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CRS — Sovereign Debt in Advanced Economies: Overview and Issues for Congress

November 4, 2013 Comments off

Sovereign Debt in Advanced Economies: Overview and Issues for Congress (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Sovereign debt, also called public debt or government debt, refers to debt incurred by governments. Since the global financial crisis of 2008-2009, public debt in advanced economies has increased substantially. A number of factors related to the financial crisis have fueled the increase, including fiscal stimulus packages, the nationalization of private-sector debt, and lower tax revenue. Even if economic growth reverses some of these trends, such as by boosting tax receipts and reducing spending on government programs, aging populations in advanced economies are expected to strain government debt levels in coming years.

High levels of debt in advanced economies arose as an issue for concern for some analysts following the global financial crisis, after decades of attention on debt levels in developing and emerging markets. Four Eurozone countries, Greece, Ireland, Portugal, and Cyprus, have turned to the International Monetary Fund (IMF) and other European governments for financial assistance. Some analysts and policymakers are also concerned about are also concerned about debt levels in other advanced economies.

To date, many advanced-economy governments have embarked on fiscal austerity programs (such as cutting spending and/or increasing taxes) to address historically high levels of debt. This policy response has been criticized by some economists as possibly undermining a weak recovery from the global financial crisis. Others argue that the austerity plans do not go far enough, and that more reforms are necessary to bring debt levels down, especially considering the aging populations in many countries.

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CRS — Cyprus: Reunification Proving Elusive

August 23, 2011 Comments off

Cyprus: Reunification Proving Elusive (PDF)
Source: Congressional Research Service (via U.S. Department of State Foreign Press Center)

Attempts to resolve the Cyprus problem and reunify the island have undergone various levels of negotiation for over 45 years. Talks between Greek and Turkish Cypriot leaders have thus far failed to reach a mutually agreed settlement leaving the country with a solution for unification far from being achieved and raising the specter of a possible permanent separation.

Since the beginning of 2011, Cyprus President Demetris Christofias and Turkish Cypriot leader Dervis Eroglu have continued the negotiation process even though the talks appear to have increasingly exposed differences and frustrations between the two leaders. Although both sides have intimated that some convergence of views have been achieved in the areas of governance, economy, and EU issues, Christofias and Eroglu have not found common ground on the difficult issues of property rights, security, settlers, and citizenship, areas where both sides have long-held and very different positions and where neither side seems willing to make necessary concessions.

The results of parliamentary elections held in Greek Cyprus in May appear to have had no bearing on the status of the negotiations or the likelihood of a quick agreement. In July an Interpeace initiative, “Cyprus 2015,” released a new opinion poll that seemed to indicate that the current state of negotiations had hardened the political climate on both sides and had created a sense of public discontent that included a growing ambivalence among the Turkish Cypriots and a negative drift toward reunification among undecided Greek Cypriots.

On July 7, 2011, Christofias and Eroglu traveled to Geneva to meet for a third time with UN Secretary-General Ban Ki-moon in another attempt by the UN to boost momentum for the talks. It appears that Ban insisted that the negotiations conclude by October so that an international conference could be held to discuss security issues and that referenda could be scheduled in both the north and south by the spring of 2012. The hope among some is that a reunified Cyprus can assume the rotating presidency of the EU on July 1, 2012.

In mid-July, Turkish Prime Minister Erdogan, on a visit to northern Cyprus, warned that an agreement needed to be achieved by the end of 2011 or the island could remain split and stated that no territorial compromises, including the return of Varosha or Morphou to Greek Cyprus would be acceptable. He also stated that Turkey would essentially freeze its relations with the EU during the Cypriot presidency of the EU if there were no solution to the Cyprus issue because Ankara could not accept the presidency of South Cyprus which it does not recognize. These comments led Cypriot President Christofias to state that there could be no prospect for peace if this was also the position of the Turkish Cypriots.

The United States Congress continues to maintain its interest in a resolution of the Cyprus issue; the lack of a negotiated settlement continues to affect relations between Turkey and the EU, the EU and NATO, and U.S. interests in maintaining a relationship with Turkey that can be useful in addressing many of the issues involving the greater Middle East as well as throughout the Black Sea/Eastern Mediterranean region. Language expressing continued support for the negotiation process has been included in the House FY2012 Foreign Assistance Authorization bill.

This report provides a brief overview of the early history of the negotiations, a more detailed review of the negotiations since 2008, and a description of some of the issues involved in the talks. A side issue involving trade between the European Union and Turkish Cyprus is also addressed.

Country Specific Information: Cypress

April 17, 2011 Comments off

Country Specific Information: Cypress
Source: U.S. Department of State

Since 1974, Cyprus, a Mediterranean island nation, has been divided de facto into a government-controlled area comprising the southern two-thirds of the island, and a northern third (the self-declared “Turkish Republic of Northern Cyprus”), administered by Turkish Cypriots. The United States does not recognize the “Turkish Republic of Northern Cyprus,” nor does any country other than Turkey. Facilities for tourism in Cyprus are highly developed. Cyprus joined the European Union in 2004. Read the Department of State’s Background Notes on Cyprus for additional information.

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