The author analyzes the situation in Cyprus upon the background o f the Annan plan and the recent parliamentary elections. The article covers the main events andfactors that have a bearing on the current sitaution in the Turkish Republic of Northern Cyprus (TRNC). The analysis concerns the Turkish prime minister's pre-election visit to the TRNC, political campaigning for the elections, external and internal factos influencing the elections, its results and Turkey's reactions to the election results and the new government. The author contends that President Denkta$ envisages 'a single new state created by the two existing states'. As to the form o f the union, he believes that 'a corifederal system would have more chance of success than afederal system. Ifthis works well the two sides may decide in future to establish a closer union'.