PROFILE
								OFFICIAL NAME: 
								Republic of Cyprus 
								
								Geography 
								Area: 9,251 sq. km. (3,572 sq. mi.); about the 
								size of Connecticut. 
								Cities: Capital--Nicosia (pop. 197,800, 
								2000 fig.). 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 (2004 est.): government-controlled 
								area: 749,200; area administered by Turkish 
								Cypriots 218,000. 
								Annual growth rate (2004): 2.3%. 
								Ethnic groups (1960 census): Greek (77%), 
								Turkish (18%), Armenian 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: Infant mortality rate--9/1,000.
								Life expectancy--73 yrs. males; 78 yrs. 
								females. 
								Work force: Government-controlled area (2004), 
								333,100: agriculture and mining--5.3%;
								manufacturing and utilities--12.0%; 
								construction--10.7%; trade, hotels, and 
								restaurants--27.1%; transport--5.3%;
								finance, real estate, and business--11.9%;
								government, education, and health--18.4%;
								community and other services--9.3%. 
								Turkish Cypriot-administered area (2003), 
								95,000: agriculture--14.5%; 
								manufacturing and utilities--9.3%; 
								construction--19.7%; trade, and tourism--11.2%;
								transport and communication--8.7%; 
								finance--2.5%; business and personal 
								services--15.3%; public services--18.8%.
								
								Government 
								Type: Republic. 
								Independence: August 16, 1960. 
								Constitution: August 16, 1960. 
								Branches: Executive--President elected 
								to 5-yr. term. Legislative--unicameral 
								House of Representatives, members elected to 
								5-yr. terms. Judicial--Supreme Court; 
								six district courts. 
								Administrative subdivisions: Six. 
								Political parties: Greek Cypriot Community--Democratic 
								Rally (right); Democratic Party (center-right); 
								AKEL (communist); KISOS (socialist); United 
								Democrats (center-left). Turkish Cypriot 
								Community--National Unity Party (right); 
								Democrat Party (center-right); Republican 
								Turkish Party (left); Peace and Democracy 
								Movement (center-left); Communal Liberation 
								Party (center-left); National Justice Party 
								(ultra-nationalist); New Party (Turkish 
								immigrant party); United Cyprus Party (left).
								
								Suffrage: Universal at age 18. 
								Economy* 
								GDP (2004): $15.4 billion. 
								Annual real growth rate (2004): 3.6%. 
								Per capita GDP income (2004): Greek Cypriots--$20,961;
								Turkish Cypriots--about $7,350. 
								Agriculture and natural resources (4.4% 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 and construction (19.3% of GDP): 
								Types--mining, cement, construction, 
								utilities, manufacturing, chemicals, 
								non-electric machinery, textiles, footwear, 
								food, beverages, tobacco. 
								Services and tourism (76.2% of GDP): Trade, 
								restaurants, and hotels 20.4%; transport 10.9%; 
								finance, real estate, and business 23.8%; 
								government, education, and health 16.1%; and 
								community and other services 4.9%. 
								Trade (2004): Exports--$1.2 billion: 
								citrus, grapes, wine, potatoes, pharmaceuticals, 
								clothing, footwear. Major markets--EU 
								(especially the U.K. and Greece), Middle East, 
								Russia. Imports--$5.8 billion: consumer 
								goods, raw materials for industry, petroleum and 
								lubricants, food and feed grains. Major 
								suppliers--Greece, Italy, Germany, U.K. 
								(U.S. trade surplus--for 2004: $112.0 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 Turkish and Greek communities have developed 
								private colleges and state-supported 
								universities. 
								Cypriot culture is among the oldest in the 
								Mediterranean. By 3700 BC, the island was well 
								inhabited, 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 left for Turkey during the 1920s, however. 
								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 fled south while almost all Turkish 
								Cypriots fled 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 one-third. The 
								Government of the Republic of Cyprus has 
								continued as the internationally recognized 
								authority; in practice, its authority extends 
								only to the government-controlled areas. 
								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.
								
								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"). Only Turkey recognizes the "TRNC". 
								POLITICAL CONDITIONS 
								In February 2003, Greek Cypriots elected Tassos 
								Papadopoulos, leader of the center right 
								Democratic Party, as president of the Republic 
								of Cyprus. President Papadopoulos was supported 
								by a broad coalition of parties ranging from his 
								own Democratic Party to communist AKEL. 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 
								temporal as well as ecclesiastical matters. 
