ROBERT SIEGEL, HOST:
The tiny Mediterranean island nation of Cyprus is awaiting final approval for the latest eurozone bailout. Cyprus has been divided since 1974. The south is a sovereign nation that's part of the eurozone, but the north is supported by Turkey.
And as Joanna Kakissis reports, that has created a strange split in Cyprus. As the euro debt crisis deepens and the economy in the south falters, Turkey's economy is booming and the north of Cyprus with it.
JOANNA KAKISSIS, BYLINE: After Turkey invaded Cyprus in 1974, Greek Cypriot families were forced to flee their homes and relocate to the south, which is now an independent nation in the European Union. Turkish Cypriots went to the north, which Turkey occupied. Because of embargoes, they became dependent on Turkey. Fikri Toros watched as his family's undergarment factory was forced to close. They now import home furnishings, but for years, a weak Turkish economy hurt the company.
FIKRI TOROS: One of the biggest challenges was to deal with the high inflation, very high interest rates and use of the Turkish lira in general.
KAKISSIS: In 2003, the border dividing the island opened. Turkish Cypriots hoped they could partner with the flourishing south and Europe. But Greek Cypriots rejected unification and joined the E.U. without the Turkish Cypriots, says analyst, Ergun Olgun.
ERGUN OLGUN: The European Union destroyed the basis for the two sides to reach the kind of sustainable agreement because there is no need for Greek Cypriots to share their power with the Turkish Cypriots at this time.
KAKISSIS: The divisions and dependencies deepened. The Greek Cypriots adopted the euro in 2008. By then, the Turkish lira was strong, says Ersin Tatar, the Turkish Cypriot finance minister.
ERSIN TATAR: Turkey's now much stronger, and because Turkey's stronger, that strength is reflecting in north Cyprus.
KAKISSIS: The Turkish Cypriot economy has grown by 5 percent annually in recent years, he says, thanks in part to an education industry financed by Turkey.
TATAR: Our universities now number about six. We have about 50,000 students.
KAKISSIS: Just 300,000 people live in north Cyprus. Most college students are Turkish, Tatar says. Many sign up at Near East University. That's where Hayrettin Gunaydin teaches.
HAYRETTIN GUNAYDIN: (Speaking foreign language)
KAKISSIS: Gunaydin, who's also from Turkey, says many Turkish professors are arriving to teach Arabic, Koran studies and Turkish history. There's a checkpoint to enter the south, another 800,000 people live here, nearly all of them Greek Cypriots. The cities have malls, villas and sleek office buildings. Paris Dimitriades is at a trendy cafe and he says he can't believe the economy is tanking.
PARIS DIMITRIADES: Cyprus had a prosperous economy. It was like one of the most prosperous economies in the EU. That was not an exaggeration.
KAKISSIS: That's because low tax rates attracted foreign investment, says economist Costas Apostolides.
COSTAS APOSTOLIDES: There are $22 billion deposited in our banks in Cyprus, primarily from Russia, the Ukraine.
KAKISSIS: Russians have invested in Cyprus for years. The port city of Limassol has Russian restaurants, a monument to Aleksandr Pushkin and city signs in Cyrillic. Marina Snigireva works for one of the many Russian offshore companies here.
MARINA SNIGIREVA: We give a lot of, how to say, working places, you know, for Cyprus as well, which is good for them because imagine if one day Russian business disappeared from here. I guess it would be a very big tragedy for Cypriots as well.
KAKISSIS: The bailout is expected next month. For NPR News, I'm Joanna Kakissis. Transcript provided by NPR, Copyright National Public Radio.