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,
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