Updated February 14, 2019
Cyprus
The island of Cyprus is located in the Eastern
The U.N. monitors a buffer zone (Green Line) across the
Mediterranean, 65 miles off the southern coast of Turkey.
island between the two sides. Over the past 44 years, the
After gaining independence from Great Britain in 1960,
U.N. has facilitated unsuccessful negotiations to unite the
Cyprus’s success as a politically stable, united republic
two Cypriot communities under a new federal system
began to unravel in 1963, as relations between the Greek
overseeing two separate states. (For more on the unification
Cypriot majority and the Turkish Cypriots deteriorated. In
negotiations, see CRS Report R41136, Cyprus:
1964, the Turkish Cypriots, objecting to revisions made to
Reunification Proving Elusive.)
the constitution by the majority, withdrew from most
national institutions and began to administer their own
The Republic entered the European Union (EU) on May 1,
affairs. Sporadic, and sometimes intense, intercommunal
2004. Although the entire island of Cyprus is considered
violence prompted the United Nations Security Council to
part of the EU, only Greek Cypriots enjoy the full benefits
order a U.N. peacekeeping force to the island. In 1974, a
of EU membership. The EU’s acquis communautaire, the
coup against the Greek Cypriot government, intended to
union’s rules and procedures, has been suspended in the
unify Cyprus with Greece, led to the deployment of Turkish
area administered by Turkish Cypriots pending a political
military forces to northern Cyprus. Since then, the island
settlement. Turkish Cypriots may enter the South and apply
has been politically and physically divided; the
for EU citizenship and passports. The Republic adopted the
internationally recognized Republic of Cyprus (Republic)
euro as its currency in January 2008; the Turkish lira is the
governs about two-thirds of the island, and the Turkish
official currency of the Turkish Cypriot area, although the
Cypriots administer an area in the northern third of the
euro is accepted.
island. In 1983, the Turkish Cypriots declared their
independence and established the Turkish Republic of
Political Situation
Northern Cyprus (TRNC). The TRNC is recognized only
The Republic is governed by a president and a 56-seat
by Turkey.
unicameral House of Representatives, both elected for five-
year terms. Nicos Anastasiades of the Democratic Rally
Cyprus: Basic Facts
(DISY) Party was elected president of the Republic in
Area: Approximately the size of Connecticut.
February 2013 and reelected in February 2018. After the
2016 parliamentary elections, eight political parties sit in
Political Division: Republic of Cyprus controls the southern
the House; the DISY party is the largest.
two-thirds of the island. Turkish Cypriots administer the
northern one-third of the island.
In the north, the Turkish Cypriots administer their own
Population: Approximately 1.2 million; some 860,000 Greek
institutions with an elected “president,” “prime minister,”
Cypriots and some 251,000 ethnic Turkish Cypriots and
and “National Assembly,” which exercise joint executive
mainland Turks. Maronites and Armenians represent very
powers. Mustafa Akinci was elected “president” for a five-
small minorities.
year term in April 2015. Parliamentary elections were held
Capital: Nicosia (for both the Republic of Cyprus and
in January 2018. Although the conservative National Unity
Turkish Cypriots).
Party (UBP), which led the previous coalition government,
Languages: Greek and English in the Republic of Cyprus and
won the most seats, the new government is led by the
small communities in the North; Turkish and English in the
Republican Turkish Party without UBP participation.
North.
The Greek Cypriots do not recognize the TRNC or the
Religion: Greek Orthodox in the South and small
elections in the North. They do not refer to Akinci as
communities in the North; secular Islam in the North.
president, and they refer to the North as the “occupied
Gross Domestic Product (GDP): In the Republic, GDP is
area.” Similarly, the Turkish Cypriots do not recognize the
$22 billion; per capita GDP is $30,000; In North Cyprus, GDP
Republic and refer to it as “South Cyprus.”
is $3.9 billion (approx.); per capita GDP is $14,100 (approx.).
Political Leaders: Republic of Cyprus: President Nicos
The Republic’s foreign policy generally follows that of the
Anastasiades, Foreign Minister Nicos Christodoulides, Energy
EU, although it historically has been tied closely to Greece
Minister Giorgos Lakkotrypis.
and its policies. The Republic maintains close relations with
Leaders of Turkish Cypriots: “President” Mustafa Akinci,
Russia, a major source of tourism, investment, and offshore
“Prime Minister” Tufan Erhurman, “Foreign Minister” Kudret
banking, although the Republic has supported EU sanctions
Ozersay.
on Russia in reaction to the Ukraine crisis. More recently,
relations with Israel and Egypt, by virtue of a mutual
Sources: Economist Intelligence Unit; International Monetary
interest in energy exploration and development in the
Fund.
Eastern Mediterranean, have expanded. Relations with
Turkey, Cyprus’s largest regional neighbor, have been
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Cyprus
tense. Turkey does not recognize the Republic, has opposed
EU has become the Turkish Cypriots’ second-largest
the Republic’s energy exploration, and has been a decisive
trading partner.
player in the island’s reunification negotiations.
