Police in Reykjavik, Iceland after a violent protest turned into a riot on January 20. Photo: finnur.malmquist (flickr)

It’s a lot worse than just about everyone thought. By some estimates, the economic crisis could cost 50 million jobs worldwide. That's a catastrophic number, and even their potential loss is already fueling some discontent and sounding alarms.

Worried about the ripple effects of widespread unemployment, the U.S. Central Intelligence Agency recently added the state of the economy to the agency's list of top security threats. Retired Admiral Dennis Blair, the U.S. Director of National Intelligence, warned that "economic crises increase the risk of regime-threatening instability if they persist over a one-to-two-year period."

On the international stage, United Nations Secretary-General Ban Ki-moon voiced his concern: "If not handled, today’s financial crisis will become tomorrow’s human crisis. Social unrest and political instability will grow, exacerbating all other problems."

Violent flare-ups over the economic recession and resulting unemployment are already occurring all over the globe.

In Pakistan, chronic power outages have forced many textile factories to close down for hours at a time, triggering thousands of angry protesters to set fire to the state-owned power company's office. Government cuts in Lithuania’s social programs prompted protesters to pelt the parliament building with eggs and rocks ; at least 14 people were injured and 84 detained. Chinese police officers are now undergoing special training to deal with expected social unrest over factory closings that have left millions of migrant workers out of a job.

Iceland and Latvia serve as extreme examples of the devastating consequences from the declining state of the worldwide economy: both countries’ respective governments collapsed under the pressure of the economic crisis.

However, security experts are concerned about other forms of collateral damage that extend beyond protests. Bruno Tertrais, a strategic and security expert at the Foundation for Strategic Research in Paris tells Time Magazine that he believes the biggest threat to international security is "the collapse of regimes vital to maintaining international order." Tertrais cites Somalia as an example — a place where, after the collapse of its government, piracy has gained a foothold and severely disrupted shipping routes along the horn of Africa.

Extreme poverty has always posed a threat, especially in the world’s emerging economies. However, the breadth and force of the current global economic crisis poses a threat to all nations, whether rich or poor.

Buffer zone in Nicosia. Photo: Bree Freeman

The last divided capital city in the world is Nicosia, Cyprus. Armed soldiers line each side of a buffer zone, with Greeks living on one side and Turks on the other. The island has been at the center of a decades-long dispute between Greece and Turkey that remains one of Europe’s biggest headaches.

But Cyprus today might be closer to a solution than ever before. When Turkish forces invaded and divided the island in 1974, the two communities were separated: Turks in the north and Greeks in the south.

New, more moderate leadership in both the north and south makes unification and compromise more likely. And people in the north — whose standard of living lags far behind their southern counterparts — may be ready for the economic benefits their neighbors are enjoying.

The south has grown far wealthier than the north since 2004, when Cyprus entered the European Union. (Cyprus in this case refers to all land not part of the Turkish Republic of Northern Cyprus, often referred to as the TRNC, the northern third of the country governed by Turkey.) Cyprus adopted the euro, began receiving EU subsidies, and started trading freely within the European market. By contrast, the north has been limited to trade with Turkey, the only country that recognizes it as a legitimate state. Its GDP is around one third of the south’s.

The effects of isolation are seen clearly in north Nicosia, where homes are missing shutters, streets are full of potholes, and many wear tattered clothing. By contrast, walk 10 minutes south and just beyond the buffer zone you’ll see gourmet restaurants, chic clothing stores, and well-to-do European vacationers enjoying their afternoon frappé.

Though the gap in living standards has worsened since 2004, it could be this very disparity which ultimately brings the island together. When he took office in 2005, TRNC President Mehmet Ali Talat said finding a solution to “the Cyprus problem” would be his main initiative. Since then he has started negotiations with the south along with key international players, and has recently addressed the Council of Europe’s PACE General Assembly – the first northern Cypriot President to do so.

If the island achieves unification, both sides have much to gain. In addition to reducing poverty in the north by way of its integration into the EU, many Greek refugees who fled south in 1974 may finally have the opportunity to return home. Furthermore, the world’s last divided capital city may become whole.