THE ECONOMICAL STRUCTURE IN THE OCCUPIED AREAS OF CYPRUS

It has been almost three years now that 40% of our island has been under the occupation of the Turkish NATO Armed Forces. This northern part, which was formed as a separate economic and political entity after the transportation of the Turkish Cypriots living outside the occupied areas with the help of various promises or under pressure and threats, can be regarded practically as a district of Turkey.

The TMT of Denktas, which has been forcing the Turkish Cypriots since 1958 to live under fascist oppression and terror, has legalized its anti-democratic regime with the declaration of the so-called “Turkish Cypriot Federated State” according to the partition plans of imperialism. The Turkish Cypriot leadership, which has been supported by financial aids of the Turkish governments since the uprising of 1963, is under the complete control of the Turkish military clique and the collaborationist Turkish bourgeosie. The Commandments of the Invasion Forces and the Turkish Armed Forces, the Turkish Embassy in Nicosia and the Denktas Administration are the institutions, which govern the economic and political life in the North.

The economy of the occupied areas has a character of being dependent on abroad and aimed at consumption rather than production. Ten thousands of Turkish Cypriot producers, who were uprooted from their fields, gardens and working places in the South are forced now to live as consumers. For example every month 38,000 persons receive foreign-oriented food-aids. Among them are the mainland Turks, who are settled in Cyprus according to the plans of raising the number of the Turkish Cypriot minority in Cyprus.

The Budget: As it is stated in the Report of the Ministry of Finance, 1974 Budget was balanced with the help of the financial aid, sent from Turkey, but the 1975 budget gave a deficit of 4.3 million Cyprus pounds (CL). The “FCFS”, which is indebted to various banks and funds, closed its 1976 Budget with a deficit of 4 million CL. The 1977 Budget, which amounts over 37 Million CL will give again a deficit of 3.6 million CL. The millions of pounds, which are sent from Turkey in order to keep up the pro-imperialist puppet- government, are being used for the over-crowded civil servants of the so-called state and for a handful of capitalists, who are supporting the leadership. The Denktas Administration takes on one hand debts from local banks and on the other hand helps the so-called “Public Economical Establishments” to get debts under its guarantee. The “TCFS”, which is in a bad economic situation and borrows money even from private persons, is in a state of luxurious expenditure and waste, for example, when it is regarded that 2,000 CL can be wasted for a cock-tail party in Nicosia’s Saray Hotel.

Exchange and Banks: The import-rights of many goods are in the hands of a few establishments or persons. They realize the imports through the so-called “non-equivalent exchange” system or with the exchange bought from the black market. On one side, sterling, dollars and German marks are bought with the Cyprus pounds, kept in the banks by the money-mongers, from the South through the British bases and brought to the occupied areas, where they are so much needed. On the other hand, the local banks do not use the official exchange rate, when they sell it. They have fixed a 36 Turkish pounds (TL) buying value for the CL, but it is sold between 40 and 45 TL. The sterling is sold also for 33 TL, while its real value costs 29 TL.

The Nicosia Turkish Bank Ltd, which made CL business with a 100% profit, especially soon after the invasion, using the insufficient legal regulations about foreign exchange, has gained a great amount of profit, when the Turkish pound was introduced in the occupied areas as the official currency. The Nicosia Turkish Bank, which has saving-accounts of over 10 million CL, pays in TL to the account owners since June 1976. The Turkish Cypriot negotiator Umit S. Onan is the chairman of the Board of this Bank and the state-president Denktas together with his wife are the share-holders of Saray Credit Company, which is a branch of the Nicosia Turkish Bank and embraces all of the big capitalists of the Turkish Cypriot community.

According to the November 1976 statistics the amount of the whole savings in all of the banks was 46.4 million CL and the amount of the reserves was about 20 million CL. The Banks in general give credit to the ones, who accumulate capital, but they do not satisfy the credit demands of the small producers and the handicraftsmen.  The money-mongers get credit from the local banks with low-rate interests and send them to the European banks, where they receive high interests. In this way, they earn both the differences between the interests and also they do not give taxes, because of their debts to the banks.

The Denktas Administration, which wants to use also the money of the small savings in the banks, has realized in the first half of 1976 only the 29% of its planned investments and later put thousands of workers out of work from various projects on the ground that there were no funds anymore. Today the official figure of unemployment has reached to 4,000 and the number of the Turkish Cypriots, wanting to emigrate to foreign countries as workers, is over 3,000. While the great masses of people have to struggle against unemployment, soaring prices and black marketing, the cabinet approved a project of opening a big gambling centre in Famagusta! On the other hand the bill for the tax reform is waiting for the last two years on the agenda of the cabinet.

