October 31, 2011

For the most current version of this Note, see Background Notes A-Z.

PROFILE

Geography
Area: 9,251 sq. km. (3,572 sq. mi.); about the size of Connecticut.
Cities: Capital--Nicosia (pop. 273,642; 2001 census.). Other cities--Limassol, Larnaca, Famagusta, Paphos, Kyrenia, Morphou.
Terrain: Central plain with mountain ranges to the north and south.
Climate: Mediterranean with hot, dry summers and cool, wet winters.

People
Nationality: Noun and adjective--Cypriot(s).
Population: Government-controlled area 803,200 (2009 est.); area administered by Turkish Cypriots 274,436 (2008 est.).
Annual population growth rate: Government-controlled area 0.8% (2009 est.); area administered by Turkish Cypriots 2.4% (2008 est.).
Ethnic groups (1960 census): Greek (77%), Turkish (18%), Maronite and Armenian (1%), and other (4%).
Religions: Greek Orthodox, Muslim, Maronite, Roman Catholic, Armenian Orthodox.
Languages: Greek, Turkish, English.
Education: Years compulsory--6 in elementary; 3 in high school. Attendance--almost 100%. Literacy--about 99%.
Health, Government-controlled area: Infant mortality rate--3.3/1,000. Life expectancy--80 years; males 77.9 years; females 82.4 years.
Work force: Government-controlled area 393,600 (2010): Agriculture and fishing 7.4%; industry, mining, and construction 19.3%; and services 73.3%. Turkish Cypriot-administered area 91,223 (2008): Agriculture and mining 3.6%; industry and construction 20.5%; and services 75.9%.

Government
Type: Republic.
Independence: August 16, 1960.
Constitution: August 16, 1960.
Branches: Executive--President elected to 5-year term. Legislative--unicameral House of Representatives, members elected to 5-year terms. Judicial--Supreme Court; six district courts.
Administrative subdivisions: Six.
Major political parties: Greek Cypriots--Progressive Party of Working People or Anorthotikon Komma Ergazomenou Laou--AKEL (communist); Democratic Party or Dimokratikon Komma--DIKO (center); Democratic Rally or Dimokratikos Synagermos--DISY (center-right); Social Democrats Movement or Kinisi Socialdemocraton--EDEK (socialist); United Democrats or Enomeni Dimokrates--ED (center-left). Turkish Cypriots--National Unity Party or Ulusal Birlik Partisi--UBP (right); Democrat Party or Demokrat Partisi--DP (center-right); Republican Turkish Party or Cumhuriyetci Turk Partisi--CTP (center-left); Freedom and Reform Party or Free Party--Ozgurluk ve Reform Partisi--OP (center-right); Communal Democracy Party or Toplumcu Demokrasi Partisi--TDP (left).
Suffrage: Universal at age 18.

Economy*
GDP (2010): $23.0 billion.
Annual GDP real growth rate (2010): Government-controlled area 1.0%.
Per capita GDP income: Greek Cypriots (2010)--$27,945; Turkish Cypriots (2009)--$13,354.
Agriculture and fishing (2010): 2.3% of GDP. Products--potatoes and other vegetables, citrus fruits, olives, grapes, wheat, carob seeds. Resources--pyrites, copper, asbestos, gypsum, lumber, salt, marble, clay, earth pigment.
Industry, mining, and construction (2010): 16.5% of GDP. Types--mining, cement, construction, utilities, manufacturing, chemicals, non-electric machinery, textiles, footwear, food, beverages, tobacco.
Services and tourism (2010): 81.2% of GDP. Trade, restaurants, and hotels 19.2%; transport 7.2%; finance, real estate, and business 29.9%; government, education, and health 20.9%; and community and other services 5.0%.
Trade (2010): Exports--$1.51 billion: citrus, grapes, wine, potatoes, pharmaceuticals, clothing, and footwear. Major markets--EU (especially Greece, Germany, and the U.K.), Middle East, Russia. Imports--$8.53 billion: consumer goods, raw materials for industry, petroleum and lubricants, food and feed grains. Major suppliers--Greece, Italy, and Germany. (U.S. trade surplus--for 2010: $102.6 million.)

* Section refers to the government-controlled area unless otherwise specified.

