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DE RUEHNC #0940/01 3301507
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P 261507Z NOV 07
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8353
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1018
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS SECTION 01 OF 04 NICOSIA 000940 
 
SIPDIS 
 
SIPDIS 
 
FROM AMBASSADOR RONALD L. SCHLICHER, TO THE MEMBERS OF 
CODEL SIRES. ATHENS FOR CODEL CONTROL OFFICER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON KCRM PTER CY TU
SUBJECT: WELCOME TO CYPRUS, CODEL SIRES 
 
¶1.  (SBU) Welcome to Cyprus, Representative Sires, my home 
since December 2005 and an island whose complexity belies its 
small size.  We have crafted a program that contains calls on 
President Tassos Papadopoulos and other high ranking Republic 
of Cyprus officials, contact with both Turkish Cypriot (T/C) 
and Greek Cypriot (G/C) opinion leaders, and a visit to the 
Buffer Zone that so sadly has divided this island since 1974. 
 Our goal is to see you depart Cyprus cognizant of the 
challenges it faces, but also of the contributions it can 
(and does) make in areas of U.S. interest, such as 
counter-terrorism. 
 
¶2.  (SBU)  Passing briefly through the schedule, you first 
visit the historic St. Mamas Orthodox Church in Morphou. 
Once threatened by neglect, elements of St. Mamas have been 
returned to their 16th century grandeur thanks to a 
USAID-sponsored conservation project, a centerpiece in the 
Mission's effort to preserve and protect the island's 
cultural and religious monuments for the benefit of all 
Cypriots.  Day 1 concludes with a reception at my official 
residence; invitees include political, religious, business 
and cultural leaders from both communities.  The following 
morning, I and select members of my senior staff -- the 
Country Team -- will provide you a Cyprus snapshot and 
discuss Mission goals and our programs to reach them.  Your 
first call is on House Leader and current presidential 
candidate Dimitris Christofias, whom I find warm but guarded 
in his discourse.  With elections just three months off, 
Christofias may attempt to "sell" you on his candidacy.  With 
all candidates, however, we suggest you repeat our mantra 
that the United States has no favorite in the February 2008 
race. 
 
¶3.  (SBU) A courtesy call on Papadopoulos follows, with the 
President later hosting you for lunch.  The government's 
efforts to reinvigorate UN-led Cyprus Problem negotiations 
will top his talking points, although he likely will raise 
improved bilateral coordination, especially in security 
matters, occurring on his watch.  Commerce Minister Antonis 
Michaelides, with responsibility over energy matters, 
receives you next; we expect him to promote his plans to 
expand our trade and commercial relationship.  Before the 
evening concludes at the 232nd Marine Corps Birthday Ball, 
you will engage Cypriot legislators serving on the 
Parliamentary Foreign Affairs Committee. 
 
¶4.  (SBU) Foreign Minister Erato Marcoullis will host a 
working breakfast on December 1.  Cypriots take seriously 
their outreach to the United States Congress, and Marcoullis, 
a former ambassador in Washington, knows and handles this 
task well.  She likely will concentrate on the Cyprus Problem 
and Cyprus's desire to play a larger role in the Middle East, 
although the question of Kosovo might also come up.  Your 
stay concludes with a UN-led tour of the Buffer Zone in old 
Nicosia.  Threading your way through disputed territory still 
peppered with observation posts and nervous conscripts, this 
surreal walk backwards in time reminds us that Cyprus's 
conflict is by no means frozen.  Speaking on behalf of the 
entire Embassy Nicosia team, we look forward to your visit 
and will endeavor to make it productive and enjoyable. 
 
------------------------------------------- 
The Cyprus Problem:  All Roads Lead to Rome 
------------------------------------------- 
 
¶5.  (SBU) Taxi drivers, barbers, shop clerks -- to say 
nothing of politicians -- have strong opinions on the Cyprus 
Problem, the de facto division of the island since the 
violent conflict of 1974.  All will share their thoughts at 
the drop of a hat, and I can think of no country where a 
single issue so dominates.  Space limitations preclude me 
from offering even the briefest of summaries; I can only 
offer that, for every compelling point made in one community, 
there exists a similarly justifiable counterpoint in the 
other.  To illustrate, Greek Cypriots call Turkey's military 
intervention an invasion and continuing occupation of 
sovereign Republic of Cyprus (RoC) territory, while Turkish 
Cypriots classify it a peace operation undertaken to prevent 
their community's annihilation at the hands of G/Cs.  We 
think that both communities would be better served by 
focusing on a common future, rather than re-fighting 
yesterday's battles. 
 
