Cyprus Solution Would Bring 20 Billion Peace Dividend

A solution of the longstanding Cyprus problem would generate a €20 billion peace dividend for the island, according to a study released yesterday.

The study, compiled by Cyprus-based economists Fiona Mullen, Alexander Apostolides and Mustafa Besim, and funded by Sweden, Denmark, Finland and Norway, predicts that a peace deal would raise per capita incomes by approximately €12,000, expand the size of the economy by around €20 billion and add an average 2.8 percentage points to real GDP growth every year for 20 years.

"In the past, the tendency has been to see the costs and benefits of a solution in a static way: There was an appreciation of the immediate costs, but there was little understanding of the dynamic benefits," the report says.

The research is based on agreement being achieved in 2016 for a bi-communal, bi-zonal federation with political equality, as outlined in the February 2014 joint declaration.

"Both sides of the island would benefit from a 'peace dividend' that will come from two sources: recurring benefits from opening up the Turkish market of 74 million people to Greek Cypriots and the European Union market of 500 million people to Turkish Cypriots," the authors state.

They estimate that the islandwide GDP at constant 2012 prices would rise from just under €20 billion in 2016 to just under €45 billion by 2035, compared with around €25 billion without a solution.

In their study, annual average growth rate is set at 4.5% over 20 years, compared with just 1.6% without a solution.


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