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the situation that had existed prior to Turkish military intervention, and with the
situation in the south, subsequent achievements were modest. Granted, security
concerns and the presence of some international sanctions were a constraint, and yet
the boost the industry received in 1986, following pro-active state action, could
have been attempted ten years earlier. Other than five (mainland) Turkish owned
hotels in Kyrenia 78 , the large scale, up-market, private sector initiative of the late
1980s, fizzled out with the demise of Polly Peck. The Turkish-Cypriot private
sector largely remained on the fringes, managing smaller boarding houses, gift
shops, food and entertainment establishments. However, much tourism and much
private sector activity in the 1970s and 1980s were dépendent on just this,
particularly the gift shops which, for tax reasons, attracted much of the mainland
Turkish tourism, which accounted for the vast majority of foreign visitors.
The trend of private entrepreneurial activity in the north
Like most small économies, northern Cyprus has a visible trade deficit. The scale of
the trade deficit however, undermines the significance of exports, visible or
otherwise (see Figure 4.4 below) and of treating northern Cyprus as anything other
than a separately administered province of Turkey. The bald figures are however
officially qualified with the argument that much of the imbalance is due to the
conséquences of the "gift fair" trade 79 , a key private sector activity that emerged
after 1974. This trade détermines that most imports are registered as such, whilst reexports
are truly invisible. The problem occurs as a result of the imbalance of
bureaucracy affecting the parties to a transaction. The importer deposits locai
currency with a Bank in exchange for a letter of credit, or foreign currency, with
78 Scott 1998. op. cit., pp. 148-9.
79 Interview with Suleyman Kiryagdi, General Co-ordinator & Acting Secretary and General Manager
of the Cyprus Turkish Co-operative Central Bank, 20-21//04/95.
204