								"TRNC President" Mehmet Ali Talat was elected 
								in April 2005, replacing long-time nationalist 
								leader Rauf Denktash. Talat’s political rise was 
								due largely to his support of the UN Settlement 
								Plan for Cyprus (the "Annan Plan"), which Rauf 
								Denktash opposed, but which was supported by a 
								majority of Turkish Cypriots in a 2004 
								referendum. Talat’s pro-settlement, pro-EU 
								political allies in the Republican Turkish Party 
								(CTP) hold 24 of the 50 seats in the "TRNC 
								National Assembly." In March 2005, the CTP 
								agreed to form a coalition "government" with the 
								5-seat Democrat Party (DP) under the leadership 
								of CTP "Prime Minister" Ferdi Sabit Soyer and DP 
								"Deputy Prime Minister/Foreign Minister" Serdar 
								Denktash. 
								The first UN-sponsored negotiations to 
								develop institutional arrangements acceptable to 
								both communities began in 1968; several sets of 
								negotiations and other initiatives followed. 
								Turkish Cypriots focus on bizonality, security 
								guarantees, and political equality between the 
								two communities. Greek Cypriots emphasize the 
								rights of movement, property, settlement, and 
								the return of territory. Turkish Cypriots favor 
								a loose grouping of two nearly autonomous 
								societies living side by side with limited 
								contact. Greek Cypriots envision a more 
								integrated structure. 
								Direct talks began in January 2002 between 
								the Greek and Turkish Cypriot community leaders 
								under the auspices of the UN Secretary General, 
								Mr. Kofi Annan. 
								In November 2002, Secretary General Annan 
								released a comprehensive plan for the resolution 
								of the Cyprus issue. This plan was revised in 
								early December. In the lead up to the December 
								2002 EU Copenhagen Summit, intensive efforts 
								were made to gain both sides' signatures to the 
								document prior to a decision on the island's EU 
								membership. Neither side agreed to sign. The EU 
								invited the Republic of Cyprus to join on 
								December 16. 
								Following the Copenhagen Summit, the UN 
								continued dialogue with the two sides with the 
								goal of reaching a settlement prior to Cyprus's 
								signature of the EU accession treaty on April 
								16, 2003. A third version of the Annan plan was 
								put to the parties in February 2003. That same 
								month the Secretary General again visited the 
								island and asked that both leaders agree to put 
								the plan to referendum in their respective 
								communities. Also in February 2003, Tassos 
								Papadopoulos was elected as the fifth president 
								of the Republic of Cyprus. On March 10, 2003, 
								this phase of talks collapsed in The Hague when 
								the then-leader of the Turkish Cypriots, Rauf 
								Denktash, told the Secretary General he would 
								not put the Annan plan to referendum. 
								On April 23, 2003, Mr. Denktash relaxed many 
								restrictions on individuals crossing between the 
								two communities, including abolishing all 
								crossing fees. Since then, the relaxed crossing 
								procedures have led to relatively unimpeded 
								bicommunal contact for the first time since 
								1974. Since April 2003 there have been over 
								7,000,000 buffer zone crossings in both 
								directions. Greek Cypriots are currently 
								required to present identity documents at the 
								checkpoints along the buffer zone, something 
								many are reluctant to do. Greek Cypriots are 
								permitted to drive their personal vehicles in 
								the Turkish Cypriot community, provided they 
								first obtain a policy from an insurance provider 
								in the north. Turkish Cypriots are permitted to 
								cross into the government-controlled area upon 
								presentation of a Turkish Cypriot ID card. 
								Turkish Cypriots must also obtain car insurance 
								from an insurer in the south to drive their 
								personal vehicles in the government-controlled 
								area. 
								Until recently, visitors choosing to arrive 
								at non-designated airports and seaports in the 
								north were not allowed to cross the United 
								Nations-patrolled "green line" to the 
								government-controlled areas in the south. 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 south are normally able to cross 
								the green line without hindrance, although on 
								occasion difficulties are encountered at both 
								the Greek-Cypriot and Turkish-Cypriot 
								checkpoints. 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. 
