PYLA, Cyprus — Maksim Restaurant sits on the United Nations “green line,” which separates the Greek and Turkish sides of this divided island, but it’s a popular stop for members of both ethnic groups.

On Friday nights the restaurant thumps with music and dancing, and Greeks drive 40 minutes to get here from the capital in Nicosia. Yet owner Hasan Celebi dismisses a suggestion that his business might offer hope for two peoples who share a bloody history and now a cold peace on this small Mediterranean island.

“Greeks from our village never come here,” Celebi said. “Only from Larnaca and Nicosia. . . . If you talk to a Pyla Greek, the other Greeks think you’re spying for Turkey. They say, ‘No, don’t talk to him.’ “

With 850 Greeks and 500 Turks living here, Pyla is one of only two villages in Cyprus where the old foes still live together and govern under power-sharing arrangements. While some in Cyprus’ Greek government say Pyla proves that peace would be possible in a unified country, many villagers see little reason for cheer. Their pessimism casts a shadow on the U.N. effort to end the Turkish occupation of Northern Cyprus and reunify the Greek and Turkish sides of the island before Cyprus joins the European Union in 2004.

Cyprus’ two nationalities have been mostly separated since the Turkish army invaded and seized the northern 35 percent of the country in 1974. Ankara established a puppet Turkish Republic of Northern Cyprus, recognized by no other nation, and 142,000 Greek refugees fled the Turkish Army in the north because of what they said was a campaign of ethnic cleansing. Meanwhile, most Turks left the Greek side for the north, where Turkey also resettled 115,000 of its citizens from the mainland.

The U.N. has repeatedly condemned the occupation. But the latest round of unification talks fizzled in December when the Turkish side failed to accept U.N. Secretary General Kofi Annan’s plan to create a federated government.

At first glance, Pyla resembles a typical Cypriot village. A stone mosque with a rocket-shaped Turkish minaret rises above the city square, and there are three churches in town, the largest a cathedral-like edifice that flies the flag of Greece, like most Orthodox churches in Cyprus.

But this is no ordinary village. A U.N. civilian post sits on top of a building downtown, so that 35 Australian and Irish civilian police can keep an eye on the city. The groups mostly socialize at separate taverns. Turks gather around a table to play cards at the Pile Turk Kahvehanesi, whose sign is decorated with a Turkish flag. Across the square, Greeks sip coffee on the veranda of the Pylaz i Makedonia tavern, where a Greek flag is prominently painted.

On a bluff above the village hunkers a Turkish Army garrison, its flags fluttering in the bright Levant sky. The Greeks regard the unit uneasily and are grateful for the Slovak soldiers and foreign police who patrol the city.

“We don’t feel safe,” said Stavros Stavrou, secretary of the Greek mayor’s office, known as the Pyla Village Council. “That observation point is a permanent violation of the ceasefire: They’re in the buffer zone.”

But the village’s Turks say they wouldn’t have it any other way. “Our only guarantee of safety is the Turkish Army,” said Akhmet Sakalli, the 66-year-old mayor of Pyla’s Turks. “If the Turkish Army leaves from that hill, we are going to leave with them. If they leave Cyprus, we are going to follow them.”

Turks remember when Greek zealots sought to unify this former British colony with Greece — from before independence in 1960 until the Turkish invasion in 1974. Violence often flared. Greek zealots bombed a Turkish press office, and there was civil war in 1958. On other occasions, snipers fired at Turkish vehicles, and mobs attacked Turks.

Yet the Turkish invasion drastically altered the face of Cyprus. Once, Greeks and Turks encountered each other daily in villages throughout the island. Now, Pyla is so unusual it draws foreign journalists and tourists.

Pyla’s form of government is shared by the mixed ethnic hamlet of Potamia. Greeks and Turks each have their own mayors. There are separate school systems, even separate soccer fields.

The Irish and Australian policemen patrol the streets. If a Greek commits a crime, he is subject to Greek Cypriot law, and officers come from nearby Larnaca to deal with the case, said Sean F. Corcoran, the Irish police superintendent. If the suspect is Turkish, police from the northern side question him. When a Greek and a Turk are involved, the two mayors sit down with Corcoran to hash it out. Mostly, such cases involve traffic accidents.

But different systems of taxation cause resentment for Pyla’s Greeks. Stavrou said Turkish Cypriots regard themselves as residents of the northern sector and refuse to pay taxes to the Republic of Cyprus’ Greek government. So they receive their electricity free and drive on roads they don’t help maintain, he said.

“Some people see Pyla as a model of solving the Cypriot problem,” Stavrou said. “But I say no. Pyla is partially a model as concerning living and working together. But as far as sharing the costs to make a better village, no.”

Still, some are finding hope in Pyla. While many village residents are pessimistic, Cypriots from outside the buffer zone are using Pyla to open a window of understanding. A group called Youth Encounters for Peace, or YEP, regularly brings together Cypriots from the Turkish and Greek sides of the island in Pyla, said organizer Nicos Anastasiou, a Greek Cypriot living in Larnaca. It has created a joint Turkish-Greek choir and traditional dance group.

Once Anastasiou met a Turkish Cypriot in his 50s whose father had been killed by Greeks before partition. “But he didn’t harbor any hatred for Greek Cypriots . . . because he grew up with Greeks and didn’t blame them for what a few madmen did,” Anastasiou said.

When YEP publicized the man’s story, a Greek Cypriot from the unoccupied area asked if a meeting could be arranged. It turned out that his father had been killed by Turks, yet he also had managed to avoid being consumed by ethnic hatred. “These two met, and they went outside and sat under a tree and told each other their stories,” he said. “And they became best of friends.”

If only that could happen for the Greeks and Turks of Pyla, as well.

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