CYPRUS: PROMOTING BICOMMUNAL TOURISM PROJECTS

C O N F I D E N T I A L NICOSIA 001614 SIPDIS SIPDIS E.O. 12958: DECL: 09/21/2016 TAGS: EAID ECON PGOV CY SUBJECT: CYPRUS: PROMOTING BICOMMUNAL TOURISM PROJECTS Classified By: Ambassador Ronald Schlicher Reasons 1.4 b and d. ¶1. (C) Summary: Tourism continues to be the main lifeblood of the Greek Cypriot economy and is a key growth sector in the Turkish Cypriot north. Cooperation between the two communities on the development and joint marketing of tourism could be a win-win for both communities and increase tourist arrivals island-wide. Cooperation, however, has been limited. On this and almost all issues in Cyprus -- politics trumps economics. Greek Cypriots have been reluctant to cooperate on tourism mainly due to political concerns, property issues and zero-sum thinking. Indeed, the Cyprus Tourism Organization spends significant time and effort trying to undercut the ability of the Turkish Cypriot community to market itself as a tourist destination abroad. What cooperation that does exist has largely been driven by the demands of foreign tour operators, and survives partly because it is not well publicized. We are pursuing a number of initiatives designed to foster bicommunal cooperation on tourism and have launched a project through the USAID-funded, UNDP-administered ACT program, and together with the respective chambers of commerce, to create a "Practical Guide to Sustainable Development" and "Code of Conduct" for hotels. Experience has shown that large, flashy initiatives generally fail to generate results, while more modest and quiet initiatives prove more successful over time. End summary. Tourism Key to Economy -------------- ¶2. (SBU) Tourism is the lifeblood of the Cypriot economy and was responsible for transforming the Republic of Cyprus from a relatively poor agricultural-based society in the 1970s to a prosperous service-driven EU member today. Almost 2.5 million tourists (including 1.4 million Brits) visit the south every year. Tourism accounts directly for 13-15 percent of the south's GDP and indirectly for at least another 20 percent through ancillary industries, according to the Cyprus Tourism Organization. The tourism industry is much less developed in the Turkish Cypriot community, but is still a key sector. Hotels and restaurants alone count for four percent of GDP. According to Turkish Cypriot statistics, over 650,000 people visited the north in 2005 (roughly 75 percent of whom were from Turkey and 20 percent from the UK). Furthermore, the north's unspoiled beaches, �00A;crusader castles, picturesque harbors, and archaeological ruins make tourism a promising growth industry. ¶3. (C) On the face of it, cooperation between the two communities to attract and share additional tourists would appear to be a no-brainer, a win-win for both communities that would expand the proverbial tourism pie. The GoC is launching new strategies to diversify its tourism industry (e.g., by building golf courses, marinas, and a possible Las Vegas- style casino) due to fears that it is pricing itself out of its traditional "sun and fun" market. Cooperation to promote island-wide tourism, however, is not being considered. The GoC and Greek Cypriots in general have been historically averse to cooperation with Turkish Cypriots on tourism for three primary reasons: -- The property issue - most of the hotels/restaurants in the north are located on property owned by Greek Cypriots displaced in 1974 by the Turkish invasion. There are a few Turkish Cypriot hotels on undisputed property, but these are not in prime locations. Turkish Cypriots were historically the minority and underclass, and thus did not own much prime beach area prior to 1974. -- Politics - Greek Cypriots are very reluctant to do anything that they perceive will provide even a whiff of legitimacy to the "illegal occupation regime" in the north. Underscoring this is the belief prevalent among many Greek Cypriots that helping the Turkish Cypriot economy to grow will only make the Turkish Cypriots less pro-settlement in the long run by strengthening the viability of the self-proclaimed "state." -- Zero-sum thinking - most Greek Cypriots see the growth of tourism in the north as competition for their tourism industry rather than as a resource that can increase tourism island-wide. ¶4. (C) As a result, the Cyprus Tourism Organization (CTO) and Cypriot Embassies overseas regularly spend considerable time and money on efforts to undermine the Turkish Cypriot community's efforts to market itself abroad as a tourist destination. The GoC and CTO have become adept at offering a combination of sticks (threats of legal action) or carrots (financial incentives) to discourage foreign tour operators/travel agents from including Turkish Cypriot destinations in their tour packages or advertising. Most major European tour operators are heavily invested in tourism in the south and have little to gain (and potentially a lot to lose) by getting involved in the less developed north. ¶5. (SBU) (Note: Partially to make the north more attractive to the major European tourism operators, Turkish developers have begun construction of a 9,000-bed resort complex in Bafra in the Karpass that has pretensions to become the Turkish Cypriot "Ayia Napa." The resort will be finished in ¶2008. Currently the Turkish Cypriot community offers a capacity of 13,000 beds -- many of which are substandard -- compared to over 100,000 beds in the south. End