The Agricultural Bank of Republic of Turkey opened a branch in the occupied North and functions now as the Central Bank of the “TCFS”. The new law of banks gave the right to this bank to control and coordinate the activities of the banks, existing within the boundaries of the so-called TCFS. But the foreign banks do not want to implement the order of this law. They have not given the legal equivalent of their capital to the Central Bank and not brought their capital in foreign currency to the North, not taken special permission for exchange and not laid their foreign currency in the Central Bank.

On the other hand, the local banks are against the activities of the Agricultural Bank, which deals also with trade, when it has to function only as a Central Bank.

Production and Consumption: The various factories, work-places and hotels, which were left by the Greek Cypriots and regarded as a great source after the invasion, are under the management of various institutions, called “Public Economical Establishments” (PEE’s), which are formed by the common capital of Turkey and the Turkish Cypriot Federated State. This kind of management, which is a form of state-capitalism, brings benefit only to a certain group of well-paid directors, who are appointed directly from Turkey. With this, the Turkish monopoly-capitalists succeeded to put their representatives to the high posts in the PEE’s and not to let some factories to function, so that they can import their own products into the colonized North. For example, the margarine production was not able to be realized, because of this reason.

In general the PEE’s do not contribute much to the economy of the North. In fact the whole economy is built upon consumption rather than production and only the agricultural sector is active. The Turkish Cypriot trade bourgeosie is satisfied with the situation, because their commissions and profits are higher than the ones in self-production, which will also bring some other problems for them.

According the official reports, the “TCFS” imported during 1976, 30 million CL worth goods from Turkey (%47) and the EEC countries like the UK, the Federal Republic of Germany, France and Holland. Among the goods imported from Turkey, many of which are not subjected to custom taxes, are primarily foodstuff, fruits, clothes, petroleum products, cement and newspapers. From the EEC countries, engines and transport vehicles, clothes, kitchen- and glass-ware are imported. Instead of promoting the local commodity production, the Denktas Administration is busy with the formalities of ever-rising imported goods, which bring high profits to a handful of capitalists.

The export from the occupied North, which amounts 7 million CL, is made to the UK, Turkey, Holland and Italy. Among the agricultural products, which make 75% of all the export, are citrus, potato, grinded carop, carrot and tobacco. Wool, leather, halloumi and bran are also exported.

The Public Economical Establishments: These establishments are copied with their name and structure from Turkey, where they number over 30 and only a few of them profit. They are used to make big profits for the private companies or persons by exploiting the state capital. The Turkish Cypriot counterparts, which are governed mostly by the mainland Turkish directors, are not subjected to the local trade-laws. The high costs of their products, unskilled usage of raw material, working with law capacity, having no plan for investment and marketing, giving high salaries to their directors and low wages to their workers, not accepting the right of trade-union activities are the main features of the PEE’s. During a debate in the House, these establishments are accused of not accepting the authority of the “TCFS” and having no function other than wasting the money of the people. There is no control of their expenditure and activities. The “TCFS” hesitates to do so, because the directors have come from the “motherland Turkey”.

ETI (Industry, Trade and Management) Enterprises Ltd. Co.: This company, which was founded in 1971, before the PEE’s, with a capital of 200,000 CL, imports more than 50% of the consumer goods in the Turkish Cypriot community. Today 25 % of its capital belongs to private persons and the rest to the Turkish Communal Chamber Development Fund. It is a product of the “From Turk to Turk campaign”, which is the economical basis of Denktas’s Partition Policy. Among the 50 private share-holders are the “state-president” Denktas and some ministers. This shows also the influence of the ETI in the political life. The Turkish Cypriot negotiator, Umit S. Onan is the legal adviser of the ETI. The other share-holders are the Nicosia Turkish Bank, whose chairman of the Board is again Mr. Onan, the İş Bank of Turkey – the biggest institution of the Turkish monopoly capital and the Evkaf.

The ETI, which made a trade of total 1.5 million CL during the period of 1971-74, has increased its activities after the invasion. It imports over 500 various agricultural and industrial products from Turkey and the EEC countries. The ETI has the monopoly rights of importing construction material, drugs and other medical equipment, marketing the spirits and the cigarettes of the Turkish state-monopoly in Cyprus and opening duty-free shops. It has imported and distributed the petroleum until June 1975 and also in the same year exported pyrit-mines worth 615.768 CL on behalf of the “TCFS”.

Beside the distribution of various auto spare-parts, the ETI is the general agent of the Renault cars, which are produced in Turkey by the OYAK Co., the economical holding of the Turkish Army.

