This report investigates the extent to which the European Union's Green Line Regulation (GLR) has contributed to the development of economic activity across the Green Line—which de facto divides Cyprus— through the movement of goods, services, and persons. The particular timeframe for the research focus is between 2004, the first year of the implementation of the GLR, and 2017, which is the most current period for which there are European Commission reports on the implementation of the Regulation. The perspective adopted is that the GLR not only aims to satisfy the legal 'need' of accommodating the de facto division of Cyprus into EU law but also intends to act as an implicit tool for developing 'linkages' in the form of economic and social connections between the Greek Cypriot and Turkish Cypriot communities. In other words the development of liberal peace principles in order to facilitate reunification of the island. This political objective can be found not only in the GLR references to promoting greater 'contacts', 'cooperation', 'interdependence', and 'integration' of the two communities, but also in other EU legislative instruments and statements regarding the Cyprus problem.
The examination of the implementation of the GLR over the last thirteen years found that, in terms of the legal aspects, (providing a workable basis) the GLR has been a significant success. This is because it contains an ingenious legal mechanism that provides a lawful basis for the movement of goods and persons between an unrecognized entity and its parent state. However, within the focus on the performance of the GLR in terms of the economic activity it has generated, the success has only been partial due to low levels of such activity. This is explained by two main factors: the design shortcomings of the GLR; and the obstacles to the cross-divide economic activity at the domestic level, which have intervened in this process (legal, administrative, political, and psychological). Within this perspective, the outcomes have also remained far below the political expectations regarding the development of economic interdependence between the north and the south. Following the analysis, in the final section of the report a set of policy recommendations is provided for making the GLR a more effective tool for the development of economic, social, and political linkages across the divide by fostering the cross-divide economic activity.