02 Sep 2017 The Turkish Cypriot property dilemma

If my hunch is right, then Turkey’s ‘Plan B’ after the collapse of talks in early July to solve the Cyprus problem involves four key steps.

The first two are to offer permanent residence to the Maronites in their traditional villages and to open up Varosha to its original inhabitants (under whose control seems to be still under discussion).

The third step would be to speed up compensation for Greek Cypriot dispossessed owners in the Immovable Property Commission (IPC), while a fourth step could conceivably be to offer other displaced Greek Cypriots to be able to reside in northern Cyprus permanently.

These four steps would remove much of the litigation risk faced by Turkey, thus ‘normalizing’ the permanent partition of the island.

Speeding up compensation payments at the IPC is not straightforward, however. So far, Turkey has paid £238.6 million (it pays in sterling) in compensation for 1,028 cases.

However, payments have slowed down because the Turkish Cypriot administration reportedly spent the money from Turkey on 13th salaries instead of on the IPC. Turkey is now pushing for other ways to fund the compensation.

The primary idea is that those who obtain ‘clean title’ to the properties they are currently using, should pay. In my view, this is perfectly justifiable, since ‘Greek titles’ in northern Cyprus are sold at a discount to ‘Turkish titles’.

This is because the market recognises that there is a legal impediment, even if the Turkish Cypriot authorities treat both titles the same.

As soon as the current user obtains clean title, therefore, the value of the property will rise. It seems only fair that those who benefit should pay the difference, rather than Turkish taxpayers.
This is, of course, politically unpopular for two reasons.

First, it seems that many mainland Turks who came in the 1980s received this property for free, and second, because Turkish Cypriots probably received more property in the north in than they had left in the south.

There are 1.4 million donums of private Greek Cypriot property in the north, compared with only 0.4 million donums of Turkish Cypriot property in the south.

Even if there is an agreement that the current user should pay, the IPC also needs a considerable increase in resources if it is to compensate every single Greek Cypriot dispossessed owner.

To date, the IPC has only concluded cases on 30,572,567 square metres (22,849 donums). That is just 1.6% of the 1.4 million donums of Greek Cypriot private property in the north.

Even if you take the most productive year (2015) in which the IPC concluded 2.4 million square metres of cases, I calculate that it would take the IPC over 400 years to process every single square metre of Greek Cypriot private land in northern Cyprus.

If there is indeed a ‘Plan B’, therefore, it is going to take years to roll out. That leaves a very small opportunity for those who still want a federal solution to keep trying.

By Fiona Mullen, Director, Sapienta Economics Ltd