Well, first of all, tracking an item can take a long time, and it's an arduous process. It could take a long time before the post office assumes any responsibility. Also, they might only do so if it was insured. I don't know how they handle mail there in Cyprus.
However, you have a few options. You can either explain to the customer that the item was shipped and that you have no control over shipping, or you could tell them that you are going to reship the item and eat the cost. The second option is impossible if the item you shipped was one of a kind, expensive, or time consuming to produce, but it may be against your nature to do so, anyways. A third option would be to refund the order. This might be hard to do if the item you sold costs a lot in material.
I don't know what is most realistic to your scenario, but I would either refund, or tell them that the item is shipped and no longer your responsibility. You risk bad feedback from the seller no matter what you do, so really it's all up in the air.
I wish you the best of luck! These situations are not fun, and I've been in your shoes so I know how you feel. Hopefully you don't get the bad feedback and your customer becomes more understanding about the situation.