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CYPRUS
Year of EU entry 2004
Political system Republic
Capital city Nicosia
Total area 9,000 km2
Population 0.7 million
Currency Cyprus pound |
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Overview
Cyprus is the largest island in the Eastern Mediterranean, and is situated south of Turkey. The two main mountain ranges are the Pentadactylos in the north and the Troodos in the central and southwestern part of the island, with the fertile plain of Messaoria in between.
Cyprus has long been a crossing point between Europe, Asia and Africa and still has many traces of successive civilisations - Roman theatres and villas, Byzantine churches and monasteries, Crusader castles and pre-historic habitats.
The island's main economic activities are tourism, clothing and craft exports and merchant shipping. Traditional crafts include embroidery, pottery and copper-work.
The local dishes are the traditional meze which is served as a whole meal, the halloumi cheese and the zivania schnapps.
Since Turkey occupied the north of the island in 1974, the Turkish Cypriot and Greek Cypriot communities have been separated by the so-called Green Line.
Cyprus is well known as the island of Aphrodite, the goddess of love and beauty, who, according to legend, was born there.
Economy
The Republic of Cyprus has a market economy dominated by the service sector, which accounts for 76% of GDP. Tourism and financial services are the most important sectors; erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy grew a healthy 3.7% per year in 2004 and 2005, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The government has initiated an aggressive austerity programme, which has cut the budget deficit to below 3% but continued fiscal discipline is necessary if Cyprus is to meet its goal of adopting the euro on 1 January 2008. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants are now on line. After 10 years of drought, the country received substantial rainfall from 2001-03 alleviating immediate concerns. The Turkish Cypriot economy has roughly one-third of the per capita GDP of the south, and economic growth tends to be volatile, given north Cyprus' relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew 15.4% in 2004, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the Republic of Cyprus. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Under the 2003-06 economic protocol, Ankara plans to provide around €420m to the Turkish Republic of Northern Cyprus (TRNC). Agriculture and services, together, employ more than half of the workforce.
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