PEOPLE AND HISTORY
Since 1974, Cyprus has been divided de facto into the government-controlled two-thirds of the island and the remaining one-third of the island, which is administered by Turkish Cypriots. Greek and Turkish Cypriots share many customs but maintain distinct identities based on religion, language, and close ties with their respective "motherlands." Greek is predominantly spoken in the south, Turkish in the north. English is widely used. Cyprus has a well-developed system of primary and secondary education. The majority of Cypriots earn their higher education at Greek, Turkish, British, and other European or American universities. Both the Greek Cypriot and Turkish Cypriot communities have developed private colleges and publicly supported universities.

Human settlement on Cyprus stretches back nearly eight millennia and by 3700 BC, the island was a crossroads between East and West. The island fell successively under Assyrian, Egyptian, Persian, Greek, and Roman domination. For 800 years, beginning in 364 AD, Cyprus was ruled by Byzantium. After brief possession by King Richard I (the Lion-Hearted) of England during the Crusades, the island came under Frankish control in the late 12th century. It was ceded to the Venetian Republic in 1489 and conquered by the Ottoman Turks in 1571. The Ottomans applied the millet system to Cyprus, which allowed religious authorities to govern their own non-Muslim minorities. This system reinforced the position of the Orthodox Church and the cohesion of the ethnic Greek population. Most of the Turks who settled on the island during the 3 centuries of Ottoman rule remained when control of Cyprus--although not sovereignty--was ceded to Great Britain in 1878. Many, however, left for Turkey during the 1920s. The island was annexed formally by the United Kingdom in 1914 at the outbreak of World War I and became a crown colony in 1925.

Cyprus gained its independence from the United Kingdom and established a constitutional republic in 1960, after an anti-British campaign by the Greek Cypriot EOKA (National Organization of Cypriot Fighters), a guerrilla group that desired political union, or enosis, with Greece. Archbishop Makarios, a charismatic religious and political leader, was elected president.

Shortly after the founding of the republic, serious differences arose between the two communities about the implementation and interpretation of the constitution. The Greek Cypriots argued that the complex mechanisms introduced to protect Turkish Cypriot interests were obstacles to efficient government. In November 1963, President Makarios advanced a series of constitutional amendments designed to eliminate some of these special provisions. The Turkish Cypriots opposed such changes. The confrontation prompted widespread intercommunal fighting in December 1963, after which Turkish Cypriots ceased to participate in the government. Following the outbreak of intercommunal violence, many Turkish Cypriots (and some Greek Cypriots) living in mixed villages began to move into enclaved villages or elsewhere. UN peacekeepers were deployed on the island in 1964. Following another outbreak of intercommunal violence in 1967-68, a Turkish Cypriot provisional administration was formed.

In July 1974, the military junta in Athens sponsored a coup led by extremist Greek Cypriots against the government of President Makarios, citing his alleged pro-communist leanings and his perceived abandonment of enosis. Turkey, citing the 1960 Treaty of Guarantee, intervened militarily to protect Turkish Cypriots.

In a two-stage offensive, Turkish troops took control of 38% of the island. Almost all Greek Cypriots subsequently fled south while almost all Turkish Cypriots moved to the north. Since the events of 1974, UN peacekeeping forces have maintained a buffer zone between the two sides. Except for occasional demonstrations or infrequent incidents between soldiers in the buffer zone, the island was free of violent conflict from 1974 until August 1996, when violent clashes led to the death of two demonstrators and escalated tension. The situation has been quiet since 1996.

GOVERNMENT
Since 1974, Cyprus has been divided de facto into the government-controlled two-thirds of the island and the Turkish Cypriot-administered one-third. The Government of the Republic of Cyprus has continued to be the only internationally recognized authority; in practice, its authority extends only to the government-controlled area.

The 1960 Cypriot constitution provided for a presidential system of government with independent executive, legislative, and judicial branches, as well as a complex system of checks and balances, including a weighted power-sharing ratio designed to protect the interests of the Turkish Cypriots. The executive, for example, was headed by a Greek Cypriot president and a Turkish Cypriot vice president, elected by their respective communities for 5-year terms, and each possessing a right of veto over certain types of legislation and executive decisions. The Greek Cypriot-controlled Republic of Cyprus retains most elements of the presidential system of government expressed in the constitution, although it has cited the Turkish Cypriots' "withdrawal from government" and the "law of necessity" to enact structural changes that allow "effective governance."

