Turkish occupied North Cyprus already has 32 casinos in an area the size of an English county
Their casino plans stoke fears of slide towards ‘dark’ economy
Locals warn further developments will turn region into byword for gambling and vice
Gambling businesses are planning to double the number of casinos to 64, as a government bet on the “dark” economy rattles Turkish Cypriots wanting to normalise the isolated region’s relationship with the outside world. Cut off by trade restrictions and international embargoes and not recognised by any country except Turkey, the turkish cypriots relies heavily on Turkish economic support. But Ankara’s volatile lira has sent the territory’s inflation skyrocketing in recent years and its recovery from the Covid-19 pandemic has stalled. As leaders grow increasingly desperate for new revenue streams, the region’s government passed a law in June removing long-standing restrictions on casinos. But with 32 casinos already in an area the size of an English county, many locals fear further development could turn the region into a byword for gambling and vice. “We have openly introduced the crime economy into our system,” said Mertkan Hamit, a Turkish Cypriot economist. “Since Covid, new elements have entered the economy — mostly elements from the dark side.” Many Turkish Cypriots fear the move will further damage the chances of a solution to the “Cyprus problem” — the frozen conflict that has kept the Mediterranean island divided since Turkey invaded in 1974 in response to a coup sponsored by Greece’s military junta. The UN deems Turkey’s occupation illegal. Turkish Cypriots are EU citizens but the region is exempt from EU legislation, which includes anti-money laundering directives. “Unless we solve the ‘Cyprus problem’, we are only left with these kinds of activities, because your ability to find funds is limited,” said Kemal Baykalli, who has worked at the EU One Stop Shop, an EU initiative promoting trade across the ceasefire line. “We’re relying so much on Turkey’s investment, and that has political costs.” Those fears have been sharpened by another bill due to be debated in September, which would allow foreign currencies to be deposited in north Cyprus bank accounts in exchange for a 3 per cent interest payment. Hamit and others say the administration risks becoming “enablers of money laundering” should the bill be passed. The region’s government did not respond to requests for comment. With most exports blocked by the international community, north Cyprus generates more than 75 per cent of its GDP through services such as tourism and higher education, according to the World Bank. When Covid wiped out demand for these services in 2020, GDP fell 16.2 per cent — more than any country in Europe. It has struggled to fill those gaps ever since. Meanwhile, the lira has been on a steady slide since 2021, fuelling a dramatic rise in the cost of living. Annual inflation in the region was 36 per cent in June. The authorities’ light touch has allowed even seemingly inoffensive parts of the economy to become mired in scandal. The rapid expansion of the higher education sector has seen private universities run wild in north Cyprus. Some have been embroiled in accusations of fraud and human rights abuses as students fall victim to exploitation. Another important means of revenue has disappeared due to inflation. Many Greek Cypriots used to cross the buffer zone to buy goods such as groceries that were cheaper in the north. But Baykalli says this trend has been reversed as rampant price increases in the north have made items comparatively cheaper in the Republic. “If you run a small business, life is not very fair to you,” he said. “You cannot make long-term plans. You cannot estimate how you will be doing next year. And occasionally you may not even realise you’ve gone bankrupt.” The removal of restrictions on the number of casino licences is aimed at attracting more tourists from Turkey, where casinos are banned. North Cyprus has long been a destination for gamblers, but experts say the relaxed laws will leave the economy even more dependent on the sector. “We are creating a monster that we cannot control. Well, we already created it but now we are doubling its size,” Hamit said.
Article Financial Times