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Last Updated: Thursday, 10 January 2008, 23:45 GMT
Ikea sparks new row in Cyprus politics
By Dominic Laurie
Europe business reporter, BBC News, Cyprus

Ever since Ikea began expanding outside Scandinavia in the 1970s, it's been a retail chain unlike all others.

Ikea Cyprus
Ikea's arrival in Cyprus has caused unexpected controversy

Its popularity with shoppers has often caused frenzied behaviour. At a midnight store opening in North London three years ago, a man was stabbed in the queue of shoppers vying to be the first in.

The year before, in Saudi Arabia, three men died in a stampede to claim a number of vouchers being given out free.

But now, demand for its ranges of household furniture with the unpronounceable names has caused a different sort of collateral damage.

This time, it has exposed tensions at one of the world's most sensitive diplomatic hotspots.

The story begins in September 2007, when Ikea opened its first outlet in Cyprus, in a business park on the edge of the capital, Nicosia.

And for the free-spending Cypriots, it's been like a red rag to a bull ever since.

The car park is rammed every weekend, the slip roads in and out jammed with vehicles.

Cross-border appeal

However, it's not just people in the south of the island who came flocking to the store when it opened. The Turkish Cypriots in the north did too.

And despite the beaurocratic hassles of coming through the UN buffer zone just to go shopping, you can understand why they have.

The northern Cypriot "state" is not officially recognised by any country except Turkey, so trade from abroad is restricted. Drive around and you'll see few western brand names (though a Nike store has opened in the last few weeks).

Ikea Cyprus
The Cypriot Ikea's 800 parking spaces are not enough

There's often little choice, and what there is, is pricey.

At a restaurant in the Turkish side of Nicosia, diners told me this made furnishing a house or an office both expensive and difficult.

So when the Swedish knights in blue and yellow invaded the small Mediterranean island, many northern Cypriots said, "Hallelujah."

Cheap branded goods to furnish our homes right on our doorstep, just a few miles away, they thought.

The currency they use, the Turkish lira, has also strengthened in the last year, after decades of devaluation, so their purchasing power for southern Cypriot goods has suddenly, and unexpectedly, improved.

Import rules

The trouble is, as is so often the case here, international politics has got in the way of a good deal.

There's a UN-administered buffer zone in between them and the store, with some very eagle-eyed customs officers on both sides of it.

And when the Turkish ones spot Ikea bags, these get special treatment and are often confiscated.

Ikea Cyprus
Northern Cypriots have been stymied by their own government

That's because of a rather odd rule that's started to be enforced recently. To bring household furniture into Northern Cyprus, even a 10-euro lamp from Ikea, you need an import licence.

An official from the Turkish Cypriot Ministry of Finance explained the rules to me.

Any resident of Northern Cyprus coming across from the south can bring in most types of goods worth up to 135 euros without incurring financial penalties. This covers your personal belongings, items you bought for yourself and gifts for others.

Anything over the 135-euro level, you have to pay 30% tax. So when the Ikea opened in September, people thought they'd be OK as long as they didn't spend over the limit.

Soon after, hundreds of people started crossing the buffer zone back into the North with the blue-and-yellow bags full of goodies to fill their house with.

However, after a few weeks, those same shoppers were getting searched and their purchases taken away. Why, if an import licence was only needed for electronic goods?

Competition

At the start of December, the minister of finance "clarified" the situation. He said a licence was now also needed for household furnishings too, whatever the value.

To get one, you need to apply to the ministry of trade in Northern Cyprus in advance of your shopping trip, and it's by no means certain you will get one.

Most Northern Cypriot fans of the store have now given up on going to Ikea.

Many are suspicious about the motives for the effective ban. One theory is that the authorities have given in to pressure from businesses in the North who've been used to little, if any, competition.

And given the amount people often spend in Ikea, perhaps these retailers have cause to be concerned about just how much business they could lose to the chain.

Ikea isn't popular with everyone, of course. Some design purists complain its styles are slowly encroaching into every living room, making every house across the world look the same.

Perhaps these people should consider visiting Northern Cyprus in 2008, because, for the time being at least, there's little danger of the trend spreading here.

SEE ALSO
Cyprus and Malta adopt the euro
01 Jan 08 |  Europe
Cyprus price fears get euro boost
31 Dec 07 |  Business
Ikea brings in hybrid car fleet
11 Jun 07 |  Business
Ikea to charge for plastic bags
04 Jun 06 |  Business

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