Transition of Turkish lira to euro in TRNC
Do we pay the price?
A comment of a “not knower”
by Ralph Kratzer
Last week I published an article in which it was said that the transition of the Turkish lira as the national currency to the euro had already begun in Northern Cyprus as part of the reunification negotiations. Click here to remember.
Some comments from readers over here and abroad came back on this topic both on the website and above all on Facebook. Most of them spoke negatively about the currency conversion and expressed their concerns.
I have of course asked myself the question: If there will be a conversion, then on what criteria?
Unfortunately, I’m an ignorant in the field of financial policy, I only know that the decision of the conversion rate, when a new state joins the so-called Euro-Zone, will be taken by the assembly of European finance ministers. In recent accessions (eg South Cyprus in 2008) the guideline used was the average of the ERM II (European Exchange Rate Mechanism II).
But what would that mean for Northern Cyprus at the moment?
The Turkish lira is currently at an all time low against the euro, pound and dollar. This not only has to do with domestic and foreign policy problems in Turkey, as it affects other currencies than the lira as well such as Russian rouble, South African rand, Norwegian krone, Australian dollar and others. Why this is like it is, only financial experts are able to answer.
Fact is, however, the Turkish lira against the euro has almost lost 100% of its value since the end of 2004. While the rate on 31st December 2004 was at 1.84 TL (or exactly at 1,836,200 old lira), it is now about 3,30TL.
Or more simply formulated, for the current minimum wage in TRNC of 1,730TL a person would have got 940 € at the end of 2004, today only about 520 €.
Just for comparison, in Germany the officially defined poverty line is at 980 € per month, in the UK, as far as I am aware, even at about 766 pounds (= 1,036 €).
As we all know, on April 24th 2004 the referendum on the common accession of South and North Cyprus to the EU took place. The outcome is well known: 65% of Turkish Cypriots approved, while 76% of Greek Cypriots rejected.
Does the population of Northern Cyprus now have to pay the price for the Greek part of Cyprus not wanting to have them on board at that time?
As I said, this is the comment of a “not knower”, maybe there is one or the other in our readership, who can bring more light into the darkness …