¶6.  (SBU) U.S. involvement to mitigate damages from the 
conflict and effect the island's eventual reunification began 
almost before the smoke cleared in August 1974.  From feeding 
and housing refugees early on, our efforts morphed into 
infrastructure construction and later, fostering bi-communal 
 
NICOSIA 00000940  002 OF 004 
 
 
cooperation.  While the United Nations has directed most 
Cyprus Problem settlement efforts, all have featured some 
level of U.S. backing.  The last, known colloquially as the 
Annan Plan after then-UN Secretary General Kofi Annan, 
culminated in April 2004 simultaneous referenda that saw two 
of three T/C voters cast "YES' ballots but three of four 
Greek Cypriots vote "OXI" (no).  In his subsequent report to 
the Security Council -- which never became "official," owing 
to a rare Russian veto -- Annan urged the international 
community to end the economic, social, and cultural isolation 
of Turkish Cypriots, since they had cast their lot for 
reunification.  U.S. policy since 2004 has followed suit: 
while we have not and will not recognize the breakaway 
"Turkish Republic of Northern Cyprus," we do maintain close 
contacts with leaders of the T/C community, attempt to engage 
them on matters of common concern, and are working to improve 
the north's economic performance in the hopes of reducing the 
final cost on Greek Cypriots of a final Cyprus settlement. 
 
¶7.  (SBU) For two-plus years after the failed referenda, 
leaders in both communities alternated silent treatments with 
petty sniping, and hopes grew dim for a re-start of 
negotiations.  UN Political Under Secretary Ibrahim Gambari 
therefore deserves major kudos for convincing President 
Papadopoulos and "TRNC President" Mehmet Ali Talat in July 
2006 to ink a framework arrangement, the "Gambari" or "July 
8" Agreement.  The deal committed the sides to ending the 
unhelpful "blame game," enacting confidence-building 
measures, and reunifying the island under a bi-zonal, 
bi-communal model, while also stipulating a process in which 
committees and working groups would form to tackle day-to-day 
life issues and final settlement matters.  Seventeen months 
after Gambari's departure, however, not a single committee or 
working group meeting has taken place, the "blame game" 
remains de rigueur, and the likelihood that full-fledged 
settlement talks will recommence anytime soon seems slim. 
 
¶8.  (SBU) Significant movement on July 8 or the broader 
Cyprus Problem looks unattainable before the RoC elections in 
February 2008.  The period after the vote holds great 
promise, however, regardless of who emerges victorious. 
International community leaders, among them Department of 
State Undersecretary Nicholas Burns, have urged the United 
Nations to re-engage fully in 2008, perhaps by naming a UN 
special envoy to jump-start the negotiations.  I am convinced 
that every day that passes makes cracking this nut that much 
harder.  And solve the problem we must:  the continuing 
division incurs great costs, both real and political, for the 
United States.  Our contributions to the 43 year-old UN 
peacekeeping mission run high in the millions.  Disagreements 
over differing settlement tactics harm our bilateral 
relationship.  And Cyprus Problem fallout exacerbates 
tensions between NATO allies Greece and Cyprus, complicates 
Ankara's accession to the EU, and undercuts EU-NATO 
cooperation in hotspots like Afghanistan and the Balkans.  It 
is not just the island's problem. 
 
--------------------------------------------- -- 
Elections 2008:  A Long, Strange Trip It's Been 
--------------------------------------------- -- 
 
¶10.  (SBU) President Tassos Papadopoulos won election in 
February 2003 with support from his own DIKO party, EDEK, and 
AKEL.  This ideologically-incongruent alliance -- 
centrist/nationalist best describes DIKO, while AKEL is 
Europe's largest per capita Communist party -- nonetheless 
held strong for four-plus years, with Papadopoulos dominating 
CyProb policy and AKEL focusing on domestic and societal 
issues.  Most considered the President's 2008 re-election a 
fait accompli, even after opposition DISY, traditionally a 
near-equal to AKEL in electoral strength, put forward popular 
former Foreign Minister Ioannis Kasoulides as its 
standard-bearer this spring. 
 
