VZCZCXRO0224
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHNC #0273/01 0581604
ZNY CCCCC ZZH
P 271604Z FEB 06
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5613
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNDT/USMISSION USUN NEW YORK 0464

C O N F I D E N T I A L SECTION 01 OF 02 NICOSIA 000273 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/28/2016 
TAGS: PREL PGOV UN EUN TU CY
SUBJECT: CYPRUS REACTS TO EU AID PACKAGE FOR TURKISH 
CYPRIOTS 
 
REF: LIBBY-MARCIEL-SKINNER EMAIL (6/17/05) 
 
Classified By: Ambassador R. Schlicher, for reasons 1.4 (b) and (d). 
 
¶1.  (C) SUMMARY.  The EU's decision to approve its 
long-awaited 139 million euro aid package for the Turkish 
Cypriots has been welcomed as a triumph of diplomacy on the 
Greek Cypriot side.  GOC contacts note that the shape of the 
aid package -- as well as the content of an accompanying 
declaration -- "meets all our requirements."  The Turkish 
Cypriots, however, are bitter that the EU has "given into 
Greek Cypriot pressure" over aid, even as Talat's staff 
privately admit that the accompanying declaration is "not as 
bad" as what had been proposed by the Commission in late 
¶2005.  While apparently unwilling to block implementation of 
the EU's assistance money, the Turkish Cypriots feel the aid 
will not contribute to the development of their economy 
absent direct trade, which remains on hold.  They also expect 
the GOC to use its concerns over Greek Cypriot property in 
the north to limit the scope of EU assistance projects. 
European diplomats here generally welcome the passage of this 
aid package as an end to a long-running EU institutional 
headache.  While the deal will give the Turkish Cypriots an 
opportunity to strengthen their still-nascent relationship 
with the EU and its myriad institutions, the immediate 
beneficiary is Tassos Papadopoulos.  The Cypriot President is 
using the agreement both to burnish his image and strengthen 
his hand in advance of his February 28 meeting with UNSYG 
Annan.  The Turkish Cypriots, meanwhile, are expressing fears 
that their "flexible" approach to the Greek Cypriots and the 
EU has brought them nothing but grief.  END SUMMARY. 
 
GREEK CYPRIOTS GLOAT 
-------------------- 
 
¶2. (C) The EU's decision to pass the long-delayed assistance 
package for the Turkish Cypriots has been welcomed as a 
diplomatic triumph in the south.  One MFA contact noted to us 
that the package "meets all our requirements," pointing to 
provisions which mandate "consultation" with the ROC over 
implementation of aid projects, especially where such 
projects "might affect property rights" -- as well as an 
annex stipulating that the EU office overseeing assistance 
would be located in the south. 
 
¶3. (C) In public, however, the biggest news has been language 
in the accompanying declaration linking further measures for 
the Turkish Cypriot economy to issues "that formed the basis 
of consultations held under the Luxembourg Presidency."  This 
is a reference to June 2005 talks held between the two 
communities (ref email), in which the Luxembourgers tried, 
and failed, to broker a deal that would have given the 
Turkish Cypriots aid and some liberalization of trade with 
the EU (perhaps even direct trade) in exchange for some 
combination of a property moratorium and the 
renovation/return of Varosha. 
 
¶4. (C) Despite his insistence that he was "neither bragging 
nor celebrating," Papadopoulos celebrated the February 24 
COREPER decision, bragging that finally "the issue of the 
return of occupied Famagusta to its lawful inhabitants had 
come under the realm of the European Union." 
 