Following the 1974 hostilities, the Turkish Cypriots set up their own institutions in the area they administered with an elected "president" and a "prime minister" responsible to the “National Assembly” exercising joint executive powers. In 1983, the Turkish Cypriots declared an independent "Turkish Republic of Northern Cyprus" ("TRNC"). The United States does not recognize the "TRNC," nor does any country other than Turkey.

POLITICAL CONDITIONS
Historically, none of the Greek Cypriot parties has been able to elect a president by itself or dominate the 56-seat House of Representatives. The 165,000 Greek Cypriot refugees from the area now administered by Turkish Cypriots are a potent political force, along with the independent Orthodox Church of Cyprus, which has some influence in secular as well as religious matters. In February 2008, Demetris Christofias defeated incumbent Tassos Papadopoulos and challenger Ioannis Kassoulides in two rounds of voting to become the first AKEL president of the Republic of Cyprus. All major parties hold seats in the National Council, the top advisory board to the president on Cyprus settlement issues.

Parliamentary elections last took place in May 2011. DISY emerged the leading party, garnering 34.3% of votes cast and is represented by 20 members of parliament (MPs), with AKEL finishing a close second with 32.7% and 19 MPs. Other parties represented in parliament include DIKO (9 seats), EDEK (5), EUROKO (2) and the Greens (1).

Dervis Eroglu was elected in April 2010 as leader of the Turkish Cypriot community, replacing Mehmet Ali Talat. The National Unity Party (UBP), previously led by Eroglu, holds a majority in the 50-seat “TRNC National Assembly.”

Attempts To Achieve a Cyprus Settlement
The first UN-sponsored negotiations to develop institutional arrangements acceptable to both communities began in 1968; several sets of negotiations and other initiatives followed. In general, Turkish Cypriots focus on bizonality, security guarantees, and political equality between the two communities, envisioning a weak federation with strong powers reserved for the two constituent states. Greek Cypriots, on the other hand, emphasize the rights of movement, property, settlement, and the return of territory, and envision a stronger, more integrated federal government. Numerous UN-sponsored negotiation rounds have faltered owing to the sides’ differing aims and wants, the last major failure being the 2004 “Annan Plan,” which in simultaneous referenda in the two communities won the support of two-thirds of Turkish Cypriots but only one-fourth of Greek Cypriots.

For 2 years following the Annan Plan defeat, the island saw little progress toward reunification until a visiting high-level UN official in July 2006 secured the sides’ support for a framework agreement aimed at restarting settlement discussions. The sides tackled procedural issues over the ensuing 18 months but mainly avoided substance. A breakthrough of sorts occurred with the February 2008 election of Republic of Cyprus President Demetris Christofias, who immediately pledged to renew settlement efforts under UN auspices. Christofias and then-Turkish Cypriot leader Mehmet Ali Talat met four times between March and July 2008, with their chief negotiators and technical experts supporting their efforts via more frequent gatherings. In July 2008, the two leaders announced the decision to proceed to full-fledged negotiations, which began on September 3, 2008.

Over the next 16 months, Christofias and Talat met more than 60 times, tackling the core negotiation issues of governance and power sharing, property, the economy, EU matters, security and guarantees, territorial arrangements, and migration issues. UN Secretary General Ban Ki-moon paid an official visit to Cyprus January 31-February 2, 2010. He congratulated the sides for progress to date and emphasized that courage and determination would be needed to bring the talks to a successful conclusion. After Dervis Eroglu defeated Mehmet Ali Talat to become the Turkish Cypriot leader in April 2010, negotiations resumed in May 2010. Christofias and Eroglu continue to meet, including on three occasions in a tripartite forum with the UN Secretary General.

