THE TURKIFICATION OF NORTHERN CYPRUS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R002000020026-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 16, 2016
• Document Release Date: October 5, 2004
• Sequence Number: 26
• Publication Date: January 2, 1975
• Content Type: MF

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C ENCY
January
~ ~"F~ 7
MEMORAND M FOR:
Intelligence Research Specialist
Western Europe-NATO
Defense Intelligence Agency
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SUBJECT The Turkification of northern Cyprus
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1.
we are senaing e attached pape response
to your request for background analysis of the economic
situation in northern Cyprus and the impact of Turkish
influence on the island.
2. If we can provide you with further information
on this matter or assist you in some other way, lease
call F7 I
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Distribution: S-6709
1 - Addressee (LDXed copy)
1 - D/OER
P January
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S CRFT
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THE TURKI FI C_ TI O 1 OF NORTHERN CYPRUS
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In the three months since the Turkish invasion
and occupation of northern Cyprus the Turkish-Cypriot
economy has increasingly become an appendage of the
mainland. Administratively, the northern sector was
first placed under the jurisdiction of Adana and sub-
sequently incorporated into Mersin Province of main-
land Turkey. While Cree,':-Cypriots continue to exercise
control over their own destiny, Turkish-Cypriots find
themselves superintendents of the mainland's strategies
for the island.
Adding to the complexity is the lack of a proper
chain of command. Turki_^h officials on Cyprus along
with many Turk-Cypriots who have assumed allegiance
to Turkey rather than an independent Cyprus compete
regularly with officials in Ankara over the goals and
strategies on the island. The Turkish military represents
a third force, often beyond control of other officials.
Despite the-confusion at the top and the frequent
lack of coordination, a great vari.'ty of work has been
done to rejuvenate the economy. In the first stage,
immediately following the cessation of hostilities,
ministers along with teams of experts from Ankara surveyed
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the newly won economic resources within the 40% of the
islar the Turks now hold.
Initial concern was with resettling the mass of
refugees as soon as possible, restoring basic services,
and preventi.ng permanent damage to the economy. To
this end Greek-Cypriots properties have been confis-
cated and Turkish-Cypriots extablished in the homes and
businesses. Even after much resettlement there still
remain many Greek-Cypriot properties to be distributed
to new owners.
The northern sector should have few problems in
physically absorbing the 30,000 to 40,000 Turkish-
Cypriots still in the Greek sector or Sovereign Base
Areas along with any Cypriots now resident on the main-
land who might wish to resettle on the island.
encourage Turkish nationals of Cypriot decent, Ankara
will guarantee pension and social security rights
and offer various economic inducements and investment
incentives. In spite of this, it is not expected that
a major proportion of the 250,000 Cypriots now living
in Turkey will return.
In addition to resettlement, the new Turk-Cypriot
administration began to tend the citrus crop, irrigate
fields, and restore power and water. The banking system
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has ?peen restored and expanded by the addition of branches
of the Turkish Agricultural Bank, an investment bank
and other financial intermediaries on the island. The
Turkish lira has been established as the Turkish sector's
currency. This move will further link Cyprus to the
mainland and serve to test the convertibility of the
lira as part of Ankara's-plans for future association
with the EC.
The industrial and.commercial sectors still remain
mostly inoperative. The reorganization of these activities the second stage in Ankara's strategy -- will largely be
incorporated in the new economic Five-Year Plan for the
northern sector. The plan, which will be inaugurated
early in 1975, will concentrate on export assets,
principally citrus cult4.vation and copper and iron pyrite
deposits and tourism. These industries are already well
established and the principal task facing the Turks is
the establishment of efficient organizational and
marketing mechanisms to exploit their potential.
To exploit these resources Ankara has begun to
establish a number of holding companies within which
these various enterprises will be centrally organized.
A Tourism Management Company has been established jointly
by the Tourism Bank, the Pension Fund in Turkey,
the Development Foundation (Inkisaj), and the
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Ploris Foundation in Turkish Cyprus. The company will.
provide training at centers in Adana and Antalya on
the mainland, high level direction and will also gather
financing for the tourist sector. Foreign tourist
companies that have not registered with the Autonomous
Turkish Administration (ATA) by January 1975 face
confiscation of their properties.
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Turkish managers and technical experts fill the gap and
may permanently become part of the landscape.
The biggest problem facing Turk-Cypriots and their
Turkish patrons is that of financing. The position of
the ATA with regard to foreign investment is certainly
no worse than what exists in many other parts of the
world. Foreign investors will undoubtedly be cautious,
however, and this will delay the rapid inflow of funds
needed to initiate and sustain these various development
projects.
Much of the new development activity will be in
supporting rather than producing areas of the economy.
This type of investment is service oriented and is less
profitable. Therefore it is less likely to interest
foreign investors. Much of the needed investment will
be of the social overhead type, such as in roads and
port facilities, and must be provided by government.
It is likely that Ankara will not find many i-
'-estors, especially large firms, interested in Cyprus
at this time. it therefore must itself assume the res-
ponsibility of carrying most of the investment. To
.accomplish this, Ankara has set up several investors-
cooperatives and issued bonds to tap private savings,
pension plans and other sources. It must still pour
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huge amounts of state funds into the Cyprus projects.
Turkey has already spent an estimated $1.2 billion on the
invasion and its aftermath and has its own ambitious
plans for development of the mainland economy.
While large-scale foreign investment and foreign
loans to Turkey may release some Turkish funds for
Cyprus, it is unlikely that these will be sufficient.
To this end it seems to Ankara more economically sound to
merge the Cypriot economy with the mainland and face
one development problem instead of two. The alternative
would be to cast Cyprus adrift or let it stagnate for
lack of funds. Whatever th strategy Ankara adopts,
Cyprus is likely to remain unable to pay for itself for
some time and will continue to act as a drain on the main-
land economy.
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