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Viewing cable 06NICOSIA113, VAROSHA - THE ETERNAL BARGAINING CHIP

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Reference ID Created Released Classification Origin
06NICOSIA113 2006-01-27 15:43 2011-08-30 01:44 CONFIDENTIAL Embassy Nicosia
Tim W Hayes  01/23/2008 02:05:33 PM  From  DB/Inbox:  Search Results

Cable 
Text:                                                                      
                                                                           
      
C O N F I D E N T I A L        NICOSIA 00113

SIPDIS
CX:
    ACTION: POL
    INFO:   CONS TSR PMA ECON PA MGT DAO DCM AMB RAO FCS

DISSEMINATION: POLX /1
CHARGE: PROG

VZCZCAYO752
PP RUEHAK
DE RUEHNC #0113/01 0271543
ZNY CCCCC ZZH
P 271543Z JAN 06
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5458
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIT/AMCONSUL ISTANBUL 0952
RUCNDT/USMISSION USUN NEW YORK 0442
C O N F I D E N T I A L SECTION 01 OF 03 NICOSIA 000113 
 
SIPDIS 
 
E.O. 12958: DECL: 01/30/2016 
TAGS: PGOV PREL GR TU CY
SUBJECT: VAROSHA - THE ETERNAL BARGAINING CHIP 
 
REF: A. 05 NICOSIA 988 
     B. 05 NICOSIA 1886 
 
Classified By: Ambassador R. Schlicher, for reasons 1.4 (b) and (d). 
 
1. (SBU) Turkey's recent proposal to link the opening of 
ports in northern Cyprus to the implementation of the Ankara 
Protocol has already been rejected outright by the GOC.  The 
Greek Cypriots have made clear their preference to discuss 
the return of Varosha in exchange for limited Turkish Cypriot 
trade, under EU auspices, through Famagusta.  In light of 
this -- and given the likelihood that Varosha will feature 
prominently in any future wheeling-dealing between the two 
sides -- we thought it would be useful to provide a bit of 
background on Varosha, and on recent proposals involving the 
city. 
 
THE TOWN 
-------- 
 
2. (SBU) Varosha ("Maras" in Turkish) is Cyprus's famous 
"ghost city" abutting the Green Line.  Over 6,000 acres in 
size, Varosha hugs the island's eastern seashore immediately 
south of Famagusta.  The city was founded in Ottoman times as 
a Greek/Christian annex to Famagusta, since non-Muslims were 
forbidden to live within the city walls.  Segregation of 
Famagusta's Greek and Turkish Cypriots became even more 
pronounced during the violent intercommunal tensions of the 
1960s; Turkish Cypriots concentrated inside the old city 
walls and Varosha become almost entirely Greek. 
 
3. (SBU) Varosha grew in wealth and importance over the 
years, however.  By 1974, its booming tourist industry made 
it one of the most important centers of economic activity on 
the island.  Several hotels, restaurants and bars were 
clustered along the beachfront, and the city was home to 
about 60,000 residents.  Varosha was evacuated after brief 
but intense Turkish bombardment during the 1974 war.  Our 
consular officials are occasionally allowed to survey the ten 
AmCit-owned properties inside the closed city; they report 
eerie scenes of quickly-evacuated homes with clothes still 
hanging out of drawers and offices strewn with paper (ref a) 
-- evidence of how little time the inhabitants had to leave 
during the fighting.  The city has since been a closed zone 
under the control of the Turkish military, although small 
portions of the town have been reopened for use as Turkish 
officers, quarters, and civilians have access to a 
church/museum at the edge of the town. 
 
A LONG-TIME BARGAINING CHIP 
--------------------------- 
 
4. (SBU) Varosha has been a bargaining chip since 1977, when 
the idea of opening the town for Greek Cypriot resettlement 
was first raised in talks between Spyros Kyprianou and Rauf 
Denktash.  Although no deal involving Varosha has ever been 
consummated, the Turkish decision to keep the city unoccupied 
makes a certain amount of tactical sense.  Refugees from the 
town are a powerful lobby in the south, and Varosha's lost 
beaches are second only to Kyrenia as a focus for Greek 
Cypriot nostalgia. Shortly after the 2004 Annan Plan 
Referendum, Turkish Cypriot leader Mehmet Ali Talat publicly 
reminded Greek Cypriots that if they had said yes, refugees 
from Varosha "would have been home by now" -- an observation 
that stung many in the south, even if it did not inspire much 
Greek Cypriot second-guessing about their opposition to Annan. 
 
5. (SBU) There are also those in the south who believe that 
Varosha could be quickly revitalized as a lucrative tourist 
center, although our impressions are that most of the town 
would probably need to be razed and rebuilt from scratch. 
After 30 years of neglect and exposure to the salt air, 
Varosha's buildings would require more than a dab of paint to 
become a viable place to live or do business. 
 