Bi-Communal Contact, Crossing Procedures
In April 2003, then-leader of the Turkish Cypriots Rauf Denktash relaxed many restrictions on individuals crossing between the two communities leading to relatively unimpeded bi-communal contact for the first time since 1974. Since the relaxation, there have been about 18 million buffer zone crossings in both directions. Under the current regulations, Greek Cypriots must present identity documents to cross to the area administered by Turkish Cypriots, something many are reluctant to do. They are able to drive their personal vehicles in the area administered by Turkish Cypriots, provided they first obtain a policy from a Turkish Cypriot insurance provider. Turkish Cypriots are permitted to cross into the government-controlled area upon presentation of a Turkish Cypriot ID card or other identity documentation acceptable to Republic of Cyprus authorities. They must also obtain car insurance from an insurer in the government-controlled area to drive their personal vehicles there.

In past years, visitors choosing to arrive at non-designated airports and seaports in the area administered by Turkish Cypriots were not allowed to cross the United Nations-patrolled "green line" to the government-controlled area. In June of 2004, however, Cypriot authorities implemented new EU-related crossing regulations that allowed Americans (and citizens of most other countries) to cross freely regardless of their port of entry into Cyprus. Visitors arriving in the government-controlled area are normally able to cross the green line without hindrance, although on occasion they encounter difficulties at both the Greek Cypriot and Turkish Cypriot checkpoints. The Government of Cyprus considers ports in the area administered by Turkish Cypriots to be illegal. Policy and procedures regarding such travel are subject to change. More information on current procedures may be obtained at the UN "Buffer Zone" Ledra Palace checkpoint in Nicosia or by referral to the U.S. State Department country information sheet on Cyprus at: http://travel.state.gov/.

Principal Government Officials
President of the Republic--Demetris Christofias
Foreign Minister--Erato Kozakou-Marcoullis
Minister of Commerce, Industry, and Tourism--Praxoulla Antoniadou-Kyriacou
Minister of Finance--Kikis Kazamias
Minister of Interior--Neoklis Sylikiotis
Minister of Defense--Demetris Eliades
Minister of Labour and Social Insurance--Soteroula Charalambous
Minister of Agriculture--Sophocles Aletraris
Minister of Education and Culture--Yiorgos Demesthenous
Minister of Communications and Works--Evthymios Flourentzos
Minister of Justice and Public Order--Loukas Louka
Minister of Health--Stavros Malas
Ambassador to the United States--Pavlos Anastasiades
Permanent Representative to the United Nations--Minas Hadjimichael

Cyprus maintains an embassy in the United States at 2211 R Street NW, Washington, DC 20008 (tel. 202-462-5772) and a Consulate General in New York City. Cyprus also maintains a trade center at 13 East 40th Street, New York, NY 10016 (tel. 212-686-6016). Turkish Cypriots maintain offices in Washington (tel. 202-887-6198) and at the Republic of Turkey's Mission to the United Nations.

ECONOMY*
(* Section refers to the government-controlled area unless otherwise specified.)

Cyprus has an open, free-market, services-based economy with some light manufacturing. Cyprus' accession as a full member to the European Union as of May 1, 2004, has been an important milestone in its recent economic development. The Cypriots are among the most prosperous people in the Mediterranean region, with a per capita income rapidly approaching 100% of the EU 27 average. Internationally, Cyprus promotes its geographical location as a "bridge" between three continents, along with its educated English-speaking population, good airline connections, and telecommunications.

In the past 20 years, the economy has shifted from agriculture and light manufacturing to services. Currently, agriculture makes up only 2.3% of the GDP and employs 7.4% of the labor force. Industry, mining, and construction contribute 16.5% and employ 19.3% of the labor force. The services sector, including tourism, contributes 81.2% to the GDP and employs 73.3% of the labor force. In recent years, the services sector, and financial services in particular, have provided the main impetus for growth, while tourism has been declining in importance. Manufactured goods account for 58.3% of domestic exports, while potatoes and citrus constitute the principal export crops. The island has few proven natural resources, although it is now gearing up for exploration for natural gas off its southern coast. Trade is vital to the Cypriot economy and most goods are imported. The trade deficit reached $7.0 billion in 2010. Cyprus must import fuels, most raw materials, heavy machinery, and transportation equipment. More than 68.8% of its imports come from the European Union, particularly Greece, Italy, and Germany, while 1.4% come from the United States.

