Currency: Greek Cypriot area: Cypriot pound (CYP); Turkish Cypriot area: Turkish lira (TRL)
GDP(per capita): Republic of Cyprus: $21,600 (2005 est.); north Cyprus: $7,135 (2004 est.)

Overview: The Republic of Cyprus has a market economy dominated by the service sector, which accounts for 76% of GDP. Tourism and financial services are the most important sectors; erratic growth rates over the past decade reflect the economy's reliance on tourism, which often fluctuates with political instability in the region and economic conditions in Western Europe. Nevertheless, the economy grew a healthy 3.7% per year in 2004 and 2005, well above the EU average. Cyprus joined the European Exchange Rate Mechanism (ERM2) in May 2005. The government has initiated an aggressive austerity program, which has cut the budget deficit to below 3% but continued fiscal discipline is necessary if Cyprus is to meet its goal of adopting the euro on 1 January 2008. As in the area administered by Turkish Cypriots, water shortages are a perennial problem; a few desalination plants are now on line. After 10 years of drought, the country received substantial rainfall from 2001-03 alleviating immediate concerns. The Turkish Cypriot economy has roughly one-third of the per capita GDP of the south, and economic growth tends to be volatile, given north Cyprus's relative isolation, bloated public sector, reliance on the Turkish lira, and small market size. The Turkish Cypriot economy grew 15.4% in 2004, fueled by growth in the construction and education sectors, as well as increased employment of Turkish Cypriots in the Republic of Cyprus. The Turkish Cypriots are heavily dependent on transfers from the Turkish Government. Under the 2003-06 economic protocol, Ankara plans to provide around $550 million to the "TRNC." Agriculture and services, together, employ more than half of the work force.

Exports: Republic of Cyprus: citrus, potatoes, pharmaceuticals, cement, clothing and cigarettes; north Cyprus: citrus, potatoes, textiles

Import: Republic of Cyprus: consumer goods, petroleum and lubricants, intermediate goods, machinery, transport equipment; north Cyprus: vehicles, fuel, cigarettes, food, minerals, chemicals, machinery

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Background: A former British colony, Cyprus became independent in 1960 following years of resistance to British rule. Tensions between the Greek Cypriot majority and Turkish Cypriot minority came to a head in December 1963, when violence broke out in the capital of Nicosia. Despite the deployment of UN peacekeepers in 1964, sporadic intercommunal violence continued forcing most Turkish Cypriots into enclaves throughout the island. In 1974, a Greek Government-sponsored attempt to seize control of Cyprus was met by military intervention from Turkey, which soon controlled more than a third of the island. In 1983, the Turkish-held area declared itself the "Turkish Republic of Northern Cyprus," but it is recognized only by Turkey. The latest two-year round of UN-brokered talks - between the leaders of the Greek Cypriot and Turkish Cypriot communities to reach an agreement to reunite the divided island - ended when the Greek Cypriots rejected the UN settlement plan in an April 2004 referendum. The entire island entered the EU on 1 May 2004, although the EU acquis - the body of common rights and obligations - applies only to the areas under direct Republic of Cyprus control, and is suspended in the areas administered by Turkish Cypriots. At present, every Cypriot carrying a Cyprus passport has the status of a European citizen; however, EU laws do not apply to north Cyprus. Nicosia continues to oppose EU efforts to establish direct trade and economic links to north Cyprus as a way of encouraging the Turkish Cypriot community to continue to support reunification.

Independence Day: 16 August 1960 (from UK); note - Turkish Cypriots proclaimed self-rule on 13 February 1975 and independence in 1983, but these proclamations are only recognized by Turkey

Capital City: Nicosia
Administrative divisions: 6 districts; Famagusta, Kyrenia, Larnaca, Limassol, Nicosia, Paphos; note - Turkish Cypriot area's administrative divisions include Kyrenia, all but a small part of Famagusta, and small parts of Lefkosia (Nicosia) and Larnaca