Beach Clubs and Casinos

Following our eventful Friday in Nicosia, the divided capital of Cyprus, I was keen to explore more of northern part of the island. I joined a group planning to couchsurf in Kyrenia that evening and visit ghostly Famagusta the following day, jumping at the chance to stay with a ‘local’ in the harbour city. Incidentally, Kyrenia was also the entry point of Turkish troops in their invasion of Cyprus in July 1974, and has been renamed Girne during the occupation. Necessary arrangements having been made, we headed across the border and took a bus north, meeting Sayed*, our host for the evening, upon arrival.

As we drove towards his apartment, Sayed gave us a brief overview of his life in Northern Cyprus. The son of wealthy parents, he moved to Girne several years ago to study at one of the multiple private universities in the region, hailing originally from Turkey. His final exam was coming up, and he was being encouraged to enter either his father’s company or the Turkish government. The ‘local’ experience we had been expecting was already being challenged; as we came to realise, we had been taken up by one of the many ‘Turkish settlers’ (those without TRNC citizenship), who, according to the 2006 Turkish Cypriot census, make up around 27.5% of the total population.

In his description of Cyprus, Sayed distinguished between the north and south in terms of wealth and economic development: while the TRNC is less developed than the south, more wealth is concentrated there. In a matter-of-fact tone, Sayed told us that ‘illegal’ money passes through casinos, coming out ‘legal’ on the other side. Helge Jensehaugen** reinforces the first part of this statement: although the Turkish-occupied 36% of Cyprus contains both the most fertile land and the most popular tourist resorts, a combination of factors, including international criticism of the occupation, a trade embargo and lack of international recognition, have resulted in significantly lower economic development here than in the south.

Upon arrival at Sayed’s apartment, we quickly donned our bikinis and headed out to the beach. Rather than the white, empty expanse of sand we were expecting, this was in fact a beach club, which we could enter free of charge (our host happened to be either a member or friends with members). Sun loungers were laid out across the grass above the beach, on the beach itself, and on a wooden jetty that extended into the perfectly clear water. After a quick swim (watched over by the monument of the Peace and Freedom Museum, placed where Turkish troops land in 1974) we settled on the jetty and were quickly joined by two of Sayed’s friends: Bahar, the owner of a new lounge further up the beach, and Mesud, who worked for one of the large casino chains in Northern Cyprus. Both men had also emigrated to the island from Turkey in recent years. This was also the second mention of casinos, prompting me to investigate Sayed’s second statement concerning the laundering of money through this industry.

A view of the beach club in Girne, with the Kyrenia mountain range behind. Image retrieved from: http://www.escapebeachclub.com/

While casinos are prohibited in the Republic of Cyprus and Turkey, they are legal in the TRNC and make up a valuable part of its tourism industry, attracting foreign tourists that come especially from the aforementioned countries. Counterintuitively (or perhaps not), this is where the regulatory frameworks surrounding finance and money laundering are weaker, allowing for the ‘cleaning’ of money described by Sayed.

A report concerning money laundering and financial crimes in Cyprus confronts how the division of the island results in different laws and regulations, and what this means for the financial relationship between the TRNC and Turkey. An abundance of casinos in the north, combined with weak regulations, opens up a system of laundering to foreigners. According to the report, ‘it is believed that the 23 essentially unregulated, and primarily Turkish-mainland owned, casinos are the primary vehicles through which money laundering occurs. Casino licenses are fairly easy to obtain, and background checks done on applicants are minimal.’

The regulatory context in the Republic of Cyprus could not be more different. Here, the first casino licence was finally awarded in 2016 to the Lawrence Ho-led Melco International Development Limited, and a detailed plan has been drawn up for the first Integrated Casino Resort (ICR) in Europe. The key objectives of the plan are the protection of the vulnerable through regulation; the promotion of tourism growth; the capture of economic benefit from the ICR; and the attraction of inward capital investment into the Republic of Cyprus. The third point involves the prevention of money laundering and fraud. According to the World Casino Directory, the one and only Cyprus ICR will be built in Limassol Marina. The plan prevents the further licensing of more casino complexes for fifteen years.

Limassol Royal Club will be the first casino in the Republic of Cyprus. There are around 23 casinos in the TRNC. Retrieved from GoogleMaps.

The different legal and regulatory contexts of the two parts of the island have led to separate and oppositional development of casino and gambling facilities. Whereas the World Casino Directory names almost thirty casinos to choose from in North Cyprus, the first ICR in the south will only be completed around 2019, and will be highly regulated. These regulatory differences are one of the many practical considerations that will need to be taken into account in the reunification process. In a question and answer document about the ICR plan in the Republic of Cyprus, the question of how the licencing and regulation of casinos would operate in the event of reunification is briefly addressed. The report responds that ‘it is envisaged that casinos in the occupied territories, if allowed to continue, would be regulated and taxed.’ This is just one aspect of the settlement process that would have to be addressed in the event of reunification, begging the question of whose regulations would apply to the casinos already existing in the TRNC.

On our trip, we encountered beach clubs and casinos, Turkish migrants and money. We did not encounter Turkish Cypriots, or see how they tied into this map of financial connections between the Republic of Cyprus, the TRNC and Turkey. Seeing all this, I wonder whether some form of exploitation is occurring here, in the lax regulations, the Turkish-owned casinos, the increasing numbers of Turkish settlers relaxing in their fancy beach clubs, and the foreigners coming through to clean up their money. What is at stake for Turkish Cypriots in this web of migration and finance? Does the convenient casino-haven that has been created in Northern Cyprus reduce Turkey’s support for reunification? How are the practicalities of financial regulation going to affect its probability? And do the Turkish Cypriots stand to benefit from changing casino regulations, and the reunification that will come with it?

*All names in this blog post have been changed.

** Jensehaugen, H. (2014). The Northern Cypriot Dream - Turkish Immigration 1974-1980. The Cyprus Review - A Journal of Social, Economic and Political Issues, 26(2), 57–83.