VZCZCXRO9553
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHBS #1306/01 1081622
ZNY CCCCC ZZH
P 181622Z APR 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 001306 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
E.O. 12958: DECL: 04/18/2017 
TAGS: PREL EUN CY TU
SUBJECT: LOW EXPECTATIONS FOR GERMAN-LED TALKS ON DIRECT 
TRADE FOR N. CYPRUS 
 
 
Classified By: ENLARGEMENT UNIT CHIEF VINCENT CARVER FOR REASONS 1.5 (B 
/D). 
 
SUMMARY 
- - - - - 
 
¶1.  (C/NF) Without disclosing details, the German Mission 
told us April 18 that German talks April 17 with northern 
Cypriot advisor Pertev on direct trade provided no 
breakthrough.  The German and British missions and the 
Commission Office for northern Cyprus have told us separately 
that they doubt a deal on direct trade will be reached during 
the German Presidency.  All three contacts claimed that the 
lack of movement on direct trade would not negatively affect 
Turkish accession negotiations on "technical" chapters -- at 
least not this year.  Greek Cypriot advisor Tzionis meets 
with the Germans in Brussels April 24.  END SUMMARY 
 
GERMAN TALKS WITH PERTEV  LITTLE NEW 
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¶2.  (C/NF) The German Mission is keeping details of the talks 
it is brokering on direct trade with northern Cyprus very 
close hold.  Nevertheless, the German Mission told us April 
18 that it is quietly trying to persuade the Greek Cypriots 
and the Turkish Cypriots to find enough room to compromise 
and open Famagusta for direct trade.  In this regard the 
German MFA Director for European Affairs met northern Cypriot 
advisor Pertev in Brussels April 17.  Commission officials 
participated in parts of the discussion devoted to technical 
issues. 
 
¶3.  (C/NF) According to our German contact, Pertev had little 
new to offer: he stressed that if no deal were to be reached 
during Germany's presidency, Talat might "abandon" the EU 
track.  Pertev also stressed the need for Turkish Cypriot 
entrepreneurs to compete on an equal footing with Greek 
Cypriot ones should any contracts be awarded as the result of 
a possible deal.  In addition, Pertev emphasized that the 
Greek Cypriots should have no say in implementing details, 
such as certification, should a deal be reached.  Finally, 
Pertev complained that the Turkish Cypriots were learning of 
Greek Cypriot counter-proposals (NFI) only through third 
parties, rather than directly from Nicosia.    Asked what the 
Germans' next step would be, our contact said that 
Papadopoulos' diplomatic advisor, Tasos Tzionis, would come 
to Brussels April 24 for talks. 
 
IF GERMANY CAN'T DELIVER, LITTLE PROSPECT FOR PROGRESS IN 
COMING YEAR 
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- - - - 
 
¶4.  (C/NF) Our German source acknowledged that expectations 
for a breakthrough were low.  Berlin, however, will continue 
to try to move the parties closer together, in part because 
it does not see the upcoming Portuguese and Slovenian 
presidencies as placing much emphasis on resolving the direct 
trade issue.  Our German contact reiterated his observation 
from the previous week -- no member state wants to expend the 
political capital to press Nicosia to live up to its December 
2006 and January 2007 commitments to allow for direct trade. 
 
BUT TURKISH ACCESSION NEGOTIATIONS SHOULDN'T BE HARMED ... 
MAYBE 
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- - 
 
¶5.  (C/NF) A Commission official dealing with northern Cyprus 
and a UKEU contact confirmed this.  Our Commission source 
said that Nicosia is playing hardball on direct trade while 
trying to be slightly more flexible on the Gambari process 
and CSBMs, such as crossing points access.  Nicosia has also 
largely refrained from stalling the Turkish chapter 
negotiations (confirmed by our German and UK contacts, both 
of whom predicted that two or three more chapters (financial 
controls, economic and monetary policy, and statistics) might 
be opened in June. 
 
¶6.  (C/NF) Pushing Nicosia on direct trade could lead to both 
a collapse of the German-led talks and to an even tougher 
Cypriot line on opening additional chapters for Turkey, our 
British colleague underscored.  He added that, in his 
personal view, the best policy would be to promote progress 
in Turkey's "technical" chapter negotiations while keeping 
Papadopoulos and Talat talking indirectly on direct trade. 
According to our British contact, this is probably the most 
one can hope for given the Turkish presidential and 
parliamentary elections, as well as the Cypriot elections 
next year.  He concluded that, if the Turks genuinely begin 
to implement their recently announced action plan (which none 
 
BRUSSELS 00001306  002 OF 002 
 
 
of our contacts had yet seen) for EU integration, so much the 
better for moving forward in 2008. 
 
COMMENT 
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¶7.  (C/NF) While our contacts are not optimistic that the 
German-led talks will succeed, they are more sanguine that 
Turkish accession negotiations will not stall -- at least not 
this year -- as a result.  The great unknown appears to be 
how hard Nicosia may push for the introduction of 
"normalization" (Turkish recognition of the ROC) as a 
condition for opening any more chapters, including even the 
technical ones that our contacts predicted might be opened in 
June.  With neither the Germans nor the British apparently 
willing to face down the Greek Cypriots (and, as usual, 
probably a few other member states hiding behind the Cypriots 
as well) we hold little expectation that an agreement on 
direct trade will be reached during the German Presidency. 
GRAY 
.