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Cyprus

Cost of property compensation could bankrupt unified Cyprus, according to World Bank – report

World Bank estimates on the cost of compensation for properties in the context of a comprehensive solution to the Cyprus problem are prohibitive as it would bring the unified island’s economy to its knees, Turkish Cypriot daily Kibris Postasi reported on Friday.

Citing the minutes of meetings between Turkish Cypriot leader Mustafa Akinci and US assistant Secretary of State Victoria Nuland, and Greek and Turkish Cypriot negotiators Andreas Mavroyiannis and Ozdil Nami, which it claims to have, the paper said that the World Bank report was pessimistic regarding the outcome of ongoing talks for a settlement of the Cyprus problem because one of the key components is the compensation.

According to the report, the World Bank report was titled “The Property Component” and dated June 27, 2016, and estimated that the “net compensation cost” – that is, after subtracting the cost of properties lost by Turkish Cypriots in the south, estimated at €8 billion, from the cost of properties lost by Greek Cypriots in the north, estimated at €21 billion – are approximately €13 billion.

The report concluded that, should compensation be paid out in today’s prices, total cost would amount roughly to 60 per cent of GDP, which would mean the bankruptcy of the economy of a unified Cyprus.

Parallels were drawn in the report, the paper added, with the reunification of Germany, when neither side could afford to pay the cost of compensation, noting that, in that case, compensation was not calculated in current market prices.

Additionally, the report said, immediate payment of compensation would likely lead the property market to crash.

Akinci, Kibris Postasi reported, discussed this issue with Nuland during their meeting on July 12, addressing the question of how a referendum on an agreed solution can be successful when people are told that the first few post-solution years will see a badly-hurt economy.

According to the paper, the US official replied that, in her view, a “single-digit” number was required on the property issue, meaning under €10 billion, and that estimates placed the total cost of a solution at €20 to €30 billion.

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