PERCHED on a hilltop a few miles from the sea, the Christian Maronite village of Kormakitis, in Turkish-controlled northern Cyprus, is running out of time. In 1974, when Turkish troops invaded the island following a Greek Cypriot coup, the town was home to some 2,000 people. Today about 110 pensioners remain. They spend their time at the café joking in the indigenous dialect, a blend of Arabic, Aramaic and Greek. Their children, who have moved to the richer Greek part of the island, visit on holidays. A Lebanese priest leads prayers at the newly restored church. Every fortnight a UN convoy arrives from Nicosia, the capital, carrying supplies.

“There is no work here, no school and no room for investment,” says Napoleon Terzis, who worked in the Greek south as an air-traffic controller before returning to retire. Without jobs, he says, the town, its language and its people, who moved here from Lebanon in the 12th century, all face extinction. Mr Terzis and his friends place their hope in a united Cyprus.

That prospect may be within reach. Since last year, Nicos Anastasiades, president of the Republic of Cyprus, and his counterpart, Mustafa Akinci, of the self-declared Turkish Republic of Northern Cyprus (TRNC), have met at least 25 times to hammer out a deal. Both sound optimistic. “A solution is possible within months,” says Mr Akinci.

Analysts agree. The Eurasia Group, a consultancy, estimates the likelihood of a settlement at 60% by the end of 2016. A parliamentary vote in the south, scheduled for May, and a government crisis in the north may delay the talks, but will not scupper them.

Cypriots have been here before. In 2004, on the eve of the island’s accession to the European Union, a UN reunification plan was put to a referendum. Turkish Cypriots voted in favour. The Greek side voted against. Cyprus remained split, with the north recognised by only one country, Turkey. The difference now, says Espen Barth Eide, the UN envoy chairing the talks, is that both sides are on board. In 2004 the then Greek Cypriot president campaigned against reunification. “This time, the deal will be written by Cypriots,” Mr Eide says.

Officials on both sides say they have made headway in areas including power sharing, property and applying EU law in the north. But the biggest hurdles are ahead. One anxiety is the bill. Compensation for the 160,000 Greek and 40,000 Turkish Cypriots forced to abandon their homes in 1974 will cost billions of euros. “There’s no way the international community will offer that kind of money,” says Fiona Mullen, head of Sapienta Economics, a Nicosia-based consultancy. The south, still convalescing from a banking crisis and a €7.3 billion ($8.3 billion) bail-out, cannot take on much more debt.

But concerns about money are also driving the talks forward. A settlement could add almost 3 percentage points to the country’s annual growth rate over the next 20 years, says a report by the Peace Research Institute Oslo (PRIO). For the south, reunification would mean access to the $800 billion Turkish market, as Turkey does not recognise the republic. For the north, it would be a chance to tap EU funds and revamp an economy that now subsists on tourism, casinos, strip clubs and a bloated public sector bankrolled by Ankara. Cypriots on both sides know that a deal might be their only chance to market the island’s plentiful offshore gas deposits.

Reminders of old grievances abound. Near a crossing on the southern side of the UN buffer zone, photos document the killing of a Greek Cypriot protester by Turkish ultranationalists. On the northern side, a sign bears the words “Turkish Republic of Northern Cyprus—Forever”.

It will take more than a peace settlement to compel Greeks and Turks to live as neighbours again. “People cannot imagine going back to their old homes,” says Cevdet Ozguler, a Turkish Cypriot who fled his village in the south after the war. “They would rather stay where they are and seek compensation.” Even when unified, the island will remain a loose federation divided on ethnic lines.

For many Greek Cypriots, anything short of a complete withdrawal of the 40,000 Turkish troops stationed in the north would be a deal-breaker. That gives Turkey and its president, Recep Tayyip Erdogan, a veto over the talks. Turkey has publicly backed a settlement. Buffeted by IS suicide bombings, a Kurdish insurgency, a row with Russia, and nearly 3m refugees, Mr Erdogan’s government might be glad to take at least one longstanding conflict off the table. It could also use the $1 billion it spends each year on the TRNC.

Yet Mr Anastasiades and Mr Akinci both say time is working against reunification. Young Cypriots, accustomed to life on a divided island, are drifting further apart. In Kormakitis, the sense of urgency may be even greater. Without a solution, the town’s children and grandchildren may never come back, frets Mr Terzis, as he drinks coffee beneath portraits of Lebanese politicians and Catholic popes. “We do not want to be the last generation.”