The goods, imported from Turkey and Europe, are transported by the three TIR heavy cars, which have UK registration and by a company-owned ship “Seabird II, which has a Panama flag. The ETI works also in cooperation with the other foreign companies.

The ETI company, which is free from taxation for ten years, makes business with 44% profit and only in 1975 made a profit of 750.000 CL. This company, which is one of the most responsible reasons for the rocketing prices in the North is not controlled, on the contrary, it gets aid from the “TCFS”. At the end of 1976, the ETI applied to the Ministry of Commerce and Industry and wanted its capital to be raised from 200.000 CL to 5 million CL. Besides the 1.3 million CL debt, it received from the local banks with the state-guarantee, ETI asked for another 1.8 million CL credit from the “state”. The ETI pays yearly 125.000 CL for the interests of its debts. This money is also put on the prices of its goods.

The ETI, whose financial responsibility has gone too much ahead of its capital, is in a big waste, disorder and favouritism. The chairman of the board, Ozalp Sarica, has 11 Renault cars at his disposal and a from-the-company-furnished guest house. 12 relatives of the director-general have well-paid posts in the company. Another acquaintance, who had a 85 CL salary before, is appointed to the ETI with a salary of 200 CL. The ETI, which has 130 permanent staff and 150 seasonal workers for the citrus packing centre, pays for its 14 depots and offices yearly 50.000 CL, rented from the big land-owners. The ETI’s representatives in Turkey get 20 CL daily and the representatives in Europe 30 CL a day for their accomodation. In 1975, 7300 CL were spent for the Turkish branch and 36.000 CL for the British branch only in 9 months.

Turkish Cypriot Industrial Enterprises Holding Ltd. Co.: It was founded in February 1975 with 100 million TL capital with the cooperation of the “TCFS” and the PEE’s of Turkey. Half of the total 200 shares belong to the Turkish Cypriot Communal Chamber Development Fund. “TCFS” gave raw material and equipment in the value of 250-300 million TL as the equivalent of 50 million TL. The rest of the shares belong to the following Turkish PEE’s: 40 shares Sumerbank, 20 shares Machine and Chemistry Industry Corporation and the Petro-Chemistry Company, Agricultural Equipment Corporation, Milk Industry Corporation and meat and Fish Corporation 10 shares each.

Under this industrial holding, there are 40 factories and workplaces out of 60, which were left after the invasion by the Greek Cypriots. The remaining 20 factories were supposed to be rented by the private sector, according to a cabinet decision. Now the company owns workplaces in the value of 80 million TL and 1,270 persons, out of which 950 are workers, working in these installations. There are 6 production branches, called Machine Production and Electric, Textile and Clothing, Plastic, Food, Cosmetics and Paint Industries. The company’s trade value of 20 million TL in 1975 reached to 60 million TL in 1976. It is because of this that the raw material and the stocks of finished products were used and sold out. When it was asked to give taxes of 2 million TL, out of their 4.717.000 TL profit, the company did not do so and gave as a pretext that they have a deficit. Although the company gets state credits and financial aids, it is indebted to some private and official institutions, to the banks and to the state. When the workers went on strike at the beginning of 1976, claiming that the company did not implement some of its obligations and that they have lost 1.5 million TL, the cabinet of the “TCFS” banned the strike.

On the other hand, the retired Army officers from Turkey are in majority among the well-paid members of the boards and the directors. The general director, Orhan Alicli is educated in military electronics in the USA and after his retirement, he worked as a coordinator in the Koc Holding of Turkey. The chairman of the board is also a mainland Turk, who was previously a financial expert in the Ministry of Finance.

Turkish Cypriot Petroleum Ltd. Co.: It is founded by the ETI, which had imported petroleum from Turkey for one year with 49% share and by the Turkish Petroleum Company with 51% share. The company, which made its foundation more attractive promising that it will make petroleum research in the Northern occupied areas, distributes only the petroleum, but has 46 personnel, together with a general director, Sureyya Koc. Members of the board and many other directors are all appointed from Turkey. The general director has a monthly salary of 28,000 TL and gets allowance for his house, although he lives in a state-owned house. He has also another house at his disposal in Bellapais. Only in one year, he received 86,113 TL as travelling allowance. He threatens the local Turkish Cypriot officials, when the activities of his company are criticized. During the election campaign, he had made pressure on some candidates on behalf of the Turkish government. The chairman of the board, Rasim Demir has a monthly salary of 5,500 TL and he had been paid 40,000 TL only in one year as travelling allowances. The money per hour, that the members of the board get, is 10 fold higher than the Prime Minister and the Speaker of the House.

