When thinking about the economic opportunities that will come with a solution of the island’s longstanding division, the obvious sectors that come to mind are tourism and construction.
The southern part of Cyprus would open up to the six million middle class Turks who travel out of the country each year looking for new holiday experiences, while the northern part of the island will benefit from the normalisation of air and sea traffic, and borders.
Construction would also get a boost from post-settlement investment, in particular upgrading Famagusta port and rebuilding the closed district of Varosha.
But there is another sector that, if the opportunity is seized, stands to gain a great deal and that is higher education.
The following paragraphs are largely based on ‘The Cyprus Peace Dividend Revisited’, co-authored in by myself, Alexander Apostolides and Mustafa Besim and published by the Peace Research Institute Oslo (PRIO) in 2014.
In the report, we assess the likely ‘peace dividend’ from two sources: settlement-specific investment and recurring benefits. Recurring benefits are the permanent gains that come from greater economies of scale and opening up the Turkish market of 74 million people to Greek Cypriots and the European Union market of 500m people to Turkish Cypriots.
60,000 students in the north
One key advantage of higher education is that it complements tourism. Just as the main bulk of tourists start to leave, the students start to come. They rent accommodation, buy food and eat in the cafés.
Higher education also generates other benefits, such as enhancing human capital, which in turn helps improve productivity and competitiveness. It also enriches local communities.
Despite non-recognition, there are seven locally established universities and two branches of well-established Turkish universities in the northern part of Cyprus. Much of the education is in English and some faculties get round recognition issues by linking with Turkish universities for accreditation.
As a result, these universities attract nearly 60,000 students from the region and Besim says that the sector brings in at least as much foreign exchange as tourism.
In the south, where it took a long time for private universities to be licensed, there are seven public and private universities. The total number of students was 33,674 in the academic year 2013/14. This is lower than in the north, not least because visa rules make it very difficult for students from non-EU countries to apply.
Synergies
If the Cyprus problem is solved, the higher education sector in both constituent states would be complementary. Both communities educate foreign students but they target very different markets and sectors.
In the north, the largest number of students comes from Turkey, followed by Iran, Azerbaijan, and, increasingly, Syria.
Meanwhile, in the south, the main students from abroad come from Greece.
In terms of subjects, the universities in the south have recently expanded into subject areas like health, which could complement existing subject areas in the north.
Need for a ‘Brand Cyprus’
As Apostolides argues, one great disadvantage of the Cyprus education sector today is the lack of any distinct identity in the global education market.
‘Brand Cyprus’ is missing for the education sector and it has little chance of being created and understood by students and their parents without a solution. A unified education sector, teaching in English, could create a strong brand to attract students from the Near East and the Commonwealth of Independent States.
Although both sides will have to address challenges (the Greek Cypriot institutions will be challenged by lower tuition fees charged in the north, while the Turkish Cypriot sector will face closer harmonisation to EU directives), the fact that they have advantages in different markets can provide the complementarities needed for Cyprus to become a regional education hub.
A settlement will also allow Turkish Cypriot universities to participate fully in the EU’s Erasmus and Bologna processes, which in turn will make them even more attractive for the potential students in the region.
Centres of excellence, in which both parts of Cyprus could have a competitive advantage, could be created, such as peace studies or archaeology.
An overall peace dividend of €400m
All this adds up to a higher education sector that would be bigger with a settlement than without one.
In the report, we forecast that the education sector in what would be the Turkish Cypriot constituent state would grow from €179m in 2012 to €466m by 2035, compared with €286m without a solution. This implies an overall peace dividend of around €180m for the sector.
The education sector in what would be the Greek Cypriot constituent state is expected to rise from €1.1bn in 2012 to €1.9bn in 20 years, instead of €1.7bn without a solution. This implies an overall peace dividend of about €190m.
As for the island as a whole, the total size of the sector is forecast to reach €2.4bn in 20 years, compared with €2bn without a solution. This yields an overall peace dividend of €400m at constant prices.
It is important to note that what has been forecast here is the direct value-added created by higher education. Foreign students, who are required to stay at least a full eight months on the island, also make a significant contribution to food, housing and retail sectors, thus creating substantial job opportunities.
Cyprus already has a strong geographical location, good weather and a low crime rate on both sides of the island. Through the Greek Cypriot universities, it already has extensive links with European institutions.
And with a solution, one of island’s current weaknesses, namely poor air connectivity, would instantly improve with links to Istanbul.
The reunification of Cyprus would therefore create the conditions for presenting a single united Cyprus brand to create the most important educational hub in the region.