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Cyprus

My hon. Friend makes an important point. The feeling, certainly among people in the south of the island, is that the pressure is on them and not on Turkey, despite Turkey’s agreement to the customs union. Indeed, Turkey will have to accept the customs union at some stage, and it might as well do so earlier rather than later. That would provide a key to unlocking many of the problems that we presently see between the communities. Although cross-green line trade is increasing as a percentage—from north to south up it is up by 53 per cent., and from south to north it is up by 164 per cent.—it does not amount to much in volume, remaining almost negligible. In the autumn, the World Bank published a devastating report on the TRNC economy, predicting economic collapse in the near future. Tourism in the north is failing, due to the sale of holiday homes—former hotel customers who buy property, and their friends who stay with them, do not need hotels—and environmental standards are undermined by development. The university sector, an important part of the economy of the north, will lose out, as its degrees will not be accredited under the Bologna process. Students will not have access to the EU Erasmus programme, and there is increased competition from Turkey and from southern Europe. The unreformed public services are overstaffed and do not deliver the services, and the huge budget deficit is financed by Turkey. The cross-green line banking system is badly in need of reform. When the power supply failed in north Nicosia in the summer, the TRNC had to buy electricity from the Republic of Cyprus. The electricity bill was paid, literally, with a truck-load of cash—folding money. Test transfers, via the French bank Société Générale, routed through London, took three days to get from south to north Nicosia, and a further three days to get back. Reputable banks also have serious concerns over the risk of money laundering, given the outlaw nature of the north’s legal system. I am pleased that the United States is funding experts to work with the banks in the north to try to overcome some of those problems. The better news is that south’s economy remains strong and is on course for euro entry on 1 January 2008, with a fixed exchange rate between the Cyprus pound and the euro in autumn 2007. I turn to bi-communal activity. When we were there, the political parties across the green line had fallen out in a big way. Not only had sister parties AKEL and CTP effectively suspended political meetings, but CTP had blocked bi-communal party activities, such as the annual joint youth camp, which in 2005 attracted 8,000 people, including 2,000 Turkish Cypriots. CTP young people did not attend this year, although a smaller number of Turkish Cypriots went under their own steam. CTP and DISY, too, have poorer relations: Mr. Anastasiades, DISY President, used to see Mr. Talat regularly, but they had not met for a year when we saw him last October. Some events have proceeded at a local level, with CTP people defying the leadership. Recently, the Famagusta CTP invited Mr. Christofias, president of the House of Representatives, and other AKEL members to a successful and well-attended dinner, at which Mr. Ferdi Soyer was present. The Ozker Ozgur peace and democracy foundation was launched at a bi-communal memorial event in north Nicosia on 22 November, which was attended by many Greek Cypriots. There have been problems at the green line checkpoints. Turkish Cypriots have had their papers searched and copied, which they regard as an intrusion. The Greek Cypriots may be looking for architectural plans and estate agent paraphernalia, presumably to stop the marketing of occupied Greek Cypriot land to tourists in the south. That, too, is understandable, but it needs to be better communicated. In his report to the United Nations Security Council, the Secretary-General referred to a serious incident on 22 November, when a group of Turkish Cypriot students at an English language college in Nicosia were attacked by masked Greek Cypriot students from outside the school. Three were arrested, and the attacks were strongly condemned by President Papadopoulos. Greek Cypriots, particularly activists, also suffer delay, harassment and meaningless searches when they go north, as I witnessed myself when crossing the line with one of them. I also saw the new development in Morphou, the neglect of older buildings and, most serious, the desecration of cemeteries and church buildings in the occupied town.