Growing Together? – Prospects for Economic Convergence and Reunification in Cyprus

Policy-makers have increasingly come to focus on the role of economic factors in fuelling or dampening regional and border conflicts. This issue can be highly relevant in the case of nonrecognized entities where some economic interests may benefit from the resulting distortions while others would gain if the political situation were regularised. The experience in Cyprus is interesting in this regard, as it seems that economic factors probably played a significant role in the referenda results of April 2004. Against this backdrop, this paper explores the prospects and priorities in Cyprus by addressing a number of relevant theoretical and policy questions, including: the potential influence of economic factors on conflict resolution; the role played by economics in the failure of the Spring 2004 discussions; the question of the income disparity between north and south; and the synergies that could be unlocked in a converging intra-Cyprus economy.