Cyprus entered the 21st century as a separated island of 2 nations and 2 religions. The division between the two will be the main focus of debate and discussion in the international arena in the years to come. The division between the 2 economies also affects the level of development of the nation. The Greek zone (Republic of Cyprus) enjoys the benefits of international recognition and has attained high levels of development and per capita income, but the Turkish zone (TRNC) has suffered economically and politically from the international embargo .
Cyprus's application for full EU membership is also a critical step that will have further consequences for the island's political economy and development. It is unclear whether the Turkish Cypriots will abandon their claims for a confederation in favor of the Greek Cypriot proposal of a federated state. Although TRNC president Denktash has called for further integration with mainland Turkey, which would mean the annexation of the island's Turkish zone into the homeland, the likelihood of this scenario is still unclear. EU officials project that Cyprus will be a full member of the European Union by 2010.
As the Republic of Cyprus prepares for full EU membership, it will continue to harmonize its economy and institutional framework with EU standards. As indicated by the World Trade Organization (WTO) in its 1997 policy review, financial openness is one of the cornerstones of policy reform for Cyprus. The WTO also notes the growing importance of the nation's services sector. This sector accounts for roughly 70 percent of the country's foreign exchange receipts as well as its GDP. Although the economy of the Greek zone is a prosperous one, the fact that the country suffers from a structural deficit and that it must rely on imports is not likely to change, even after a possible EU membership.