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UNCLAS NICOSIA 000478 
 
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USDA FOR FAS 
 
E.O. 12958: N/A 
TAGS: TBIO EAGR ECON ETRD SENV EUN CY
SUBJECT: CYPRUS RISKS EU SANCTIONS OVER BAN ON BIOFEULS WITH BIOTECH 
CONTENT; PLANNING FURTHER STEPS 
 
REF: NICOSIA 400, B) 06 NICOSIA 1822 
 
(U) This cable is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary.  On May 17, the Cypriot parliament voted 25-24 to 
keep in place a ban dating to June 2005 on the "sale or distribution 
of biofuels produced with genetically modified plants," thereby 
risking sanctions from the European Commission.  Biotech is not an 
issue that has any proponents in Cyprus, and politicians generally 
see opposing biotech as a cost-free way to win votes and to curry 
favor with the small but influential anti-biotech lobby.  We 
understand that the Green Party is planning to introduce a bill this 
fall to make Cyprus a "GMO-free zone." 
 
¶2. (SBU) The government is also no fan of biotech.  Nevertheless, 
the GoC's official position is that Cyprus, as a member of the EU, 
should follow EU biotech policy, and under pressure from the 
Commission, it lobbied for a repeal of the ban.  Within the EU, 
however, the GoC is working to further limit biotech, and it 
regularly votes against any approval of new biotech varieties within 
the European Council.  The government is also busy preparing a 
"scientific" case to the Commission requesting a derogation from the 
acquis to allow Cyprus to ban the import and cultivation of certain 
biotech seeds.  In the run-up to Cyprus's accession to the EU and 
adoption of EU biotech policy, U.S. cereal producers lost millions 
of dollars of exports to Cyprus.  Cyprus's ban on biotech biofuels, 
however, has yet to directly affect U.S. producers.  This could 
change, though, if Cyprus develops a biofuels market, or if the ban 
emboldens the Cypriot parliament and/or larger EU markets to 
introduce more significant anti-biotech measures.   End Summary. 
 
 
Attempt to Repeal Ban on Biotech Biofuel Fails 
--------------------------------------------- - 
¶3.  (SBU) On June 24, 2005, Cyprus passed a law promoting the use of 
biofuels in Cyprus (Law number 66(I), of 2005).  At the insistence 
of several MPs, the House added a provision to this law banning the 
sale and distribution of biofuels made from biotech plants. 
Specifically, Article 6 of the law sets out appropriate standards 
for biofuels (e.g., they must contain certain minimum percentages by 
biofuel content and conform to Cypriot standard CYSEN 14214, and 
European standards EN 228 and EN 590) and then adds: "It is 
understood that the sale and distribution of biofuel produced from 
genetically modified plants is prohibited." 
 
¶4.  (SBU) The European Commission has been in contact with the GOC 
on this issue since the passage of this law and has begun a formal 
infringement procedure.  According to the Cypriot Legal Service, the 
Commission has sent the GOC "two or three" letters, gradually 
stepping up pressure on the GoC to abolish the ban on the grounds 
that the ban violates the EU acquis and the free moment of goods.  A 
source in the Environment Service of the Ministry of Agriculture 
told us that they expected that a failure to repeal the ban could 
expose Cyprus to potential fines of up to 9 million Euro. 
 
¶5.  (SBU) In December 2006, the Energy Department of the Ministry of 
Commerce, Industry and Tourism, drafted a bill amending the existing 
biofuels law, with a view to introduce incentives for the use of 
biofuels and to harmonize Cypriot legislation with the latest EU 
directives on this issue.  Among other things, the bill included a 
provision eliminating the ban on biofuels made from GMO plants.  On 
April 19 the parliament passed all the provisions of this bill 
except for the repeal of the biotech ban, prompting the President to 
send the bill back to the parliament for a second reading.  Despite 
testimony from the Attorney General's Office and the Ministries of 
Agriculture and Commerce that failure to remove the ban could lead 
to EU sanctions, on May 17, the Parliament voted 25 to 24 in favor 
of keeping it.  Governing coalition members AKEL, EDEK, and the 
Greens all voted to keep the ban, while only the President's party 
DIKO and opposition DISY voted for its repeal. 
 
