Turkish foreign aid to Northern Cyprus: a mother’s blessing or curse?

ABSTRACT

This paper talks about the impact of Turkish aid on the macroeconomic development of Northern Cyprus. Since the physical division of the island of Cyprus in 1974, Turkey has been sending considerable financial aid to the de-facto state in its northern part, but the impact of this aid on local economics and politics has been controversial. We show that foreign aid has not been directly relevant for economic growth of Northern Cyprus. We suggest that persistence of aid, despite its negative impacts, can be explained by Turkey’s geopolitical interests on the island.

KEYWORDS:

• Foreign aid
• Northern Cyprus
• Turkish aid
• de-facto states
• Samaritan dilemma

Disclosure statement

The authors confirm that there are no known conflicts of interest associated with this publication and there has been no significant financial support for this work that could have influenced its outcome.

Notes

1. Source: http://wikileaks.org/plusd/cables/06NICOSIA47_a.html

2. Turkey also has been financing large scale projects (electricity plant, dam, airport) directly which are not part of the aid we discuss in this paper. There is unfortunately no annual historical data on such finances.

3. We did not have a ‘loan only’ component because the sample size gets too small for any meaningful statistical analysis. We would like to thank an anonymous referee for suggesting this breakdown.

4. We would like to thank an anonymous referee for motivating this exercise.

5. Source: http://wikileaks.org/plusd/cables/09NICOSIA186_a.html

6. Erdoğan met by protests from Turkish Cypriots during visit, The Guardian, 15 November 2020: https://www.theguardian.com/world/2020/nov/15/erdogan-met-by-protests-from-turkish-cypriots-during-visit-northern-cyprus

7. Nikolaos Stelya, ‘Ankara said to have intervened in leadership race to determine Turkish Cyprus’ new PM’, Duvar English, 7 November 2020, accessed at https://www.duvarenglish.com/diplomacy/2020/11/07/ankara-said-to-have-intervened-in-turkish-cyprus-pm-elections.

Additional information

Notes on contributors

Yonca Özdemir

Tufan Ekici is a quantitative social scientist with a background in Economics. He obtained his PhD from the Ohio State University in 2006 and has worked in multiple higher education institutions since then. His main research interests include labour economics, political economy and behavioural economics. Ekici is also the author of the book titled ‘Political and Economic History of Northern Cyprus: A Discordant Polity’.

Yonca Özdemir is an assistant professor at the Political Science and International Relations Program of the Middle East Technical University, Northern Cyprus Campus. She holds a PhD from University of Pittsburgh in Public and International Affairs. She specializes in international political economy and comparative political economy. Her works include both cross-national studies and also case studies of Turkey, Cyprus and some Latin American countries. She has published in several journals including Contemporary Politics, Middle East Studies, and Revista Brasileira de Politica Internacional.