Cyprus has been a member of the Eurozone since January 1, 2008, when it replaced the Cyprus pound with the Euro. The final conversion exchange rate between the Cypriot pound and the Euro was one Euro per 0.585274 Cyprus pounds. The following website offers additional information on the mechanics of Cyprus's adoption of the Euro: http://www.euro.cy/

In 2010, the Cypriot economy expanded by 1.0%, buoyed by a rebound in tourism and financial services, following a 1.7% contraction in 2009 in the aftermath of the global financial crisis. However, Cyprus' path to recovery is still fraught with difficulties. Structural rigidities in the labor market undermine Cyprus' competitiveness in most sectors, while a bloated civil service poses special challenges. Tourism, once the engine of growth for the island, has been stagnating over the last decade, facing stiff competition from the region. Growth for 2011 is forecast at 1.4%-1.7%. Most analysts agree that Cyprus will find it difficult to reach growth rates in excess of 2.0%-2.5% in the coming years--considerably lower than the 4.0% growth average recorded in the decade preceding the 2009 crisis.

The state payroll represents about 30% of public spending annually. The government pledged to engage civil service unions in a discussion to effect wide-ranging cutbacks, including seeking union agreement on shaving €70 million (approx. $96 million) off the civil service payroll over 2 years (2011 and 2012) and discussing civil service pension reform. Civil service employees do not contribute toward their own pensions, but this may have to change in order to safeguard the long-term viability of the social security system.

In recent months, all three major credit rating agencies have downgraded Cyprus (both its sovereign debt and its main banks) over concerns of fiscal slippage and exposure of the Cypriot financial system to the Greek market and debt. These downgrades effectively place Cyprus only marginally above the Eurozone's most troubled countries (Greece, Portugal, and Ireland). Inflation remained stubbornly above the average EU 27 level at 2.6% in 2010, a trend continuing in 2011. Unemployment remains below the average EU level, but its current level of over 7.0% is a 35-year high for Cyprus.

Investment Climate
In the run-up to EU accession (May 1, 2004), Cyprus dismantled most investment restrictions, attracting increased flows of foreign direct investment (FDI), particularly from the EU. According to the United Nations Conference on Trade and Development (UNCTAD) "World Investment Report 2009," Cyprus ranked among the world leaders in terms of attracting foreign direct investment on a per capita basis. The World Economic Forum's Competitiveness Index ranked Cyprus 40th among 139 economies in 2010-2011. The Heritage Foundation and the Wall Street Journal 2010 Index of Economic Freedom ranked Cyprus the 24th freest economy in the world. Transparency International also ranked Cyprus among the top 28 countries on transparent procedures in 2010. Non-EU investors (both natural and legal persons) are free to invest in Cyprus in most sectors, either directly or indirectly (including all types of portfolio investment in the Cyprus Stock Exchange). The only exceptions concern primarily the acquisition of property and, to a lesser extent, restrictions on investment in the sectors of tertiary education, banking, and mass media.

In 2009, the inflow of FDI (including “brass plate” companies) reached U.S. $6.0 billion. About 90% of this investment came from the broad region of Europe, including 36.6% from the Russian Federation. In terms of sectoral allocation, incoming FDI in 2009 went to the following sectors: financial intermediation 58.1%; trade and repairs 23.7%; and real estate and business activities 15.7%.

The flow of U.S. investment in Cyprus reached U.S. $101.3 million in 2009, or 1.7% of Cyprus' total inward FDI. The stock of U.S. investment in the island was U.S. $248.8 million at the end of 2009. Projects involving U.S. investment in recent years have included real estate and various business activities, including a well-known U.S. coffee retailing franchise, a university, an information technology firm, an equestrian center, a hair products manufacturing unit, a firm trading in health and natural foodstuffs, an oil field products manufacturer, and a financial services company. U.S. investors may benefit from Cyprus’s abolition of EU-origin investment restrictions, provided they operate through EU subsidiaries.

Additional information on foreign direct investment can be obtained from the Cyprus Investment Promotion Agency website: http://www.cipa.org.cy.

European Union (EU)
Along with the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia, the Republic of Cyprus entered the EU on May 1, 2004. The EU acquis communautaire is suspended in the area administered by Turkish Cypriots pending a Cyprus settlement. Cyprus adopted the Euro on January 1, 2008.

