Convergence and reunification in Cyprus: Scope for a virtuous circle

The issue of Cyprus reunification did not lapse with the No vote on the Annan plan in the Greek Cypriot community in April 2004. Reunification remains a central challenge - not only for political reasons but because economic convergence offers
important gains for both the Greek Cypriot South and the Turkish Cypriot North. Productivity and income levels in the North are much lower than in the South. However, changing external circumstances, with the right policies, could trigger strong and sustained convergence, bridging the wide economic gap between the two communities. Given synergies and complementarities between North and South, the scope for a virtuous circle is clear: both would benefit from sustained convergence and reunification.