Cyprus - Politics, government, and taxation

Cyprus gained its independence from the United Kingdom in August 1960. Three years later, clashes between the Greek and Turkish communities on the island began, and the island started to disintegrate politically. A junta-based (a small military ruling group) coup attempt backed by Greece in July 1974 led to a Turkish intervention that divided the island in two, creating the de facto (existing if not officially recognized) Turkish Republic of Northern Cyprus. The Greek Cypriots took full control of the internationally recognized government of Cyprus while the Turkish Cypriot administration declared independence for its zone in November 1983. "The Turkish Republic of Northern Cyprus" (TRNC), however, has been recognized only by Turkey. The period from 1983 until 2001 has been characterized mainly by international efforts, under the leadership of the United Nations and the United States, to resolve the conflict between the 2 sides and to create a new type of government. The Greek Cypriot position on the issue has been towards a new federal system (with stronger power for the national government) while the Turkish Cypriots prefer a confederate system (with more power-sharing between Greeks and Turks).

The island has different constitutions and sets of governing bodies for each side. The Greek Cypriots are still using the constitution that took effect in 1960 following independence, while the Turkish Cypriots created their own constitution and governing bodies in 1975 following the 1974 break-up. The TNRC adopted a new constitution passed by a referendum (popular vote) in May 1985. Talks to find a peaceful resolution between the 2 Cypriot zones resumed in 1999.

Glafcos Clerides has served as the president of the Republic of Cyprus since February 1993. He serves as both the head of state and the head of government. According to the 1960 constitution, the post of the vice president is reserved for a Turkish Cypriot, but the office has not been filled since the 1974 separation.

The Turkish Republic of Northern Cyprus also elects a president by a popular vote, although he is only recognized as a head of state by Turkey. Rauf R. Denktash has served as president of the TRNC since February 1975. Dervis Eroglu has been the TRNC's de facto prime minister since August 1996, heading the Turkish zone's Council of Ministers (cabinet).

As there are 2 different heads of state and 2 separate sets of governing bodies on the island, political parties for the 2 zones are different. In the Greek Cypriot political system, the following parties have dominated: Democratic Party (DIKO), Democratic Rally (DISY), Ecologists, New Horizons, Restorative Party of the Working People (AKEL or Communist Party), United Democratic Union of Cyprus (EDEK), United Democrats Movement (EDI, formerly Free Democrats Movement or KED). In the Turkish Cypriot area the main parties have been: Communal Liberation Party (TKP), Democratic Party (DP), National Birth Party (UDP), National Unity Party (UBP), Our Party (BP), Patriotic Unity Movement (YBH), Republican Turkish Party (CTP).

Taxes and foreign economic aid provide the main sources of income for both the Greek Cypriot and Turkish Cypriot governments. In both zones, the government plays an important role in the island's economy. The Turkish zone relies heavily on financial aid from Turkey. Until recently, the Republic of Cyprus government has controlled key sectors of the economy by means of semi-governmental organizations such as those that oversee the telecommunications and power industries. The Republic of Cyprus government has been moving toward a more liberal role in the economy. The country's candidacy for EU membership supports efforts to loosen government control over the economy. For instance, the liberalization of air transportation in Europe has forced Cyprus Airways, the island's government-owned airline, to become more efficient. The traditional regulations that restricted retailers' hours of operations and limited special sales to certain times of the year have been recently liberalized so that the island's economy can be more competitive and productive.

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