For most residents of the self-proclaimed Turkish Republic of Northern Cyprus (TRNC), life has been pretty good in recent years.
Turkish Cypriots, Turks and expatriates have typically enjoyed a laid-back Mediterranean lifestyle and high incomes with few hopes or expectations for major changes. At least, it was that way until a series of economic programmes designed by Turkey created some austerity-related tensions in the enclave.
The island has been divided between Turkish and Greek Cypriots since 1974, when the Turkish military intervened in the Republic of Cyprus - in response to a brief Greek-inspired coup - on the legal basis of a treaty of guarantee signed in 1960 when the republic was founded. Since the establishment of the de facto TRNC - only recognised by Turkey - in 1983, the north has been described as "occupied part of Cyprus" by the UN Security Council.
Early general elections were held in the TRNC on July 28. The elections followed a no confidence vote that resulted in the fall of the centre-right National Unity Party (UBP) government in May.
Historically, the dispute between the Republic of Cyprus and Turkey has almost always topped the agenda for elections in northern Cyprus. But not this time. Economic reform packages pushed by Turkey were the main topic of discussion in the latest polls.
The centre-left pro-unification Republican Turkish Party (CTP) won 21 of the 50 seats in the parliament, followed by the Ulusal Birlik Party (UBP) with 14 seats, the centre-right Democrat Party (DP) took 12 seats and the left-wing Communal Democracy Party (TDP) won three seats. A coalition government will have to be formed, as no party won a majority.
The drop in the votes of the UBP is widely seen as a backlash against the Turkey-sponsored economic programmes.
The TRNC is a relatively closed economy with limited options for international trade due to its political isolation. It is largely subsidised by financial aid from Turkey.
A 1994 European Court of Justice verdict made exporting agricultural products from northern Cyprus to the EU much harder, as it forced Turkish Cypriot exporters to acquire export documents from Greek Cypriot institutions or face extra taxes - a painful option for uncompetitive producers.
|Cyprus fiscal mess spreads in divided island
The construction boom fueled by unification prospects and the flow of Western expatriates in mid-2000s has ended in recent years after EU and British courts gave negative verdicts on property disputes regarding the TRNC. The case of the infamous British Orams couple has had a particularly strong effect.
The increasing flow of workers from Turkey to the TRNC put pressure on the labour market causing increased competition for jobs. Passports are not needed for workers travelling between northern Cyprus and Turkey.
According to the census of 2006, 95,000 of a total population of 257,000 were Turkey-born and 28,000 of them were TRNC citizens. Detailed results of the 2011 census, which put the population at the level of 295,000, are yet to be published.
The recent financial crisis in the south was also unfavourable for shops in the north, as the number of border crossings dropped and the Greek Cypriot government limited the amount of cash that can be carried to the north.
The Justice and Development Party (AKP) government in Turkey has been reflecting its own economic vision on the TRNC for the last few years. The AKP government took over a Turkish economy suffering from inflation and high unemployment in 2002 and brought impressive levels of stability and growth through trade and foreign investment.
The two TRNC reform programmes - covering the periods 2010-2013 and 2013-2015 - aim to create a sustainable private-sector oriented economy and to decrease the massive budget deficits funded by Turkey.
Cenk Mutluyakali, editor-in-chief of left-wing Yeni Duzen newspaper, said that northern Cyprus has been too reliant on Turkish aid over the past decade. "There are structural problems, enormous budgetary deficits, populist practices, and very high salaries and [social] rights," he told Al Jazeera.
[In TRNC] there are structural problems, enormous budgetary deficits, populist practices, and very high salaries and [social] rights.
Ankara has been trying to gradually reduce its financial aid to the TRNC. The amount dropped from $600m in 2009 to $577m in 2010, $503m in 2011 and $458m in 2012.
As of 2012, there were more than 41 thousand retired people and more than 21 thousand public employees in the TRNC, accounting for more than one fifth of the population.
Critics believe the hiring process for public sector jobs is full of nepotism, as new governments employ their supporters and fire previously contracted civil servants once they are elected. Turkey is said to be trying to curb this practice through transparent hiring.
