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Abstract
The key argument of this article is that in the aftermath of the failure of the Annan Plan, Turkey assumed the role of the 'IMF of northern Cyprus', aiming to effect a deeper transformation in the economy and politics of the Turkish Cypriot community. Turkey imposed economic programmes that included austerity measures and the privatisation of state owned enterprises in order to tame the 'cumbersome' state in the north of Cyprus. Furthermore, AKP (Adalet ve Kalkinma Partisi [Justice and Development Party]) opted for a strategy that defines northern Cyprus as an investment area. As a result of the deliberate attempts of the AKP government, Turkish capital has significantly increased its presence in state enterprises through privatisation along with infrastructure, education, construction and tourism sectors and commercial centres. The paper argues for an analysis that would locate this neoliberal restructuring in Cyprus in a global context as well as grasping the peculiarity of the state formation and the actual agency of local dynamics in the north of Cyprus.
Keywords: economic crisis, neoliberalism, austerity, privatisation, 'TRNC, AKP
The year 2013 placed the Republic of Cyprus (RoC) in the international spotlight due to a severe economic crisis which eventually forced Cyprus to seek a bailout. The rather novel 'bailout and 'bail-in experiment included haircut levies on large depositors together with the closure of the second largest bank in the RoC; Laiki Bank. The 'remedies' recommended by the Troika also comprised austerity measures such as salary cuts and pay rise freezes in the public sector, and an increase in the retirement age and the increase in working hours.
Meanwhile, the economy of the Turkish Republic of Northern Cyprus' (hereafter TRNC'), began to experience a downturn from as early as the end of 2003 and before the greatest impact of the global financial crisis had been sensed. The economy entered a recession during 2008 when its growth rate decreased from 13.4% in 2004 to -3.4% in 2008.1 In this period the affiliation between Turkey and the Turkish Cypriot community which had traditionally been explained as a 'motherland-infant-land' relationship, transformed with Turkey assuming the role of a disciplining external force with aims to effect a deeper transformation in the economy and politics of the Turkish Cypriot community.2 In its...