation, a formula which allowed, as well as unhindered island-wide travel for EU citizens, limited trade across the Green Line. Most of the trade, it was envisaged, would be from north to south as Turkish Cypriot traders finally found a way of overcoming the embargoes that had for years barred them from European markets.

Initially, the range of products they were allowed to export was extremely limited, but in the ensuing four years the range has broadened to include most basic agricultural foodstuffs. Still, the rule remains in place that all goods crossing the line in this context must be wholly produced in Cyprus.

So how much do Turkish Cypriots sell in the south or to European markets beyond? The answer is “very little”. In 2004, when the regulation was still new, €475,000 worth of goods crossed. Last year it was €4.9 million. Some might say this is a significant percentage increase, but it is not – especially when compared with the $70 million worth of exports that leave the north via Famagusta to Turkey.

Regardless of the fact that Turkish Cypriots could never get rich from selling tomatoes, olives, or fish across the Green Line, one cannot help but wonder a little at why so few are taking the opportunity to sell their wares in the south.

The first reason is that the range of products they are allowed to sell is so narrow. The hellim, or halloumi, made in the north cannot be sold across the Line because dairy products remain on the not allowed list, as do all meat products. The north’s line of alcoholic beverages also remains off limits. In fact, all Turkish Cypriots are allowed to sell are some agricultural produce, raw materials for building, and furniture.

Stringent checks at crossing points call on Turkish Cypriot traders to prove beyond doubt that they have not imported produce from Turkey in order to try and pass it off as Turkish Cypriot. To attempt such a thing would be in the financial interest of traders as Turkish produce is generally cheaper than the Turkish Cypriot variety. And the fact that Turkish Cypriot heavy-goods vehicles are not allowed into the south also inhibits the flow of goods, adding cost and inconvenience to the equation.

Complicated and duplicated taxation also discourages traders from Green Line trading as sellers are subject to taxation and duties on both sides.

In all, trying to sell from the north into the south is an expensive, time-consuming and demoralising process, and, as the researchers point out, the stringent checks at crossing points tend to remind Turkish Cypriots of what they recall as the institutionalised persecution and intimidation that foreshadowed the Turkish invasion of 1974. If Turkish Cypriots are to be persuaded to trade more in the south, say the researchers, they have to feel that what they are doing is not bordering on illegal, and that they are not compromising their self-esteem in the process.

The researchers describe the overriding feeling among Turkish Cypriots trying to trade as that of “fear of inferiority”. Foremost is a feeling of numerical inferiority that comes from being a member of a smaller ethnic group. Also, being on the whole less affluent than Greek Cypriots, coupled with first or second hand memory of past victimisations, renders Green Line trade “a humiliating experience” for many.

It is not surprising then that while 37 Turkish Cypriot businessmen joined the International Cyprus Trade Fair in south Nicosia in 2004, only one took part in 2007.

Shopping in the south, however, appears to pose few problems for Turkish Cypriots, who seem to have no qualms about travelling there to stock up on household groceries and, to some extent, consumer durables. In fact, according to the research, Turkish Cypriots spent almost €16 million in the south, and that only includes money spent on credit cards. In short, the problem is not that they cannot buy from the Greek Cypriots, it is that they cannot sell.

Correspondingly, Greek Cypriots seem to be able to sell to Turkish Cypriots, but they do not feel comfortable buying from them. This stems, the researchers say, from a tendency towards “denial”. The “prevailing atmosphere… [is]…the idea that any dealings with Turkish Cypriots, however small, are somehow not legitimate and may be considered as some form of recognition of the pseudo state”.

Worryingly, numerous attempts by the researchers to interview potential Green Line traders were met with suspicion and hostility. A classic response was, “We don’t consider the issue important so we don’t find any reason to talk about it”. This sense of denial was found to be deep seated even in the minds of supermarket owners who denied even being aware that large numbers of Turkish Cypriots frequented their stores.

Seeing that trade is deemed vital in helping to create new bonds between the two main communities on the island, it is vexing that neither of the governments on the island appear to actively encourage it. Perhaps Cypriot leaders too are subject to the emotional damage evident in many of their countrymen.

Whether or not they are, the institute has called on the leaderships to “get over it” and create an environment in which intra-island business can thrive. Doing so, the researchers say, could only help bring about the solution both leaders profess to want.

The first thing they could do is to “openly encourage trade”. This would help “lift the taboo” surrounding inter-communal business. The governments should work towards “overcoming blockages” at crossing points and towards streamlining bureaucracy so that companies pay tax only once.

Overall, crossing points need to be made “more business friendly”, the researchers say, so that Turkish Cypriots in particular do not feel they are depending on the goodwill of police and customs when crossing the Green Line with goods. Vitally important too is that businesses and officials both sides of the Line are properly informed about the law and the provisions of the Green Line regulations.

After all, how can business thrive if even the customs officials at the crossing are not sure of the rules?

04.01.2009