GoC Opposes Biotech but Committed to Honoring EU Rules 
--------------------------------------------- --------- 
 
¶6. (SBU) Despite its support -- under EU pressure -- to remove the 
ban, the GoC is no fan of biotech.  Cyprus has voted against 
approval of every new biotech variety within the European Council 
since it got a vote in 2004.  This policy is unlikely to change 
anytime soon despite the recent retirement of the head of the 
Environment Service, who told us in 2004 that Cyprus would never 
support any new biotech applications as long as he was in that post. 
 According to staffers at the Environment Service, the European 
Commission has approved two derogations to EU GMO policy allowing 
countries to ban the cultivation of biotech crops in certain 
locations on scientific grounds.  The Service is currently preparing 
its own "scientific" justification for a Cyprus-wide ban on the 
import and cultivation of certain biotech seeds.   Reportedly, the 
main argument to be used it that because of Cyprus's small size and 
small agricultural plots, it would be "impossible" to prevent 
certain GMO varieties from cross-pollinating with indigenous wild 
plant species.   Nevertheless, as Agricultural Minister Photiou 
reiterated to Ambassador Schlicher last week, the official GoC 
policy is to follow EU rules on GMOs. 
 
Biotech Ban Yet to Affect U.S. Producers 
---------------------------------------- 
¶7. (SBU) According to the GoC Energy Department, there have been no 
imports of biofuels into Cyprus and domestic production of biofuels 
has been negligible.  Post is not aware of any biofuels being 
available on the Cypriot market.  Thus, the Cypriot ban on the sale 
and distribution of biofuels made from biotech plants appears to 
have been largely symbolic and not to have had a direct effect on 
U.S. producers.  No U.S. business has complained to the Embassy 
about the ban.  This, however, may soon change.  The new law 
amending the 2005 biofuels law creates significant financial 
incentives for the sale and use of biofuels in Cyprus, and thus we 
expect biofuels to be introduced into the Cypriot market in the near 
future. 
 
¶8. (SBU) While Cyprus's ban on biotech biofuels has not affected 
U.S. producers, the same cannot be said for Cyprus's adoption of EU 
biotech policy.  Prior to Cyprus's entry into the EU and its 
adoption of EU restrictions on biotech products, U.S. cereal exports 
to Cyprus (mainly corn) peaked in 2000 at USD 25.1 million -- a 
third of all Cypriot cereal imports.  In 2006, Cyprus imported only 
USD 142,000 worth of U.S. cereals. 
 
¶9. (SBU) Comment:  Cyprus is a small market of less than a million 
people that does not currently trade or produce biofuels.  Even if 
the new incentives work, and biofuels are introduced into Cyprus, 
the biofuels market will still be relatively small.  The importance 
of the Cypriot ban is whether it emboldens the Cypriot parliament 
and/or larger EU markets to introduce more significant anti-biotech 
measures.  Two years ago, the Cypriot parliament backed down on an 
anti-biotech bill that would have required biotech products to be 
segregated within stores, after we objected, and more importantly, 
the European Commission raised significant concerns.  The 
Parliament's insistence on maintaining the ban, even in the face of 
explicit Commission opposition, is a new and worrying development. 
Cypriot parliamentarians seem convinced that opposing biotech is a 
low-cost way of winning votes by fanning fears that Cyprus is 
somehow being targeted by large foreign interests seeking to do 
Cyprus harm.  Unless the Commission acts quickly to impose real 
costs on Cyprus for keeping the biotech biofuels ban, the parliament 
is likely to be emboldened to introduce more significant 
anti-biotech measures.  Post will continue to raise our concerns 
over Cypriot biotech policy, but without a domestic lobby with which 
to work, we are fighting an uphill battle.  Our efforts to keep 
Cyprus from going beyond the already restrictive EU biotech 
regulations, however, will be much more successful if we can get the 
European Commission to lead the fight. 
 
SCHLICHER