								In February 2004, President Papadopoulos and 
								Rauf Denktash accepted the Secretary General's 
								invitation to resume negotiations on a 
								settlement on the basis of the Annan plan. After 
								a meeting with the Secretary General in New 
								York, talks began in Cyprus on February 19. The 
								two community leaders met nearly every day for 
								negotiations facilitated by the Secretary 
								General's Special Representative for Cyprus, Mr. 
								Alvaro De Soto. In addition, numerous technical 
								committees and subcommittees met in parallel in 
								an effort to resolve outstanding issues and 
								complete the legislative framework. Beginning on 
								March 24, the talks moved to Burgenstock, 
								Switzerland with the participation of the Prime 
								Ministers and Foreign Ministers of Greece and 
								Turkey. Negotiations concluded on March 31, and 
								the Secretary General presented the two sides 
								with a final settlement package. 
								Most Turkish Cypriot and Turkish leaders 
								supported the agreement, but most Greek Cypriot 
								leaders, including President Papadopoulos, urged 
								the Greek Cypriot public to reject the 
								settlement. On April 24, after a three-week 
								campaign marked by accusations that the 
								government of Cyprus was unfairly manipulating 
								public opinion, Cypriots on both sides of the 
								Green Line went to the polls in parallel and 
								simultaneous referenda. Turkish Cypriots voted 
								by a large majority (65% "yes" to 35% "no") to 
								accept the solution. Greek Cypriots, however, 
								voted by an even larger margin (76% "no" to 24% 
								"yes") to reject it. 
								Cyprus entered the European Union on May 1, 
								2004 as a divided island. The Secretary 
								General’s Good Offices Mission is suspended. 
								Principal Government Officials
								President of the Republic--Tassos 
								Papadopoulos 
								Foreign Minister--George Iacovou 
								Minister of Commerce, Industry, and Tourism--Yiorgos 
								Lillikas 
								Minister of Finance--Michalis Sarris 
								Minister of Interior--Andreas Christou 
								Minister of Communications and Works--Haris 
								Thrasou 
								Minister of Justice and Public Order--Doros 
								Theodorou 
								Ambassador to the United States--Euripides L. 
								Evriviades 
								Permanent Representative to the United 
								Nations--Andreas Mavroyiannis 
								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* 
								Cyprus has an open, free-market, services-based 
								economy with some light manufacturing. Cyprus's 
								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. 
								Internationally, Cyprus promotes its 
								geographical location as a "bridge" between West 
								and East, along with its educated 
								English-speaking population, moderate local 
								costs, good airline connections, and 
								telecommunications. 
								In the past 20 years, the economy has shifted 
								from agriculture to light manufacturing and 
								services. The service sector, including tourism, 
								contributes 76.2% to the GDP and employs 72.0% 
								of the labor force. Industry and construction 
								contribute 19.3% and employ 22.7% of labor. 
								Manufactured goods account for approximately 
								58.0% of domestic exports. Agriculture and 
								mining is responsible for 4.4% of GDP and 5.3% 
								of the labor force. Potatoes and citrus are the 
								principal export crops. 
								Following a classical pattern, growth rates 
								have gradually begun to decline as the Cypriot 
								economy has matured over the years. The average 
								rate of growth went from 6.1% in the 1980s, to 
								4.4% in the 1990s to 3.4% from 2000 to 2004. In 
								2004, growth picked up to 3.6%, from 1.9% in 
								2003. Unemployment was fairly constant at 3.6% 
								in 2004, while inflation declined to 2.3% in 
								2004 from 4.1% the year before. As in recent 
								years, the services sectors, and tourism in 
								particular, provided the main impetus for 
								growth. 
								Trade is vital to the Cypriot economy: the 
								island is not self-sufficient in food, and has 
								few natural resources. The trade deficit 
								increased by 18.4% in 2004, reaching $4.6 
								billion. 
								Cyprus must import fuels, most raw materials, 
								heavy machinery, and transportation equipment. 
								More than 50% of its trade is with the European 
								Union, particularly with the United Kingdom. 
								The economic outlook remained bright in 2005: 
								growth was expected to remain strong (around 
								4.0%), with low unemployment (less than 4.0%), 
								and low inflation (around 2.3%). Equally 
								important, public finances were expected to 
								continue improving, with the fiscal deficit 
								forecast to decline to 2.9% of GDP in 2005, from 
								4.2% in 2004, and 6.3% in 2003. 
