VZCZCXRO1438
RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHNC #0532/01 2251428
ZNY CCCCC ZZH
R 131428Z AUG 09
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC 0074
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RUEHC/SECSTATE WASHDC 0075
RUEHBS/USEU BRUSSELS
RUCNDT/USMISSION USUN NEW YORK 1501

C O N F I D E N T I A L SECTION 01 OF 05 NICOSIA 000532 
 
SIPDIS 
 
DEPT FOR EUR/SE 
 
E.O. 12958: DECL: 08/07/2019 
TAGS: PREL PGOV UNFICYP TR CY
SUBJECT: CYPRUS: SOLUTION TALKS' FIRST-READING CONCLUDES, 
UNSYG SA DOWNER AND LEADERS "CAUTIOUSLY OPTIMISTIC" 
 
REF: A. AUGUST 4 PANICO-NETOS E-MAIL 
     ¶B. AUGUST 5 PANICO-NETOS E-MAIL 
     ¶C. AUGUST 6 PANICO-NETOS E-MAIL 
 
Classified By: CDA Jonathan Cohen for reasons 1.4(b) and 1.4(d) 
 
¶1. (C) Summary: "I am still cautiously optimistic" UNSYG 
Special Adviser Alexander Downer told the Charg on August 6, 
hours after the end of the first reading of UN-brokered 
negotiations between Greek Cypriots (G/C) and Turkish 
Cypriots (T/C) that commenced in September 2008.  Downer 
previewed his expectations for the second reading, set to 
start on September 3, with seven meetings scheduled through 
October 2. G/C leader Demetris Christofias and T/C leader 
Mehmet Ali Talat, he said, plan to tackle the election of the 
executive (governance), then move to property, while their 
representatives deal with ancillary issues. If convergence 
could be achieved in these two chapters, he said, then the 
economy and EU affairs chapters should "fall into place." 
The discussion of territory, however, would be a "very bloody 
affair", he warned, and Turkey would insist on retaining some 
kind of intervention rights under the Treaty of Guarantee. 
Overall, he believed the sides had a common vision of a 
post-solution Cyprus--a "small and weak" federal government 
with two robust constituent states--but could not yet admit 
this.  Downer has urged both leaders to stop "wasting time" 
on "history lessons" and urged them to put a "positive public 
spin" on their efforts, which both did in their public 
remarks that day. Downer has"cautious optimism" in the 
leaders' ability to conjure a "yes" vote from their 
respective communities in eventual referenda, but warned that 
implementation of a solution would bring "crisis after 
crisis" and urged the USG to start preparing itself for this 
possibility. 
 
¶2. (C) Summary Continued: Downer, who on August 5 had 
summoned the UK and U.S. Chargs to help calm a nasty dust-up 
regarding the road route of the Limnitis/Yesilirmak crossing 
point (Ref E-Mails), thanked the Embassy for its 
intervention, adding that the process had been "absolutely on 
the edge" for a couple of days. He said the best role for the 
U.S. in the next phase would be to continue to publicly 
support the process and to remain available to intervene with 
the sides when they or the UN request it--as in the case of 
Limnitis. End Summary 
 
--------------------------------------------- ----- 
Focus on Governance and Property in Second Reading 
--------------------------------------------- ----- 
 
¶3. (C) Downer told the Charg he hoped that the second 
reading, set to commence on September 3, would move much 
faster than the 11-month first reading, which witnessed forty 
meetings between Talat and Christofias. He said that while 
there were still organizational matters to discuss on 
September 3, the leaders had agreed to focus the second 
reading first on governance and power sharing (election of 
the executive), then move to property. For their part, the 
two lead negotiators, George Iacovou and Ozdil Nami, will 
work on ancillary issues, and Downer hopes that the two can 
get the leaders to sign on to their ad referendum agreements 
prior to the leaders' meetings, thus allowing things to be 
done more quickly and efficiently.  (Note: In the first 
reading, agreements were only made at the leaders' meetings, 
which often dragged Christofias and Talat into weedy details 
with which they were unfamiliar. End Note)  He said that Nami 
had told him that the T/Cs would table a new proposal on 
governance early on, which Downer thought might be the 
abandonment of the Annan-era "Presidential Council" model in 
favor of a Presidential/Vice-Presidential system, the G/C 
position. 
 
¶4. (C)  Downer believes that the key to solving the property 
issue was a common law vice civil law approach. Common law, 
he said, combines the notions of precedent, statute, and, 
most importantly, justice for the occupant as well as for the 
original owner. Downer said that if the parties only use a 
civil law approach, as the EU (with the exception of the UK) 
generally does, they will be guided solely by statute and 
code and will never find a solution acceptable to the T/Cs. 
 
¶5. (C) He was especially ebullient over his U.S. property 
lawyer, Jeff Bates, and complained about his previous 
property expert, a pleasant, if civil law-bound, EU 
bureaucrat.  (Note: The UN facilitator for the Economic 
Working Group told us that Bates proposed a plan monetizing 
 
NICOSIA 00000532  002.2 OF 005 
 
 
the appreciated value of GC-owned property in the north from 
its 1974 level. This appreciated value would become a 
security that could then be sold in the market by either the 
current occupant (if he were forced to move) or the GC-owner 
(if he gave up his property rights). As the facilitator 
noted, however, this does not solve the political question of 
who would have the right of first refusal, with the G/Cs 
insisting on the original owner, and the T/Cs demanding 
adjudication by an independent property board acting 
according to mutually agreed principles. End Note). 
 