There was a great abuse in the construction of the petroleum tanks and LPG filling installations in Famagusta. Although two big houses are put at the disposal of the company as guest houses, the officials, who live in these houses, get allowances for accomodation and travelling. This company, which can bring 16 million TL taxes yearly according to the estimates, is not subject to taxation.

Cyprus Fruit and Vegetable Enterprises Ltd. Co. (Cypfruvex): It was founded with 10 million TL capital by the “TCFS” for the export and marketing of the citrus products, left by the Greek Cypriot producers in the occupied areas. When its technical contract with the Turkish “Meysu Fruit-juice Company” did not work in 1975, it paid to this firm 1.5 million TL as compensation. Later Cypfruvex gave the distribution rights of its product “Meysan” to the local companies, ETI Ltd, Sanpa Ltd and Ahmet Rasit Mustafa and Co.

The distributor of Cypfruvex in England is a Jewish company, called Rudolfo. Cypfruvex has paid 10,000 CL instead of 3,000 CL, in order to buy half of the shares of this company. The distribution of the citrus products in Holland is done by the Euroface Company. The accounts of both companies were not given to the Investigation Commission of the House, when they were asked to do so.

At the end of August 1976, Cypfruvex had a debt of 93,857,723 TL to the banks and various companies. The total export of Cypfruvex in 1976 amounts 1.250,000 CL. The marketing of its products are not well-organized.

Turkish Cypriot Tourism Enterprises Ltd. Co: This company, too, was founded with the cooperation of the Turkish state capital and the Turkish Cypriot Communal Chamber Development Fund with the aim of making the best use of the hotels in Famagusta and Kyrenia, left by the Greek Cypriots after the invasion. The bed capacity is 1,350. Mainland Turks are appointed as directors of various hotels and they get high salaries. ,

The management did not pay the income-tax and savings-shares, which were cut from the wages of its workers without their consent, to the related institutions, saying that the company does not have money. An unlimited credit was given to a certain travelling agency together with the right of getting hotel-contingent without pre-payment. This agency has a debt of 1 million TL to the company since one year. The general director of the Tourism Company lives in a private, luxurious house in Kyrenia, whereas 84% of the hotels are in Famagusta.

Turkish Cypriot Airlines Company: It was founded at the end of 1975 with the equal capital of 20 million TL by the “TCFS” and the Turkish Airlines (THY). It has the monopoly right of using the Ercan (Timbou) airport. It was disclosed that it had made a net profit of 13 million TL in 1976. A bureau, which was rented in Istanbul Sheraton Hotel, maintains the contact with the THY. The company does not have its own airplanes and makes air-transport with the airplanes rented from the THY. It is alleged that its high fares are obstructing the development of tourism in the North and that it makes 60% reduction for some certain persons and gives free ticket to some persons, close to the leadership.

Turkish Cypriot Maritime Lines: Like the Airlines Company, it functions as an agency of the Navigation Bank of Turkey in Cyprus, which owns 50% of its shares. It has a capital of 30 million TL and a ship of 844 tons, named “MS Barış”, which carries Panama flag and was bought from Denmark.

Turkish Cypriot Tobacco Industry Ltd. Co. and Turkish Spirits Factory (Taşel): Both were founded with a 51% share of the Turkish Monopoly Administration for Tobacco and Spirits and 49% share of the Turkish Cypriot Communal Chamber Development Fund. “Harman” and “Barış” cigarettes are produced from the tobacco, imported from Turkey and the Spirit Factory works with primitive methods. Those low-quality products are not sold widely, because the import of both cigarettes and spirits is being done through a big smuggling net, which is formed by military and civil officials. They smuggle from the South or American cigarettes from Turkey.

The Private Sector: Apart from the PEE’s, whose structure of capital and activities are examined above, the Turkish Cypriot private sector, either distributes the goods, which are imported by the ETI or imports itself commodity products directly from Turkey or Europe.

The Turkish Cypriot trade bourgeosie, which did not want to participate in the formation of the PEE’s in the early period, wants now the PEE’s, to be handed over to the private sector. The chairman of the Turkish Cypriot Chamber of Commerce, Mehmet Can told in a statement he gave on the occasion of Vehbi Koc’s visit (one of the biggest monopolists in Turkey) to the occupied areas: “We receive with pleasure this visit of the Koc Holding’s managers, as a first step in the way of the unification of our economy with Turkey. We believe that the PEE’s have fulfilled their duties and that it is now the time to hand over this duty to the serious holdings and public companies.”

