Sedat Ergin, the Turkish foreign-affairs veteran columnist and the mass-circulation daily Hurriyet's Ankara Bureau Chief is one observer that I follow closely on Cyprus. For the last couple of weeks Ergin has been examining one aspect of the Annan Plan after another, helping us envision the future of the United Cyprus through a matrix of fresh data and cool-headed inquiry.
As the parties including the United States, the European Union, Japan, and the World Bank are getting ready for the Cyprus Donors Conference on April 15, Ergin provided a run down of the monetary costs of putting the two communities together again. It seems like billions of dollars are needed right off the bat to preempt any quick disillusionment with the Plan.
Here are the numbers provided by Ergin:
The Annan Plan projects a deadline of 42 months to finish building new housing for the settlers who would be moving from the South to the North and vice-versa. On December 31, 2007 all settlers must be in their new homes, with their titles in hand.
A round figure for the number of families that would be affected by this new wave of migration is put at 15,000, which roughly corresponds to 50,000 individual settlers. Annan Plan foresees the construction of high-quality housing for the settlers, varying between 70 sq-m for a family of two, to 120 sq-m for a family of four or five.
If we assume that an average house would cost $40,000, this would translate to a fund requirement of $600 million dollars. When the cost of the new roads, public utility networks, sewage, common areas and the new schools are also added, Ergin projects a minimum and immediate cost of $1 billion as the amount needed to welcome the 50,000 settlers to their new homes in the new federated Cyprus.
There are other immediate costs as well. According to the Annan Plan, Turks will be leaving the ghost-city of Maras, famous for its (now rundown) touristic hotels, to the Greek-Cypriots. To restore these hotels back to their days of glamor would require untold millions of dollars which the Greek-Cypriots would probably like to charge to the account of the same donor parties.
The 25-to-30,000 Turkish-Cypriots who will be repatriated to Turkey would each be paid 10,000 Euros of "severance payment" which adds up to another $300 million Euros.
Then in the fourth year of the plan, the "compensation payments" will kick in. Ergin wonders if these compensations which will be paid to the Greek-Cypriots who will not be able to reclaim their pre-1974 properties might add up to another $10 billion dollars. As of today no one seems to be sure what the final and total bill would be. The Plan proposes to compensate such Greek-Cypriots through issuing bonds. However it is still not clear who will buy such bonds and if such a solution would really work in practice.
The whole world is discussing how to overcome the political obstacles on the way to a United Cyprus. But the financial obstacles are equally formidable and deserve equal attention.