Energy
Turkish Cypriot foreign policy generally mirrors that of
Turkey, although the Turkish Cypriots have long sought
The Republic claims an exclusive economic zone (EEZ)
increased diplomatic and trade relations with other
that includes a 200-mile stretch of the Eastern
countries. An estimated 25,000 Turkish military forces are
Mediterranean extending southward toward Israel, Egypt,
stationed in the North.
and Lebanon. In December 2011, Noble Energy, a Texas-
based energy company, announced the discovery of natural
Economic Conditions
gas in Cyprus’s Aphrodite gas field. Many felt at the time
that the discovery would place Cyprus on Europe’s energy
The Republic has an open, free-market economy. The
map. Subsequent rounds of drilling, by France’s TOTAL,
services sector, including a large tourist industry,
Italy’s ENI, and an Italian/South Korean consortium
contributes approximately 75% to the GDP and employs
(ENI/KOGAS), have failed to locate any significant
about 72% of the labor force.
additional gas. Exxon-Mobile also is exploring for gas.
The Greek Cypriot economy traditionally has been linked to
Cyprus, Israel, Greece, and Italy have moved forward on a
the Greek economy. Between 2009 and 2013, when the
potential gas pipeline to Europe. In addition, Cyprus and
global economic and Eurozone crises hit Greece, resulting
Egypt have signed agreements to pipe future Cypriot/Israeli
in a major economic and financial crisis, the Cypriot
gas to Egypt’s liquefied natural gas facilities for possible
economy also declined. In 2011, Cypriot banks ran into
future export to outside markets. A more economic and
liquidity problems as the number of nonperforming loans in
technically practical gas pipeline across Cyprus to Turkey
both Cyprus and Greece began to increase. In 2012,
and into Europe would depend on an overall solution to the
representatives of the European Commission, European
island’s division.
Central Bank, and International Monetary Fund (IMF)
Turkey and the Turkish Cypriots have objected to the
began work on an assistance program for the Republic that
drilling and threatened to take action if it continues. In
included implementing austerity and reform initiatives. The
September 2011, Ankara and the Turkish Cypriots signed
rescue program included a loan of €10 billion to cover
an agreement authorizing the Turkish Petroleum
maturing debt held by foreign institutions and the
Corporation to explore for energy resources in areas off the
recapitalization and merger of weakened banks. Cyprus
coast of Cyprus, including parts of the Republic’s EEZ that
emerged from its financial crisis and the EU/IMF-backed
Turkey claims as part of its EEZ. Turkish naval vessels
bailout program in March 2016. According to Eurostat, real
have continually conducted operations in the Republic’s
GDP grew by about 4.0% in 2018. The Economist
EEZ and have harassed other gas-exploration operations,
Intelligence Unit indicates that economic growth will hover
raising tensions between Ankara and Nicosia and
around 3% in 2019 and continue on a healthy pace through
negatively impacting the settlement negotiations.
2021.
The economy of the Turkish Cypriot-administered area is
U.S.-Cyprus Relations
dominated by the services sector, including tourism, and
U.S. relations with the Republic have been considered good
education, with smaller trade, agriculture, and light
and are expanding. Relations with the Turkish Cypriots are
manufacturing sectors. The economy operates on a free-
considered unofficial but cordial. The United States regards
market basis but remains highly dependent on financial
the current division of Cyprus as an issue in need of a
assistance from Turkey, including low-interest loans mostly
solution and has supported negotiations to achieve a fair
to Turkish entrepreneurs in support of export-oriented
and permanent settlement. Although offshore banking
industrial production and tourism. Economic growth (5% in
operations and relations with Russia have raised concerns
2018) has been handicapped by the political isolation of
about money laundering and Russian influence, the United
Turkish Cypriots, the lack of private and public
States has expressed its satisfaction with the Republic’s
investments, high freight costs, and skilled-labor shortages.
anti-money laundering policies. The United States also
In 2018, exports amounted to $105 million and imports
supports the Republic’s policies toward the prevention of
totaled around $1.7 billion. Turkey remains the Turkish
human trafficking.
Cypriots’ main trading partner, supplying 60% of imports
and absorbing around 40% of exports. A pipeline
The United States has taken the position that the Republic
transporting fresh water from mainland Turkey to north
has the right to explore for natural resources within its EZZ
Cyprus opened in late 2015. An electrical cable from
but that any revenues that may result from the discovery of
Turkey will supply additional electricity to North Cyprus.
natural gas should benefit both the Greek and the Turkish
Cypriot communities. The United States hopes that tensions
Direct preferential trade between North Cyprus and EU
between Cyprus and Ankara over the energy issue do not
member states is restricted. However, since August 2004,
pose significant problems in the regional attempt to
EU rules have allowed goods produced or substantially
establish the Eastern Mediterranean as a new energy area.
transformed in the area administered by Turkish Cypriots to
Vincent L. Morelli, Section Research Manager
be sold duty-free to consumers in the Republic and, through
the Republic, to the rest of the EU. Under these rules, the
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Cyprus



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https://crsreports.congress.gov | IF10749 · VERSION 5 · UPDATED

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