¶11.  (SBU) By June, however, cracks in the alliance had 
become visible.  Insiders claimed that AKEL Secretary General 
Dimitris Christofias was becoming ever more uncomfortable 
with Papadopoulos's hard-line Cyprus Problem tactics, which 
he considered counterproductive.  So, too, were AKEL's 
rank-and-file, who historically enjoyed closer cross-Green 
Line ties than supporters of other organizations.  Party 
leaders were bombarded by polling and anecdotal evidence 
portraying the AKEL SG as Cyprus's most popular politician. 
If AKEL ever were to capitalize on its status as the island's 
preeminent political force, conventional wisdom offered, this 
was it.  The President's camp drew the final straw in June 
when it announced, apparently without having consulted AKEL, 
that Papadopoulos would represent the alliance in 2008. 
 
NICOSIA 00000940  003 OF 004 
 
 
Within three weeks, a scorned Christofias had gone before his 
party congress, received a mandate to run if he so chose, and 
declared his independent candidacy. 
 
¶12.  (SBU) Papadopoulos will not repeat the first-round 
runaway win of 2003, that is certain.  While all polls still 
show him leading, just four to seven points separate the 
President from third-place Kasoulides, and two recent polls 
show Christofias winning the second-round runoff.  This 
election constitutes a perfect venue for Greek Cypriots to 
debate the candidates' alternative visions for the future, 
whether over Cyprus Problem strategies tactics, energy and 
water usage, or tax matters -- traditional campaign grist. 
Regrettably, however, the contenders are looking backwards, 
not forwards, with the Annan Plan and who-voted-how 
continuing to dominate.  So far, the United States and 
Cyprus's relations with Washington have not surfaced as 
campaign issues; by professing our neutrality at every bend, 
we intend to keep it that way. 
 
--------------------------------------------- -------------- 
Counter-Terrorism Cooperation:  In General, Trend Points Up 
--------------------------------------------- -------------- 
 
¶13.  (SBU) Cyprus's location at the crossroads of three 
continents and its historically close ties with Eastern 
Europe and the Balkans make it especially vulnerable to use 
as a transit point for the smuggling of weapons, people, and 
money.  RoC legislation on arms brokering, evidence, and 
intelligence collection is antiquated, limiting the 
government's ability to counter threats.  Even worse is the 
situation in the Turkish Cypriot-administered areas, where 
the lack of C-T infrastructure, expertise, and legislation 
leaves authorities unable to confront money 
laundering/terrorism finance, weapons proliferation, and 
general smuggling.  Given the porosity of the Green Line 
separating the communities, the north of Cyprus represents a 
potential target of opportunity for terrorists seeking entry 
into European Union territory. 
 
¶14.  (SBU) Cognizant of the threat, Cyprus takes a clear 
stand against international terrorism and is supportive of 
U.S. C-T efforts.  The government continues to allow blanket 
overflight and landing rights to U.S. military aircraft 
supporting operations in Iraq and Afghanistan, for example. 
Cyprus is a party to all relevant UN conventions on 
terrorism, generally supports international efforts to block 
and freeze terrorist assets, has implemented Financial Action 
Task Force (FATF) recommendations, and conforms to EU C-T 
directives.  Additionally, it was the first EU member state 
to sign a shipboarding agreement with the United States under 
the auspices of the Proliferation Security Initiative 
Agreement (PSI), and has cooperated recently to interdict 
suspect vessels. 
 
¶15.  (SBU) Our countries also collaborate on money laundering 
and terrorism finance (ML/TF) issues.  In the area 
administered by Turkish Cypriots, however, issues of status 
and recognition restrict the ability of T/C authorities to 
cooperate fully on C-T.  The "TRNC" cannot sign treaties, UN 
conventions, or other international agreements.  Moreover, it 
lacks the legal and institutional framework necessary to 
combat ML/TF effectively.  Within these limitations and with 
USAID technical assistance, T/C leaders have cooperated with 
the United States in pursuing specific C/T objectives, 
however, and have improved their abilities in this critical 
field. 
 