The Turkish Cypriot capitalists, who are not willing to make long-term investments, are aiming with this proposal both to get their own share out of the exploitation in the PEE’s, which are very appropriate for practicing usury and to help the Turkish monopolies, whose local distributors they are, to rule over the economic life in the North.

On the other hand, apart from being a small market for them, the Turkish monopoly capitalists want to use the Greek-Cypriot-owned industrial and touristic installations, which are not functioning in full capacity. But until today the various attempts have not given any result to this effect. After the Koc Holding, a new group of businessmen from the Dogu Holding visited the island in the last May for the same purpose.

Meanwhile, in the mid-February, the Denktas Administration accepted a project of opening a free-trade area in Famagusta, which was the proposal of some Turkish and EEC monopolies for a long time. According to the project, a free-trade area of 30,000 square metres will be established around the Famagusta sea-port. Industrial products, which will be produced with the duty-free raw material or which will be assembled there, will be exported to the Middle East countries. There will be a reduction of custom duties for the imports made from this area, where some other goods can be freely exchanged as well.

Although it is not sure how far this project will be realized, it seems that imperialism wants to use a partitioned Cyprus for other purposes other than as a military base. The puppet administration of Denktas does as much as it can and does not hesitate of showing its loyalty to its imperialist patrons. Some Common Market circles are helping the “TCFS” in the realization of these plans.

Conclusions: The pro-imperialist “Turkish Cypriot Federated State”, which is formed on the expense of trampling the independence, sovereignty and territorial integrity of the Republic of Cyprus and of uprooting hundreds of thousands of people is today in an ever-deepening economic, political and social crisis. The money spent for the over-crowded civil servants of the “State” and for the general expenditure exceeds 20 million CL and only the salaries paid to the personnel of the PEE’s amount over 1.3 million CL. The “TCFS” is in a big waste and in short, it can be said that it is swimming in debts.

Comparing to the South, the cost of living is 116% higher in the occupied areas. On the other hand, the per capita national income has dropped 33%, compared to the last year. Soaring prices, unemployment, black-marketing, abuses, usury and thefts are growing higher and higher.

The reaction of the people is getting bigger, especially to the various fascist and reactionary elements sent from Turkey to the occupied areas, in order to support the administration of Denktas and the TMT. These chauvinist groups, which are against the friendship and the cooperation of the two communities in Cyprus, function under the protection and financial support of the capitalist circles in Turkey and in Cyprus. The Department of Youth, Culture and Sports, which is in the hands of the fascists, headed by an old TMT commander, has received an amount of 200,000 CL from the budget.

According to a statement of the leader of this fascist movement, 200 youths in 1975 and 800 youths in 1976 were trained in the special summer camps. Some thousands of fascists, who are fanatic members of the fascist Nationalist Action Party of Turkey, were settled also in various villages and towns in the occupied areas. On the other hand, religious and reactionary people from Turkey have come to Cyprus in order to teach “religion and morals” to the Turkish Cypriots, whom they accuse of not believing in God and not exercising the orders of the Islam religion. Religion lessons are introduced in the schools, where the fascists, too, want to raise their influence.

The Turkish Cypriot people, who is struggling against the imperialist plans of NATO, aimed at destroying the Republic of Cyprus by declaring a separate state and who does not approve the partitionist policy of the Denktas clique, wants to live again together with their Greek compatriots in a Cyprus, which will be independent, sovereign, territorially integral, non-aligned and without any military bases, free from the intervention of foreign countries in its internal affairs.

The deliberate keeping-away of the Turkish Cypriots from production is aimed to stop their growing consciousness in the process of production. 30 strikes took place in 1976, which were participated by over 8,000 workers and civil servants and organized by the progressive trade unions. Five of these strikes were banned by the Denktas Administration on the ground of endangering the social life and the welfare of the people. In this year, two such bans took place and at the end of last month, the number of the strikes against the anti-democratic administration reached to twenty.

The Turkish Cypriot people has seen and lived what the partitionist policy of the leadership, which says that it speaks for the whole Turkish Cypriots, brought for them. Despite the very difficult conditions under the rule of an invasion army of 40,000, the fascist TMT and the pro-imperialist administration of Denktas, the Turkish Cypriot working people will carry on its struggle for a united, territorially integral, sovereign, demilitarized and fully independent Cyprus.  

(An abridged version of this article in Turkish was published in socialist weekly Kitle in Istanbul on 15 November 1977, No.185. It was also sent on 12 June 1977 under the name “Hasan Mehmet” to Haravghi newspaper in Nicosia, but it was not published in Greek.)