								Investment Climate 
								Cyprus, a full EU member since May 1, 2004, has 
								a liberal climate for investments. On October 1, 
								2004, the Government of Cyprus lifted most 
								investment restrictions concerning non-EU 
								residents, completing earlier reforms 
								(introduced in January 2000) concerning EU 
								investors. Through this decision, the Government 
								of Cyprus has lifted most capital restrictions 
								and limits on foreign equity 
								participation/ownership, thereby granting 
								national treatment to foreign investors. Non-EU 
								investors (both natural and legal persons) may 
								now invest freely 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 and mass media.
								
								The inflow of approved foreign direct 
								investment reached $1.22 billion in 2004, 
								compared with $1.0 billion in 2003, and $1.06 
								billion in 2002. The sectoral allocation of this 
								investment in 2003 was as follows: manufacturing 
								0.8%; construction 0.8%; trading 14.6%; hotels 
								and restaurants 0.2%; transport and 
								communications 11.1%; financial intermediation 
								24.7%; real estate and business 41.0%, other 
								services 6.7%. In terms of geographical origin, 
								the majority of new investments in 2003 (58.1% 
								of total value) originated from the EU; 31.1% 
								originated from other European countries; 4.6% 
								from the United States of America; and the 
								remaining 6.2% from various other countries. 
								The gradual liberalization of foreign direct 
								investment regulations has made Cyprus 
								progressively a more attractive destination for 
								U.S. investors in recent years. Traditionally, 
								U.S. direct investment in Cyprus consisted of 
								relatively minor projects, mostly by 
								Greek-Cypriot expatriates. New investment 
								projects with U.S. involvement in 2003-2004 
								included a well-known U.S. coffee retailing 
								franchise, an equestrian center, a hair products 
								manufacturing unit, a firm trading in health and 
								natural foodstuffs, and a financial services 
								company. It should also be noted that the 
								abolition of restrictions on investment 
								originating from the EU allows U.S. investors to 
								benefit as well, provided they work through 
								subsidiaries in the EU. 
								Cyprus has good business and financial 
								services, modern telecommunications, an educated 
								labor force, good airline connections, a sound 
								legal system, and a low crime rate. Cyprus's 
								geographic location, tax incentives and modern 
								infrastructure also make it a natural hub for 
								companies looking to do business with the Middle 
								East, Eastern Europe, the former Soviet Union, 
								the European Union, and North Africa. As a 
								result, Cyprus has developed into an important 
								regional and international business center. 
								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’s acquis communautaire is 
								suspended in the area administered by Turkish 
								Cypriots pending a settlement of the island’s 
								division. 
								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, and tourism development projects. 
								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. Finally, the 
								island’s private sector has a growing appetite 
								for U.S.-made office machines, computer software 
								and data processing equipment, while U.S. food 
								franchises and apparel licensors have found 
								fertile ground for expansion in Cyprus in recent 
								years. 
								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 $112.0 
								million in 2004 (exports of $131.2 million 
								versus imports of $19.2 million--according to 
								Government of Cyprus Statistics). 
								Principal U.S. exports to Cyprus include 
								office machines and data processing equipment, 
								electrical equipment, tobacco and cigarettes, 
								passenger cars, and wheat. Principal U.S. 
								imports from Cyprus consist of Portland cement, 
								clothing, hunting rifle cartridges, canvas, 
								dairy products, and fresh fish. 
								Bilateral business ties also encompass a 
								healthy exchange in services. In 2004, the 
								inflow of services (from the United States to 
								Cyprus) was $585.9 million, against an outflow 
								(from Cyprus to the United States) of $346.7 
								million, according to Government of Cyprus 
								statistics. 
								Turkish Cypriot Economy 
								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 
								governmental investment, high freight costs, and 
								shortages of skilled labor. Despite these 
								constraints, the Turkish Cypriot economy turned 
								in an impressive performance in 2003 and 2004, 
								with growth rates of 9.6% in 2004 and 11.4% in 
								2003. Over the same period, per capita income 
								almost doubled reaching $7,350 at the end of 
								2004, compared with $4,409 in 2002. This growth 
								has been buoyed by the relative stability of the 
								Turkish Lira, the employment of over 5,000 
								Turkish Cypriots in the Greek Cypriot economy 
								where wages are significantly higher, and by a 
								boom in the education and construction sectors. 
