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Economic affairs in Cyprus are dominated by the division of the country into the southern (Greek) area controlled by the Cyprus Government and the northern Turkish Cypriot-administered area. The Greek Cypriot economy is prosperous but highly susceptible to external shocks. Erratic growth rates in the 1990s reflect the economy's vulnerability to swings in tourist arrivals, caused by political instability on the island and fluctuations in economic conditions in Western Europe. Economic policy in the south is focused on meeting the criteria for admission to the European Union. As in the Turkish sector, water shortage is a growing problem, and several desalination plants are planned. The Turkish Cypriot economy has about one-fifth the population and one-third the per capita GDP of the south. Because it is recognized only by Turkey, it has had much difficulty arranging foreign financing, and foreign firms have hesitated to invest there. The economy remains heavily dependent on agriculture and government service, which together employ about half of the work force. Moreover, the small, vulnerable economy has suffered because the Turkish lira is legal tender. To compensate for the economy's weakness, Turkey provides direct and indirect aid to tourism, education, industry, etc.

The U.S. embassy in Nicosia sponsors a popular pavilion for American products at the annual Cyprus International State Fair, hosts the Commercial Awards dinner, and organizes other events to promote U.S. products throughout the year. Total U.S. exports to Cyprus were about $700 million in 1997 (compared with $670 million in 1996), making the U.S. Cyprus' number-one supplier of total imports for the third year in a row. Exports include American tobacco and tobacco products, automatic data processing and other machinery, and cereals. Principal U.S. imports from Cyprus consist of clothing, footwear, steel tubes and pipes, dairy products, and various food items.

Folk music on Cyprus is similar to the folk music of Greece, and includes dances like the sousta, syrtos, zeimbekikos, dachas, and the kartsilamdhes.

Cyprus has been liberalizing its trade regime by eliminating import quotas and licenses and lowering tariffs on most products as a result of its obligations under the new world trade agreement and its Customs Union agreement with the European Union. As a result, U.S. products are becoming more competitive in Cyprus and prospects for further expansion of bilateral trade ties are excellent.

After independence Cyprus became a founding member of the Non-Aligned Movement despite all three guarantor powers (Greece, Turkey and the UK) being NATO members. Cyprus left the Non-Aligned Movement in 2004 to join the EU.

Greek and Turkish Cypriots share many customs but maintain distinct identities based on religion, language, and close ties with their respective motherlands. Greek is predominantly spoken in the south, Turkish in the north. English is widely used. Cyprus has a well-developed system of primary and secondary education. The majority of Cypriots earn their higher education at Greek, Turkish, British, or American universities, while there are also sizeable emigrant communities in the United Kingdom and Australia. Private colleges and state-supported universities have been developed by both the Turkish and Greek communities.

Greek language is predominantly spoken in the south, Turkish language in the north. This delineation of languages is true only in the present period, due to the post-1974 division of the island, which involved an expulsion of Greek Cypriots from the north and the analoguous move of Turkish Cypriots from the south. Historically however, Greek (its Cypriot dialect) was spoken by nearly 82% of the population, which was evenly distributed along the entire area of Cyprus, north and south. Similarly, Turkish speakers were evenly distributed. English is widely used.

The Turkish Cypriot area proclaimed its independence in 1975, and the self-styled Turkish Republic of Northern Cyprus was established in 1983. This state was recognised only by Turkey. Furthermore, Organization of the Islamic Conference granted it observer member status under the name of "Turkish Cypriot State". The other power with territory on Cyprus is the United Kingdom. Under the independence agreement, the UK retained title to two small areas on the southern coast of the island, around Akrotiri and Dhekelia, known collectively as the UK sovereign base areas. They are used to host military bases.

Turkish Cypriots, together with Turkey, do not accept the Republic's rule over the whole island and call it the "Greek Authority of Southern Cyprus". They control the northern third of the island, following a military invasion by Turkey in 1974. This happened following a coup sponsored by the military regime of Greece, see: the 1974 crisis between Greece and Turkey.

The music of Cyprus includes a variety of classical, folk and popular genres. Recent trends have seen the rise of Ayia Napa, a resort, as a home for UK garage music, similar in its evolution to that of the island Ibiza.

Cyprus is geographically in Western Asia. Historically, Cyprus has always been a bridgehead between Europe and Asia, with interchanging periods of Levantine, Anatolian, and Greek influences.

The Cyprus Broadcasting Corporation (CyBC) is the main broadcaster in the Greek Cypriot area, although there are also privately-owned radio and TV stations. A TV channel from Greek state broadcaster ERT is also available. The British Forces Broadcasting Service also operates radio and TV stations, although the TV signal is now confined to the Sovereign Base Areas or encrypted for copyright reasons. In the Turkish Cypriot area, Bayrak Radio Televizyon is the local broadcaster, with radio and TV from Turkish state broadcaster TRT also available.

Government computerization and telecommunications development, two of the priorities of the government's 5-year development plan (1994-1998), provide excellent opportunities for U.S. exports. Sales of computer-assisted design systems, new capital equipment for textile, clothing, footwear production, medical equipment, environmental equipment, and services are also expected to grow. U.S. pressure resulted in the adoption of a new copyright law in 1994 and a new patent law in 1998.