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1 november 2006, 22:45

World Bank Cautions Nothern Cyprus Against Interest Groups

By Cihan News Agency, Nicosia

Wednesday, November 01, 2006

The World Bank has prepared a comprehensive report about Turkish Cyprus's

The 300-page report, covering many areas such as the budget, social
security, the banking sector, and agriculture, has very striking points.

According to the report, the country, which has a population of 180,000 and
has been financially supported by Turkey with $3.4 billion every year since
1974, has been under pressure and control of multifarious interest groups.

The report emphasized that public expenses were higher than normal. It said
the country should have been able to focus on backing the poor and securing
funding for primary and secondary education, and most basic health and
infrastructure services.

The report emphasized the importance of using public money for the welfare
of the people instead of wasting it on personal interests.

It is noted that the state was being exploited by various interest groups,
including syndicates and the producer unions.

These groups, a very small portion of the population, were accused of
furthering their personal interests with an unjustifiable influence on the
state at the expense of social welfare.

Also, officers with very high-paying jobs were said to have been wasting the
state's money, the report pointed out.

The report, entitled "Sustainability and Resources of Economic Growth in the
Northern Part of Cyprus," was prepared under the EU Coordination Center with
the cooperation of the departments involved and non-governmental

In order to prepare the report, experts from the World Bank came to Northern
Cyprus last year and worked in the related departments.

The report, covering almost all areas except the health and energy
industries, is mostly focused on the social security system.

According to the report, the system covers only 42 percent of the labor
force and its retirement expenses are too high, making it unsustainable.

Total pensions paid to retirees are more than 12 percent of the total GNP.
Insurance premiums paid, however, amount to 4 percent, with the 8 percent
gap created in the social security system covered by the budget.

The retirement system is considered the greatest drain on resources along
with transfers and public wages, with a growing number of retirees supported
by a declining number of employees. Urgent reform is inevitable.

The report also underlines the fact that there is no common vision for
economic growth and the budget is squandered, relying on the generous
backing of Turkey.

According to the report, Northern Cyprus is faced with a "strategic choice"
despite no clear solution.

Though EU standards are not officially implemented, institutions and
policies could be adjusted to the European Union.

In the event Northern Cyprus takes this direction, it will have to make
reforms in many areas and make important sacrifices in the short run.

If the reform plans are not properly implemented, social welfare will be at
stake in the long run, which would eventually make the northern part
permanently dependent on Turkey causing the financial gap between Southern
Cyprus to widen.


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