Opening remarks

Ms. Lisa Buttenheim SRSG/acting SASG

H.E. Klas Gierow, Ambassador of Sweden

Pre-registration is obligatory. RSVP via email to guido@prio.org no later than Monday 26.05.14

The Cyprus Peace Dividend Revisited is a new effort to quantify the value of a solution of the Cyprus problem: to the economy as a whole, to different sectors and to individuals. In so doing, it also updates the qualitative analysis and advances earlier efforts, by exploring new approaches and linking these to the existing economic literature on the topic.. In the Day After series, published between 2008 and 2010, Mullen, Antoniadou-Kyriacou and Oğuz-Çilsal made the first substantive attempt to quantify the commercial opportunities of a Cyprus settlement. The award-winning three-part series included the recurring (permanent) benefits, the combined recurring and solution-related benefits, and the benefits that would accrue to Turkey and Greece.

Much has happened to the economic environment since then, while subsequent natural gas finds offshore have also changed long-term prospects. Both parts of the island were significantly underperforming even before the recent economic crisis. In the period 2005-12, growth in total factor productivity (TFP)—a measure of the long-term prospects for growth—was negative in the north and barely positive in the south. This has created risky imbalances such as high current-account deficits and rising debt. Moreover, low TFP growth points to a continued future of very weak overall economic growth and high unemployment.

The dynamic impact of peace is considered in two ways: through a "top-down" approach known as Growth Accounting and through a bottom-up, sector-by-sector approach. In order to arrive at the "peace dividend"—the difference between economic activity with a solution and without a solution to the Cyprus issue—the authors take the geometric mean of these two effectively independent approach.