note.) ¶6. (SBU) Nevertheless, some bicommunal cooperation has emerged. Several Greek Cypriot and Turkish Cypriot travel agents/tour operators cooperate to provide day trips to Kyrenia, Famagusta and north Nicosia from tourist hotels in the south. During peak months, as many as 2,000 tourists a week participate in these excursions (although Turkish Cypriot travel agents claim this number is down 35 percent from a year ago, which they attribute to rising costs partly fueled by informal requirements to use both Greek Cypriot and Turkish Cypriot tour guides and by GoC restrictions that prevent the use of less-expensive Turkish Cypriot buses and drivers.) Several Turkish Cypriot travel agents also cooperate with Greek Cypriot bus companies to transport visitors from Larnaca airport to hotels in the north. ¶7. (C) Some Greek Cypriot and Turkish Cypriots travel agents have succeeded in organizing package tours that overnight in both communities, including a recent package tour that followed the steps of St. Peter during his stay on Cyprus. Those involved in these projects, however, claim that the profit made was not worth the time and effort required. Indeed, tourist professionals note that most bicommunal package tours were organized by foreign tour operators and required only modest communication between the Greek Cypriot and Turkish Cypriot tour operators. ¶8. (SBU) The Mission, and especially USAID, has done quite a bit to foster bicommunal cooperation on tourism, with some modest success. The USAID-funded and UNDP-administered BDP/ACT program over the years has initiated a number of bicommunal activities to improve Cyprus as a tourism destination. These efforts were and are, admittedly, more for bicommunal than tourism effect. Restoration and conservation of the Venetian walls in divided Nicosia, which required some cooperation between the two Nicosia municipal structures, have has been a big success. A bicommunal walking tour project, however, did not reach its potential because of political quarrels over street names. Attempts at bicommunal eco-tourism similarly stalled because of Greek Cypriot property concerns. AID is now advising its contractors to start small and try to build rather than to begin with large high-visibility projects. ¶9. (SBU) The USAID-funded, UNDP-administered ACT program has launched a new initiative with the (Greek Cypriot) Chamber of Commerce and Industry and the Turkish Cypriot Chamber of Commerce to prepare an "Impact of Business on the Environment Report" under the UN's Global Compact Rubric. As part of this, the Chambers will work together to create a "Practical Guide to Sustainable Tourism" and a "code of conduct" for hotels. The plan is to launch the Guide at an international seminar in Cyprus, with participants from both communities and throughout the region. ¶10. (C) The Mission has also done a lot to try to encourage the GoC and the Turkish Cypriot professional drivers' union to find a compromise that would permit Turkish Cypriot buses and trucks to cross the Green Line freely -- even in effect acting as a de facto unofficial mediator at times -- although without success. We will continue our efforts. Lessons Learned/Recommendations -------------- ¶11. (C) Lessons we have learned in trying to facilitate these and other bicommunal projects include: -- Big and flashy does not work. It is best to start small and build over time. -- Publicity is generally counterproductive. This is especially true of tourism projects given the baggage they carry in the south. -- Having USG fingerprints all over programs is not always helpful. It is often best to work through the UNDP or indirectly support projects initiated by other donors. -- Successful bicommunal tourism projects have generally been driven by outside tour operators rather than by local actors. Very few U.S. tourists visit Cyprus given the wealth of sun and fun opportunities that are closer to home and less expensive. Thus U.S. operators are unlikely to be able to offer Cyprus a new client base in exchange for island-wide experiences. -- In any case, it isbest not to try to use U.S. businesses for political goals. We recommend against having a bicommunal business conference on tourism involving U.S. firms. The U.S. businesses would be walking into a political mine field for which they would be unprepared, and that may very well damage their prospects for doing business in the south. Comment -------------- ¶12. (C) We will continue to encourage the development of common bicommunal initiatives on tourism. Joint planning and promotion can be a win-win scenario that ensures further growth of tourism on both sides. That said, given property concerns and the zero-sum thinking so prevalent on the island, bicommunal tourism projects are especially difficult and need significant care and watering. They are also likely to wither if exposed to too much light. Experience has shown that it is best to start small and to avoid publicity. We have high hopes for our new bicommunal sustainable tourism project -- it is hard for anyone to oppose environmental protection, and if we keep it general enough we can stay above specific property concerns. We hope to build on its success to foster new avenues for tourism-related cooperation. We will also continue our efforts to help broker a compromise to allow Turkish Cypriot trucks and buses to cross to the south -- a move that would not only facilitate all-island tourism but lower the costs of intra-island trade. SCHLICHER