Export Opportunities
Best prospects for U.S. firms generally lie in services, high-technology sectors, such as computer equipment and data processing services, financial services, environmental protection technology, medical and telecommunications equipment, desalination and water purification equipment and services, and tourism development projects such as casinos, marinas, and golf courses. Moreover, alternative energy sources and the energy sector in general, are attracting an increasing amount of attention, while the possible existence of natural gas and petroleum reserves off the southern and eastern coast of Cyprus opens up new prospects. U.S. food franchises and apparel licensors are also finding fertile ground for expansion in Cyprus.

Trade Between Cyprus and the United States
The U.S. Embassy in Nicosia sponsors a popular pavilion for American products at the annual Cyprus International State Fair and organizes other events to promote U.S. products throughout the year. The U.S. runs a significant trade surplus with Cyprus, on the order of $102.6 million in 2010 (exports of $123.5 million versus imports of $20.9 million, according to Republic of Cyprus statistics).

Principal U.S. goods exports to Cyprus include office machines and data processing equipment; electrical appliances; optical, measuring, and medical equipment; passenger cars; mineral fuels and oils; and edible fruit and nuts. Principal U.S. imports from Cyprus consist of dairy products, salt, and mineral substances.

Bilateral business ties also encompass a healthy exchange in services. In 2010, the inflow of services (from the United States to Cyprus) was $404.8 million, against an outflow (from Cyprus to the United States) of $244.6 million, according to Republic of Cyprus statistics.

Turkish Cypriot Economy
The EU acquis communautaire has been temporarily suspended in the northern part of the island due to the unresolved political situation. The currency used is the Turkish Lira, although Euros are widely accepted. The economy of the Turkish Cypriot-administered area is dominated by the services sector including the public sector, trade, tourism, and education, with smaller agriculture and light manufacturing sectors. The economy operates on a free-market basis, although it continues to be handicapped by the political isolation of Turkish Cypriots, the lack of private and public investment, high freight costs, and shortages of skilled labor. Despite these constraints, the Turkish Cypriot economy turned in an impressive performance from 2003 to 2006, with estimated growth rates of 13.2% in 2006, 13.5% in 2005, 15.4% in 2004, and 11.4% in 2003. This growth was fueled largely by a construction boom, which ended abruptly amid renewed controversy over the legitimacy of property titles in the north, following a much-publicized court case in which the United Kingdom Court of Appeal on January 19, 2010 affirmed an earlier ruling by the European Court of Justice. The global financial crisis has hit the Turkish Cypriot economy hard; leading to negative growth rates of 6.3% in 2009, and 3.4% in 2008. Tourism and tertiary education are two very important sectors. The Turkish Cypriot economy benefits by the employment of around 6,000 Turkish Cypriots in the Greek Cypriot economy where wages are significantly higher, and by the relative stability of the Turkish Lira (prior to 2008). In 2008, the services sector accounted for 77% of GDP, industry and construction accounted for 18% of GDP, and agriculture 5%, according to Turkish Cypriot statistics. The partial lifting of travel restrictions between the two parts of the island in April 2003 has allowed movement of persons--around 18 million crossings to date--between the two parts of the island with no significant interethnic incidents.

Turkey remains, by far, the main trading partner of the area administered by Turkish Cypriots, supplying 70% of imports and absorbing around 50% of exports (2008 figures). In another landmark case, the European Court of Justice ruled in 1994 against the British practice of importing produce from the area based on certificates of origin and phytosanitary certificates granted by "TRNC" authorities. This decision resulted in a considerable decrease of Turkish Cypriot exports to the EU--from $36.4 million (or 66.7% of total Turkish Cypriot exports) in 1993 to $17.2 million in 2008 (or 20.5% of total exports). In August 2004, new EU rules allowed goods produced or substantially transformed in the area administered by Turkish Cypriots to be sold duty-free to consumers in the government-controlled area and through that area to the rest of the EU. To qualify, goods must also meet EU sanitary/phytosanitary requirements. Animal products are excluded from this arrangement. In 2005, Turkish Cypriot authorities adopted a new regulation "mirroring" the EU rules and allowing certain goods produced in the government-controlled areas to be sold in the area administered by Turkish Cypriots. (However, suppliers cannot legally transport imported products over the green line in either direction.) Despite these efforts, direct trade between the two communities remains limited (comprising only 0.09% of the Greek Cypriot community’s trade, and 11.8% of the Turkish Cypriot community’s trade in February 2009).