POST-ANNAN HAGGLING OVER VAROSHA 
-------------------------------- 
 
6. (C) After the 2004 Annan Referendum, both sides have toyed 
with ideas to move the settlement process forward again. 
Varosha has figured prominently in these plans.  In the early 
days of Cyprus's EU membership, the GOC (which did not want 
to be forced into using its veto) sought to block the EU's 
draft direct trade regulation by proposing watered down 
alternatives to trade in order not to "upgrade the TRNC."  In 
August 2004, the GOC floated a proposal involving the return 
of Varosha in exchange for GOC agreement to allow the Turkish 
Cypriots to trade with the EU through the port of Famagusta 
(provided the port was under some kind of joint 
administration involving Greek Cypriots and/or the EU). 
 
7. (C) Holding out for direct trade, which the Turkish 
Cypriots assumed would include the opening of all ports 
including Ercan airport, Talat let it be known he would not 
accept the Greek Cypriot idea.  We are not aware that the two 
sides ever discussed this idea face-to-face in 2004, although 
it seems likely that the topic of Varosha was hashed over in 
general terms during various party-to-party contacts held 
between political leaders from the two communities. 
 
THE (IN)FAMOUS LUXEMBOURG TALKS 
------------------------------- 
 
8. (C) In spring 2005, the Luxembourg presidency decided to 
renew efforts toward some kind of deal on proposed EU 
measures for the north -- reportedly after an April meeting 
between PM Junker and President Papadopoulos in which the 
latter expressed concern that the upcoming UK presidency 
would broker a trade/aid deal inimical to Greek Cypriot 
interests.  Accordingly, the Luxembourgers invited both sides 
to closed-door talks in Brussels to discuss some kind of 
quid-pro-quo. 
9. (C) According to Turkish Cypriot "government" sources, 
there was considerable hesitation on Talat's part about 
whether to accept the invitation.  Although wary about 
allowing discussion of settlement-related issues in an EU (as 
opposed to a UN) forum, Talat ultimately agreed.  Talat 
reportedly concluded that EU-brokered talks were better than 
no talks at all and, perhaps more importantly, that he did 
not want to be portrayed as the man who wouldn't sit down and 
deal. 
 
10. (C) So in early June 2005, delegations from both sides 
held two rounds of talks in Brussels under Luxembourg 
auspices.  Varosha featured prominently in these talks. 
According to two of the Turkish Cypriot participants (Talat 
advisors Erhan Ercin and Rasit Pertev), the first round of 
the talks went surprisingly smoothly.  The Greek Cypriots 
(led by Presidential Diplomatic Advisor Tassos Tzionis and 
Cyprus Ambassador in Brussels Nicos Emiliou) reportedly did 
not immediately rule out Turkish Cypriot demands for direct 
trade and an end to sports embargoes, etc. in exchange for 
the renovation of Varosha (under Turkish Cypriot or UN 
auspices) and phased return of Greek Cypriots to the city. 
As part of this deal, the Greek Cypriots reportedly asked for 
a moratorium on property development in the north.  The 
Turkish Cypriots claim they were even presented with a joint 
Greek Cypriot-Luxembourg non-paper on the subject.  According 
to the Turkish Cypriots, this first round of talks adjourned 
for a week after the Turkish Cypriots promised to prepare 
detailed maps of the north in order to discuss the details of 
a development moratorium. 
 
11. (C) The second round of talks went nowhere, collapsing 
acrimoniously on June 15, 2005.  According to the Turkish 
Cypriots, the GOC representatives backed away from their 
initial willingness to talk about trade (which they 
reportedly insisted was solely an "interna U matr") ra 
property moratorium ("they even refused to look at our maps," 
said one Turkish ypriotdelegae).  At this point, according 
t the Trkish ypriot, they made a final "big push," 
offering the immdiate and unconditional return of Varosha to 
GOCcontrol in exchange for an end to trade and other 
"embargoes," but 
e offer was rejected. 
 
12. C) The Greek Cypriots, needless to say, paint a very 
different picture of what transpired in Brussels and cast 
much of the blame on the Turkish military.  The Greek 
Cypriots say they offered to allow EU-supervised trade 
through Famagusta in exchange for Varosha (i.e., the idea 
floated in 2004).  They blame the Turkish Cypriots for the 
collapse of talks, suggesting that Talat and the Turkish army 
were unwilling to accept territorial adjustments without a 
full settlement deal (presumably along the lines of the 
"unacceptable" Annan Plan). 
 
13. (C) Hoping to use the desire of Greek Cypriot refugees to 
return to Varosha as a lever to pressure and embarrass 
President Papadopoulos, Talat subsequently told the press 
that he had offered to return Varosha immediately, suggesting 
that the GOC was lying to the public about what had been on 
the table in Brussels.  The GOC counterattacked in full spin 
mode, denouncing Talat's offer and suggesting he was not in a 
position to follow through anyway.  Pointing to a statement 
by Talat that the Turkish Cypriot goal in Brussels was to get 
"everything short of recognition," GOC officials dismissed 
the offer as a political ploy to "upgrade the TRNC." 
 
