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The physical division of the island is accompanied by a profound alienation between both population groups. In 2004 the mutual distrust was intensified when the Annan Plan was rejected, which in turn impeded the work of the bi-communal activists on both sides.
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The rich oil and gas deposits in the Eastern Mediterranean contain an enormous potential for conflict. For one, a conflict is looming between Turkey and the Turkish Cypriots, on the one side, and the Greek-Cypriot dominated Republic of Cyprus.
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Until the financial and economic crises hit Cyprus, the implementation of necessary political, social and economic reforms have been hindered by the omnipresence of the Cyprus Problem.
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The effects of the economic and financial crisis, as well as the austerity policy, are another key area of the FES. Due to the crisis, the Greek-Cypriot society is confronted with a dramatic increase in unemployment, particularly among young people, and a declining standard of living.
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