In addition, labour disputes have become the regular part of life. A series of strikes at the state electricity company against privatisation attempts left large parts of northern Cyprus under blackouts at various times in 2012.
'Worst time of our history'
The poor economic outlook for young Turkish Cypriots in the northern part of the pseudo-state has led to desperation among many.
"We are having the worst time of our history in Turkey’s richest years," Cahit Erdemel, a 27-year-old political science graduate working for a betting office in northern Cyprus told Al Jazeeera. "Entry-level salaries in the public sector are around the minimum wage. How is this going to work in a closed economy?"
Nahide Ozgur Atay, a 32-year-old shop owner from Famagusta/Magusa disagreed: "The austerity measures created an uproar among the citizens at first, but they are necessary to create a state that can stand on its feet. There is not much public reaction any more. These measures are unavoidable."
|Turkish Cypriots protested against economic austerity measures backed by Ankara in April 2011 [AP]
"The economic course has changed in line with Ankara's policies that seeks to decrease spending on the TRNC in order to further develop Turkey," Burcin Aybars from Nicosia/Lefkosa told Al Jazeera. "The polemic on the TRNC wages in 2010 is an important demonstration of this," the 30-year-old graphic designer commented.
In July 2010, Turkish Prime Minister Recep Tayyip Erdogan asked then-TRNC prime minister Irsen Kucuk, questions about the salaries of TRNC public employees in a joint press conference in Ankara and criticised the high income levels in public.
Thousands of Turkish Cypriots launched protests against Turkey and the economic reforms in 2011, in a move condemned by Erdogan who said Turkish Cypriots were "feeding from" Turkey.
Following the initial public uproar against the economic measures, recent anger has focused on the reform programme's implementation rather than its content, Mutluyakali said. "The programme was never publicly discussed here, it was produced by Turkish officials and hidden from the Turkish Cypriot public."
In a recent crisis just before the July elections, the caretaker government, which was formed to govern until the polls, did not have the money to pay the full wages of public sector employees. The government announced that the necessary funds could not be obtained from Turkey due to "technical problems".
The incident was perceived as a hint for the new potential government to fully implement the economic programme.
There have been various similar examples of the TRNC's temporary default in the past, which were also mostly seen as messages from Ankara.
TRNC has a functional administrative system and government, but it is heavily influenced by Turkey on key issues. This has been the case for years regardless of the political party or parties in power in Turkey or in the TRNC.
Governments in Turkey often seek to form proponent governments in northern Cyprus using their financial tools. This attitude degenerates the Turkish Cypriot politics.
An audio recording - reportedly from 2009 - leaked to the media only days before the July elections is a relevant recent example. In the recording, Mehmet Ali Talat, the Turkish Cypriot president of the time, admits that he asked for Turkish Prime Minister Recep Tayyip Erdogan's financial support to help the centre-left CTP, the party he led until 2005, to win the general elections of 2009.
There are mixed feelings in the TRNC on Ankara's involvement in local politics.
"Governments in Turkey often seek to form proponent governments in northern Cyprus using their financial tools. This attitude degenerates the Turkish Cypriot politics," Ilke Gurdal, a 28-year-old PhD candidate told Al Jazeera.
"In addition to foreign policy issues, Ankara also staunchly supports the TRNC in moral and material ways internally," Ibrahim Yasar, a Turkey-born driver living in Kyrenia for the last 12 years, said.
Nahide Ozgur Atay believes that Turkish Cypriot politicians pursue support from Turkey in order to stay in power and continue to abuse state resources. "They seek their own interests, not the society's," Atay said.
Few expect the situation to improve soon, as political divisions between the Greek and Turkish parts of the island continue against a back-drop of austerity.
It is hard to find a single Turkish Cypriot hopeful of a settlement in Cyprus. Even the relentless pro-unification ones believe that the last chance was missed after a peace plan – so-called Annan plan – was rejected by Greek Cypriots in a 2004 referendum.
On the backdrop the Turkey's highly unpromising EU membership prospect, the status quo on the island is likely to continue as Ankara tries to lower the financial burden of that exact status quo through economic reforms in the TRNC.
Follow Umut Uras on Twitter: @Thriceee