Nicosia, Cyprus — ''This little island used to be paradise,'' said the Greek-Cypriot telephone company worker, ''but half a paradise is better than none at all.'' Since Turkey invaded 10 years ago, one of the most remarkable achievements of the Republic of Cyprus, the Greek sector, has been its economic reconstruction.
In July 1974, Turkish forces took over 38 percent of the island, which included the majority of Cypriot economic production.
The north accounted for nearly 70 percent of the island's production and included over 70 percent of its infrastructure for tourism. The port of Famagusta handled approximately 80 percent of all cargo. The richest agricultural land, also located in the north, accounted for more than 50 percent of total agricultural output.
''We were desperate,'' says Iakovos Aristidou, director general of the Planning Bureau of the southern Cyprus. ''The south almost doubled in population. . . .'' So the government placed its emphasis on ''survival, reactivation,'' taking every measure ''just to keep going.''
Appearances alone testify to the policy's success. Scarcely a village exists in southern Cyprus where the old buildings are not dominated by modern, rectangular houses, topped with solar water heaters. The cities have been swamped by new apartment blocks, office buildings, and hotels.
Even in the old town of Nicosia, surrounded by virtually intact ramparts built by the Venetians, the old is jostled by the new. Restaurants and shops are open for business within a few feet of the roadblocks separating the Greek and Turkish sectors.
Statistics back up the appearances. From a high of 35 percent immediately after the Turkish invasion, unemployment fell to 8.3 percent by 1976, to a low of 1.7 percent in 1977. It now stands at 3.3 percent. The rate of inflation was a relatively low 5.3 percent in 1983. Within four years of the invasion, the real gross national product of the south had reached the same level as for the entire country before 1974. Since 1976, the GNP has risen 70 percent, industrial production nearly 50 percent, agricultural production 15 percent.
With this rapid growth, Cyprus has shifted from a predominantly agricultural country to one that is more urban and whose economy has shifted toward greater reliance on tourism, manufacturing, services, and construction.
An important reason for the change came from the effort to house and reactivate the 200,000 Greek-Cypriot refugees from the north. Villages of new apartments and houses have been constructed for the displaced Cypriots, when possible using refugee labor, engineers, and architects. Other refugee families have taken advantage of the so-called ''self-help housing.'' The government provides the land, infrastructure, and financial assistance, and the recipient builds his own house.
The government also provided guaranteed loans for individuals to restart their businesses lost in the north. Most rehired their old employees, thus absorbing some of the refugee unemployment. ''For every two persons helped, three more got jobs,'' according to A. Callimachos, director of the special service for the care and rehabilitation of displaced persons. Industrial parks were established, where new factories produce furniture, shoes, clothing, foodstuffs, and some machinery.
Most of the refugees seem satisfied with the efforts the government has made. Christos Constantinou, a 25-year-old refugee from a village near Famagusta, owns a poultry farm with his father and also works construction to pay for his shiny new Volvo.
''The government has done everything it could, I think,'' he said. ''But they can never, I am afraid, give me what I really want: a chance to go back home and settle after I marry.''
The rosy economic picture is not without blemishes.
''People speak of an 'economic miracle,' but we do not have one,'' said Takis Hajidimitriou, secretary-general of the Socialist Party. ''We face a (STR)1 million ($1.8 million) daily deficit in our balance of payments. Ten thousand people are living on welfare with only (STR)30 ($54) a month, and 40,000 are on pensions. Our economy is overdependent on fragile industries, mainly construction and tourism. It's a fool's world.''
Mr. Aristidou acknowledges the problem, but points out, ''we have not had the time or the appropriate setup to go for the most rational type of development.''
Panayiotis Loizides, secretary-general of the Cyprus Chamber of Commerce and industry, says that while the Cypriot economy faces serious problems, its nature will allow it to overcome them.
The economy also continues to benefit from the civil war in Lebanon, as many companies previously based in Beirut have moved across to Cyprus. Since 1975-76, 2,000 offshore companies have established here. Their directors mention geographical location, sophisticated communications, educated work force, and attractive financial incentives as the reasons for choosing Cyprus.