As I remember Cyprus, multi-culturism wasn't the problem: two conflicting cultures created it.
As ever, the basic difficulty stemmed from the outside interference of the "motherlands", as it were, sowing crappy dreams of taking over the entire island within the embrace of one of them.
Left to themselves, the Cypriots had a beautiful island that I worked on several times; it could have been the class leader in terms of Mediterranean tourism. From skiing to swimming in a single day...
Rob