TURKISH CYPRIOTS GRUMBLE 
------------------------ 
 
¶5. (C) The Turkish Cypriots, however, feel that by passing 
its assistance package without the direct trade measures 
originally conceived to go with it, the EU has once again 
"given in to Greek Cypriot pressure" and guaranteed that its 
aid package will have little positive impact on the Turkish 
Cypriot economy.  In private, Turkish Cypriot officials 
acknowledge that this official decoupling of trade and aid 
has come as no surprise to them, but nonetheless are angry 
that the EU-25 have agreed to an aid package "filled with 
concessions to Papadopoulos."  In a press release, 
"President" Talat's office focused on the accompanying 
declaration, saying it did "not consent" to its content and 
criticizing the reference to the Luxembourg talks as a 
"possible loophole through which UN issues could be dragged 
onto the EU platform." 
 
¶6. (C) Nonetheless, Talat's U/S Rasit Pertev (please protect) 
suggested to us that the Turkish Cypriots had decided not to 
block the actual implementation of the aid measure, which 
"would cause us more trouble" than it was worth.  Although 
the Turkish Cypriots felt they "had to go on record" with 
criticism of the aid, the EU's reference to the Luxembourg 
talks was "vague" and "not as bad as it could have been" 
because it made no specific mention of "unacceptable" Greek 
Cypriot demands from the Luxembourg talks -- a unilateral 
 
NICOSIA 00000273  002 OF 002 
 
 
freeze on property development and the return of Varosha. 
Pertev was still angry, however, that the final aid package 
had been agreed to "over our heads."  He was certain that the 
Greek Cypriots would see to it that property concerns and 
other "political" considerations would limit the scope of 
specific aid projects to the point that European assistance 
would be economically meaningless. 
 
¶7. (C) By passing aid in a form that met Greek Cypriot 
demands, Pertev suggested that the EU was inviting further 
Greek Cypriot hardball tactics -- and slowly painting Talat 
into a corner.  The Turkish Cypriots already regretted their 
decision to "show flexibility" during the Luxembourg talks by 
agreeing to discuss settlement-related issues outside a UN 
context again.  They would "never ever ever" agree to discuss 
such issues in an EU context.  The Turkish Cypriots "were 
still paying the price" for their decision to do so last year. 
 
COMMENT 
------- 
 
¶8. (C) European diplomats here, including the British (who 
usually see eye-to-eye with us on Cyprus issues), have 
welcomed the EU aid agreement and praise the Austrian 
Presidency for defusing this long-running institutional 
headache.  Indeed, the Austrians do deserve credit for 
walking the Greek Cypriots back from the demands they made in 
late 2005, when the GOC insisted on an accompanying 
declaration that explicitly mentioned Varosha and property. 
Furthermore, even a limited aid program will benefit the 
Turkish Cypriots -- even if it is politically inconvenient 
for Talat -- by deepening and institutionalizing the 
community's ties with European institutions. 
 
¶9. (C) Nevertheless, the biggest beneficiary of the EU aid 
program, at least in the short run, is likely to be Tassos 
Papadopoulos.  Having secured a politically useful 
declaration -- and effectively watered down key elements of 
the aid package -- Papadopoulos can now play the role of 
magnanimous statesman by allowing assistance to move forward. 
 This strengthens his hand in advance of his February 28 
meeting with UNSYG Annan.  Even as he has given little 
indication that he is ready to move forward with real 
give-and-take on substantive matters relating to the Cyprus 
problem, Papadopoulos may hope that this gesture will help 
prod Annan into taking a more active role in the Cyprus 
problem -- which the ruling DIKO-AKEL coalition would like to 
see before legislative elections in May.  In addition to this 
"positive" GOC gesture, last week's Turkish refusal to allow 
a Greek Cypriot ship to dock in Mersin has also let Tassos go 
into the Annan meeting looking "the good guy." 
 
¶10. (C) The Turkish Cypriots view the tortured process that 
led up to today's aid decision as a lesson in the dangers of 
showing "flexibility" toward the current Greek Cypriot 
administration.  Fearful of a "Luxembourg trap," Talat is 
likely to be much more circumspect about negotiating 
confidence-building measures currently being contemplated by 
the UN, such as the opening of Ledra Street or the 
demilitarization of Old Nicosia.  END COMMENT. 
SCHLICHER