LUXEMBOURG POSTMORTEM AND TURKEY'S NEW "ACTION PLAN" 
--------------------------------------------- ------- 
 
14. (C) We have tried, with moderate success, to triangulate 
with European diplomatic sources what actually happened at 
the Brussels talks.  The French DCM (who claimed to have 
access to "insider information" on the meetings, which 
probably means Tasos Tzionis) insisted that it was the 
Turkish army who objected to any bargaining involving their 
equities in Varosha, pulling the plug on Talat's final "big 
push" offer to give back Varosha before it could be explored. 
 The Turkish Cypriots deny this.  Although they admit they 
went out on a limb offering Varosha without pre-clearing the 
deal with Ankara, Talat's advisors remain convinced they 
could have persuaded the army to accept a deal involving 
Varosha if it involved real concessions (such as direct 
trade, direct flights, etc. from the Greek Cypriots. 
 
15. (C) It seems more likely that it was the Greek Cypriots 
who slammed on the brakes.  In late June, the EC's former 
Ambassador here, Adrian van der Meer, confided to Ambassador 
Klosson that the Commission believed the Greek Cypriots never 
intended to strike a deal, but instead were hoping to prompt 
the decoupling of EU trade and aid proposals for the north -- 
passing the latter and shelving the former. 
 
16. (C) This tracks with what we have heard from other 
sources, including a Dutch diplomat here who worked closely 
in support of her understaffed Luxembourg colleagues (who 
have no permanent diplomatic presence in Cyprus) during the 
Grand Duchy's presidency.  She remarked privately that 
Luxembourg had started its presidency generally sympathetic 
to the Greek Cypriot position, but that their experience in 
the hot seat (especially during these talks where the GOC 
appeared to have no intention of negotiating seriously) left 
them feeling angry at the GOC's tactics and more ambivalent 
Qout the m 
its of the Greek Cypriots, case. 
 
17. (C) Since then, there has been little serious discussion 
of Varosha.  The GOC has rejected, out of hand, Turkey's 
January 2006 "Action Plan" as "reheated food" that offers 
nothing new.  Government spokesman Lilikas noted that the 
Greek Cypriot proposal regarding Varosha, however, remains on 
the table -- although he gave no indication the GOC is 
prepared to go beyond it.  Apparently, the August 2004 GOC 
proposal is still "fresh;" it is only Turkey's ideas that are 
stale.  For Greek Cypriots, the question of Turkish Cypriot 
isolation is related to the Cyprus problem and Turkey's role 
as occupier and aggressor.  Discussing Turkish Cypriot trade 
in the context of settlement-related questions (like Varosha) 
is one thing; establishing a link between concessions to the 
Turks and Turkey's fulfillment of "pre-existing obligations" 
to the EU (such as the implementation of the Ankara Protocol) 
is not. 
 
NOTE ON VAROSHA OWNERSHIP AND PROPERTY LAW SUITS 
--------------------------------------------- --- 
 
18. (C) Recent property-related law suits brought by Greek 
Cypriots against Turkey (as the "occupying power") in the 
European Court of Human Rights have potential implications 
for Varosha, since many cases, including the landmark 
Xenedis-Arestis case (ref b), involve property in the town. 
The initial Turkish defense in this case was to move for 
dismissal on the grounds that the Xenedis-Arestis house was 
actually built on land owned by the Turkish Cypriot "Evkaf" 
foundation.  Indeed, many Turkish Cypriots still maintain 
that most of Varosha rightfully belongs to Evkaf, but that 
the land was illegally seized by Greek Cypriots or sold to 
them under duress at rock-bottom prices by Turkish Cypriots 
forced to flee during the 1960s.  The ECHR disagreed with 
Turkey's claim, however, (at least with regard to the 
Xenedis-Arestis property) and allowed the suit to go forward. 
 
 
19. (C) Ultimately, the ECHR ruled the Turkish side must set 
up an "effective local remedy" to deal with Xenedis-Arestis 
and other complaints over seized property.  The December 2005 
Turkish Cypriot law establishing a Property Commission was an 
attempt to comply with this directive and (theoretically) 
provides for restitution of -- or compensation for -- 
property in Varosha.  If the ECHR accepts this law as 
effective local remedy, the Turks and Turkish Cypriots would 
be forced either to return Greek Cypriot property in Varosha 
or buy out the previous owners. 
 
20. (C) In either case, Varosha's utility as a Turkish 
bargaining chip could be diminished.  But the sheer number of 
refugees from Varosha and the amount of the property there 
make it unlikely Greek Cypriot claims will ever be fully 
settled by the courts or the Property Commission.  Varosha is 
set to remain an unresolved bone of contention -- and a 
potential deal-sweetner -- in any future talks between the 
two sides. 
SCHLICHER