The EU continues to be the second-largest trading partner of the area administered by Turkish Cypriots, with a 14.1% share of total imports and 20.5% share of total exports. Total imports increased to $1.7 billion in 2008, while total exports remained at $83.7 million. Imports from the U.S. reached $11.7 million in 2008, while exports to the U.S. were nil.

Assistance from Turkey is crucial to the Turkish Cypriot economy. Under the economic protocol signed in 2006, Turkey undertook to provide Turkish Cypriots financial assistance totaling 1.875 billion New Turkish Lira (YTL--roughly $1.34 billion) over a 3-year period (600 million YTL in 2007, 625 million YTL in 2008, and 650 million YTL in 2009). Turkey also provides millions of dollars annually in the form of low-interest loans mostly to Turkish entrepreneurs in support of export-oriented industrial production and tourism. The total amount of Turkish assistance to Turkish Cypriots since 1974 is estimated to be more than $4 billion.

FOREIGN RELATIONS
The Republic of Cyprus aligns itself with European positions within the EU's Common Foreign and Security Policy. Cyprus has long identified with the West in its cultural affinities and trade patterns, and maintains close relations with Greece. Since 1974, the foreign policy of the Republic of Cyprus has sought the withdrawal of Turkish forces and the most favorable constitutional and territorial settlement possible. This campaign has been pursued primarily through international forums such as the United Nations (see Political Conditions). Turkey does not recognize the Republic of Cyprus.

The Republic of Cyprus enjoys close relations with many countries, including Greece, Russia, China, France, Cuba, Israel, Egypt, Lebanon, and other countries in the region. Cyprus is a member of the United Nations and most of its agencies, as well as the World Trade Organization, the World Bank, International Monetary Fund, Council of Europe and the British Commonwealth. In addition, the government has signed the Multilateral Investment Guarantee Agency Agreement (MIGA).

U.S.-CYPRUS RELATIONS
The United States regards the status quo on Cyprus as unacceptable. Successive U.S. administrations have viewed UN-led intercommunal negotiations as the best means to achieve a fair and permanent settlement.

The United States is working closely with Cyprus on counterterrorism efforts. A Mutual Legal Assistance Treaty, which has been in force since September 18, 2002, facilitates bilateral cooperation. Cyprus also signed a Proliferation Security Initiative Ship Boarding Agreement with the United States on July 25, 2005, which reinforces bilateral counterterrorism cooperation.

The United States has provided more than $500 million in assistance to the two communities since the mid-1970s. Over the years, this assistance has provided humanitarian relief, built health facilities and schools, and provided training and scholarships to thousands of students and professionals. Since the late 1990s, the U.S. assistance program has been working to actively promote cooperation between the two geographically separated communities on initiatives that benefit the island as a whole and support a broad political settlement, based on a bizonal, bi-communal federal framework. In 2011, the United States will provide approximately $8 million to continue to reduce tensions and promote peace and cooperation between the two communities. The U.S. assistance program focuses on creating conditions conducive to resolution of the long-standing Cyprus conflict, supporting reunification of the island, promoting peace and cooperation between the Greek Cypriot and Turkish Cypriot communities, addressing the economic disparities that complicate relations between the two communities, and supporting initiatives that encourage a durable peace settlement.

Principal U.S. Officials
Ambassador--vacant
Deputy Chief of Mission--Andrew Schofer
Consular Officer--Nan Stewart
Defense Attache--COL William Woods
Economic/Commercial Officer--Susan Delja
Management Officer--Tracy Harding
Political Officer--Alicia Allison
Public Affairs Officer--Keith Peterson
USAID Representative--Alan Davis

The U.S. Embassy in Cyprus is located at the corner of Metochiou and Ploutarchou Streets in Engomi, Nicosia; mailing address: PO Box 24536, Nicosia, Cyprus; U.S. mailing address: PSC 815, FPO-AE 09836-0001. Tel. [357] 22 39 39 39; telex: 4160 AMEMY CY; fax: [357] 22 78 09 44; Consular fax: [357] 22 77 68 41.

[This is a mobile copy of Cyprus (10/31/11)]