In July the Republic of Cyprus took the EU presidency, despite the fact that the country is experiencing severe economic crisis.

The economic situation in South Cyprus

As well as North Cyprus, which is still more or less under the control of Turkey, South Cyprus is connected to Greece, despite the fact that the Republic of Cyprus joined the EU in 2004 as a separate and independent state. After the economic debacle in Greece, it would be unwise to assume that the situation does not affect and South Cyprus. Banks in South Cyprus have strongly invested in the bonds of Greece, much of the credit of the country were given Greek companies and individuals. The problem now, of course, is that the Greeks are unable to pay its debts to the island. It is estimated that as much as the third of lending’s of Greek Cypriot banks to Greece may be irrecoverable. Southern Cyprus is in a quagmire, economic dependency which continues to pull the country down. The budget deficit is increasing, and it means that the Greek Cypriots are not able to comply with the rules established for the management of the economy in the Euro zone. The number of unemployed in the country continues to grow and with it drops the tax revenues and increases the size of social handouts. Southern Cyprus has unsuccessfully tried to borrow from Russia and China, rather than to accept the EU bail-out.

But the problems of Southern Cyprus go beyond the purely economic. There are also political considerations: one of the conditions for further assistance from Russia is that the Federation wants to have a naval base in Cyprus, it certainly has raised considerable concern in many capitals of the European Union, as well as in the U.S.. And so the South Cyprus, led by the Communist leader, had no choice but to accept aid from the EU.

The Greek Cypriot government is looking with concern at what has happened in Greece, where the economic crisis, unemployment and despair, there were riots and demonstrations in the streets, which were calmed by the police using rubber bullets and tear gas.

Northern Cyprus – the other part of the island

Despite the fact that the southern part of the island tries its best to fight the economic crisis and pressure from the European Union, North Cyprus is not in the same situation. The economy certainly has risen over the past few years, which undoubtedly helped the "tourist boom" of the state. But despite this, the government worried over the fact that Northern Cyprus is still under the trade embargo and other than Turkey, the state is not recognized by any country in the world. On July 28, just days before the South Cyprus EU presidency, 350 Turkish Cypriots staged a protest in the Belgian capital, Brussels, as a sign of disagreement about the unsolved problem of the island. The negotiations on the unification of the island between the two countries continued for many years, surviving six UN Secretary-General, six leaders of the Southern Cyprus and the three presidents of the North. In spite of the embargo and absence of direct flights into the country, foreign nationals, including those of the EU countries, heavily invest in the country, buy property in Northern Cyprus and select the country for permanent residence. The reason for this is the fact that the government of Northern Cyprus, supports foreign investors, property of the country is several times cheaper than on the southern side of the island, and other "hot spots" of the Mediterranean, and the prices are slowly but steadily growing.

Presidency of the EU and Northern Cyprus

Former President of Northern Cyprus, Mehmet Ali Talat, said that the Greek Cypriot presidency of the EU will be unsuccessful.

"The Greek side of the island has neither enough money nor the knowledge to successfully lead the EU"

Mr Talat said on July 3 that Southern Cyprus will use its term in the EU for their own purposes, but "these six months will also pass"

Speaker of the Parliament of Northern Cyprus, Hasan Bozer, July 2, said that the TRNC will not create tension on the southern side during the presidency of the EU, adding that now the last hope to unite the island is lost.

Also, the question remains open about the drilling in the waters of the Mediterranean - each country claims to not yet found the gas. Bozer said that Turkish Cypriots are equal partners of all natural wealth of the island and its surroundings.