¶16.  (SBU) Kurdish-origin communities exist on both sides of 
the Green Line.  Media report that the Kurdish Workers' Party 
(PKK) maintains a presence island-wide, using the island as a 
fundraising, R&R, and transit point.  The government 
maintains, however, that it is fulfilling all 
responsibilities with respect to the EU's designation of the 
PKK as a terrorist organization.  Turkish and Turkish Cypriot 
contacts believe that the large troop presence in the north 
acts as a significant deterrent to open PKK activity there, 
and both the RoC and authorities in the north believe there 
is little risk the terrorist group will conduct operations on 
the island. 
 
-------------------------------------------- 
Balkans:  Favors Stability, Fears Separatism 
-------------------------------------------- 
 
¶17.  (SBU) Cyprus, like Greece, maintains close relations 
with fellow Orthodox nations like Serbia, a fact that colors 
its Western Balkans policies.  During NATO's 1999 Kosovo 
 
NICOSIA 00000940  004 OF 004 
 
 
campaign, the same ugly, pro-Milosevic demonstrations which 
wracked Athens plagued Nicosia as well, resulting in minor 
damage to this Embassy.  On Kosovo, Cyprus supported the 
2006-07 efforts of UN envoy and former Finnish President 
Marti Ahtisaari to broker an agreement between Pristina and 
Belgrade, but regretted Ahtisaari's decision to suspend talks 
last spring with the parties still miles apart.  Foreign 
Ministry officials believe that negotiations should continue 
in order to find an arrangement that satisfies both the 
Kosovars' demands to manage their own affairs and Serbia's 
insistence that the international community respect and 
ensure its territorial integrity. 
 
¶18.  (SBU) Cyprus publicly opposes a Kosovar unilateral 
declaration of independence (UDI) should the follow-up 
"Troika" (U.S., EU, Russia) talks prove unable to resolve 
Kosovo's final status -- an outcome most experts predict. 
Underpinning the Cypriot position is their belief that 
independence for Pristina, even under international 
supervision (as Ahtisaari's plan stipulated), sets a 
dangerous precedent for countries battling ethnic and/or 
regional separatism.  After the international community 
partitions Serbia it will divide Cyprus, their theory goes. 
Our best efforts to convince the government that Kosovo's 
case is sui generis were generally effective over the last 
two years, but are fraying as Kosovo nears the point of 
decision.  On another "hot" Balkans issue -- the uptick in 
tension between Greece and Macedonia over the latter's 
constitutional name, and the possibility Greece will veto 
Macedonia's eventual EU and NATO membership as a result -- we 
can expect Cyprus to back Athens solidly. 
 
--------------------------------- 
Energy Security:  Possibly a Role 
--------------------------------- 
 
¶19.  (SBU) Its island geography and small-market status 
leaves Cyprus out of the latest "Great Game" of 
pipeline-building and alliance-forming.  In general, energy 
security issues garner little press play or official notice 
here.  Oil and gas did dominate newscasts earlier this year, 
however, as the RoC initiated the tender process for seabed 
blocks potentially containing recoverable reserves.  The 
government's actions drew an immediate, threatening response 
from Turkey.  The RoC had no right to delineate Exclusive 
Economic Zones with Egypt and Lebanon, Ankara argued, since 
the "Greek Cypriot government" did not speak for all the 
island's residents -- Turkish Cypriots, too, deserved a slice 
of the natural resource pie. 
 
¶20.  (SBU) We were unable to remain outside the fray, 
unfortunately.  Asked to comment publicly, I voiced our 
conviction that the Republic enjoyed a sovereign right to 
conclude treaties and agreements with its neighbors.  Both 
communities should seek opportunities for rapprochement in 
the potential energy windfall, I added, not further grounds 
for discord.  The first bidding round disappointed government 
circles, as none of the multinational biggies bid on the 
plots (but one mid-sized U.S. firm did).  A second round, 
containing more attractive blocks, is scheduled for shortly 
before the presidential elections in early 2008. 
 
¶21.  (SBU) American companies have scored notable energy 
sector successes in Cyprus, in part due to Embassy efforts. 
In 2006, General Electric and its partners won a power 
station tender worth $250 million.  With the RoC facing EU 
demands to move from environmentally-unfriendly oil-based 
electricity generation to cleaner methods, U.S. companies 
selling "green" solutions like wind farms and solar power 
would seem to benefit.  I have made commercial advocacy a top 
strategic goal of this Mission, and we are actively pressing 
for further market liberalization and expanded opportunities 
for non-EU firms. 
SCHLICHER