								In 2003, the services sector accounted for 
								nearly two thirds of GDP, industry accounted for 
								11.6% of GDP, agriculture 10.6%, and 
								construction 10.1%, 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--almost 
								seven million crossings to date--between the two 
								parts of the island with no significant 
								interethnic incidents. In August 2004, new EU 
								rules allowed goods produced in the north to be 
								sold in the south provided they met EU rule of 
								origin and sanitary/phyto-sanitary requirements. 
								In May 2005, the Turkish Cypriot "authorities" 
								adopted a new regulation "mirroring" the EU 
								rules and allowing certain goods produced in the 
								south to be sold in the north. Suppliers of 
								imported products in the government-controlled 
								area cannot directly serve the Turkish Cypriot 
								market and vice versa. Despite these efforts, 
								direct trade between the two communities remains 
								very limited. 
								Turkey remains, by far, the main trading 
								partner of the area administered by Turkish 
								Cypriots, supplying 60% of imports and absorbing 
								over 40% of exports. In a landmark case, the 
								European Court of Justice (ECJ) ruled on July 5, 
								1994 against the British practice of importing 
								produce from the area based on certificates of 
								origin and phytosanitary certificates granted by 
								"TRNC" authorities. The ECJ decision stated that 
								only goods bearing certificates of origin from 
								the Government of Cyprus could be recognized for 
								trade by EU member countries. The ECJ 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 $13.8 million in 2003 (or 28% of total 
								exports). Even so, the EU continues to be the 
								second-largest trading partner of the area 
								administered by Turkish Cypriots, with a 25% 
								share of total imports and 28% share of total 
								exports. Total imports increased to $853.1 
								million in 2004 (from $477.7 million in 2003), 
								while total exports increased to $61.5 million 
								(from $50.6 million in 2003). Imports from the 
								U.S. reached $7.1 million in 2004, while exports 
								to the U.S. were less than $10,000. 
								Assistance from Turkey is crucial to the 
								Turkish Cypriot economy. Under the latest 
								economic protocol (signed in 2005), Turkey 
								undertakes to provide Turkish Cypriots loans and 
								financial assistance totaling $450 million over 
								a three-year period for public finance, tourism, 
								banking, and privatization projects. Turkey also 
								provides millions of dollars annually in the 
								form of low-interest loans to mostly Turkish 
								entrepreneurs in support of export-oriented 
								industrial production and tourism. Total Turkish 
								assistance to Turkish Cypriots since 1974 is 
								estimated to exceed $3 billion. 
								* Section refers to the government-controlled 
								area unless otherwise specified. 
								FOREIGN RELATIONS 
								The Government 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 Government 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 
								Government of Cyprus. 
								The Government of Cyprus enjoys close 
								relations with Greece. Cyprus is expanding 
								relations with Russia, Israel, Egypt, and Syria, 
								from which it purchases most of its oil. 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 country 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 
								administrations have viewed UN-led 
								inter-communal negotiations as the best means to 
								achieve a fair and permanent settlement, but 
								after the failure of the Greek Cypriots to 
								approve the comprehensive settlement plan in 
								April 2004, the path to a settlement is unclear.
								
								The United States is working closely with 
								Cyprus in the war on terrorism. A Mutual Legal 
								Assistance Treaty, which has been in force since 
								September 18, 2002, facilitates bilateral 
								cooperation. 
								The United States has channeled $305 million 
								in assistance to the two communities through 
								bi-communal projects, the UN Office of Project 
								Services, the UN High Commissioner for Refugees, 
								and the Cyprus Red Cross since the mid-1970s. 
								The United States now provides approximately 
								$13.5 million annually to promote bi-communal 
								projects and finance U.S. scholarships for Greek 
								and Turkish Cypriots. 
								Principal U.S. Officials 
								Ambassador--Ronald 
								L. Schlicher 
								Deputy Chief of Mission--Jane B. Zimmerman 
								Consular Officer--Henry Hand 
								Defense Attaché--Col. Steve G. Boukedes 
								Economic/Commercial Officer--Michael Dixon 
								Management Officer--Katherine Munchmeyer 
								Political Officer--Matthew A. Palmer 
								Public Affairs Officer--Thomas S. Miller 
								USAID--Thomas A. Dailey 
								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.