¶6. (C) Downer said that if the T/Cs are reassured that their 
equities in the federal executive will be protected, they 
will back away from insisting on many constituent state 
competencies and numeral equality in many federal bodies, 
opening up opportunities for deal making with the G/Cs. He 
added that if agreement could be achieved in these two 
chapters--the "biggest challenge" of the second reading--then 
issues like the economy and EU affairs, on which he claimed 
there was already much convergence, would "fall into place." 
The sides, he added, planned to skip over the presently 
intractable "territory" and "security and guarantees" 
chapters until the final "give-and-take phase." 
 
--------------------------------------- 
Territory Chapter--"Very Bloody Affair" 
--------------------------------------- 
 
¶7. (C) Downer said that the debate on  territory would be a 
"very bloody affair." He said that while the T/Cs and the 
Turkish Cypriots (with the support of the Turkish military) 
are prepared to give up the abandoned, fenced-off city of 
Varosha, the return of the Karpaz/Karpas peninsula, another 
G/C demand that was not achieved in the Annan Plan, was a 
non-starter. (Comment: According to the UN Facilitator for 
the Territory Working Group, the T/Cs argued that the 
post-Annan building boom in the north drastically reduced 
open space needed for resettlement; consequently, any 
large-scale territorial give-backs would result in a 
"humanitarian" crisis. Such logic, he added, infuriated the 
G/Cs who saw a "moral equivalency" with their own 1974 
displacement and wanted as many G/Cs to return under G/C 
administration as possible.  A Talat adviser told us that 
Turkey is against the return of the Karpaz/Karpas peninsula. 
He added that the Turkish Cypriots also do not favor the 
return of Karpaz/Karpas, but were at least willing to discuss 
it. End Note) 
 
--------------------------------------------- --------- 
Turks might modify Treaty of Guarantee, Not Abandon it 
--------------------------------------------- --------- 
 
8.(C) Downer thought that Turkey might modify its unilateral 
right of intervention under the Treaty of Guarantee to 
accommodate the new post-solution state of affairs, but 
doubted that Ankara would abandon it.  (Note: His assessment 
tracks with everything we have heard from Turks and Turkish 
Cypriots, including polling. However, Christofias has 
passionately appealed to terminate the unilateral guarantees, 
either outright or by making them multilateral by including 
the UN or the EU. End Note). Greece would support the G/C 
position, including if it evolves.  He thought that the UK, 
which has been largely silent on the issue, would "go along 
for the ride", but assumed London would also maintain its 
guarantor status. In response to the Charge's question 
regarding when to involve the three guarantor powers 
(UK/Turkey/Greece) in the process, Downer skirted the issue, 
replying only that "they did not necessarily need to be in 
the room" at any point. 
 
--------------------------------------------- 
"Settler" issue appears to loses its urgency 
--------------------------------------------- 
 
¶9. (C) Downer said that the "life" is going out of the 
"settlers" issue, short-hand for Turkish citizens who moved 
to the north post-July 1974 and are considered "illegal" by 
the RoC. (Note: The G/Cs fought unsuccessfully to make this a 
stand-alone negotiating chapter, but settled for its 
inclusion under "governance and power sharing." End Note) He 
said that Christofias, who even before the start of the 
preliminary negotiations had accepted the presence of 50,000 
"settlers," was clearly trying to find modalities to solve 
the issue. He said that the sides had agreed to exchange 
information on population at their August 6 meeting. Downer 
said the possibility of offering a 10,000 Euro repatriation 
 
NICOSIA 00000532  003 OF 005 
 
 
payment was being discussed as a vehicle to encourage anyone 
above the 50,000 to return to Turkey. He added that the G/Cs 
understood there could be no forced repatriation and was 
confident that sides could find an accommodation.  (Note: 
Leonidas Pantelidas, the head of Christofias' Diplomatic 
Office, expressed similar, moderate sentiments to Embassy 
Officers on August 6.  Nami and Talat, both publicly and 
privately, have said that all "TRNC" citizens would stay 
post-settlement. According to the 2006 T/C census, there are 
about 178,000 "TRNC citizens", of whom 120,007 had both 
parents born in Cyprus and might otherwise be considered RoC 
citizens.  Under the Annan Plan, the Turkish Cypriots could 
not fill a quota of 45,000 settlers and came up only with 
around 42,000 names. Nami, however, told us that the 42,000 
did not include those born in the north who would otherwise 
not be considered RoC citizens, i.e. children of a "settler" 
family. End Note). 
 
--------------------------------------------- ------------ 
Post-Solution Cyprus: "Small and weak" federal government 
--------------------------------------------- ------------ 
 
¶10. (C) Downer said that the sides shared a "realistic" 
vision of post-solution Cyprus, with, at least initially, a 
"small and weak" federal government. Most functions, he said, 
would be conducted in the two constituent states. He noted 
that the "weakness" of the central government would be 
necessitated by limited federal revenue based solely on 
value-added tax, half of which would go to shore up the 
constituent states. He said that the sides "basically agreed" 
with each other, but were loath to admit this publicly. 
(Comment: If accurate, Downer's assessment represents real 
progress. The G/Cs have traditionally, including hitherto in 
this round of negotiations and loudly in the press, fought 
for a strong federal government and dismissed anything less 
as unacceptably "confederal". Downer's Canadian governance 
expert foreshadowed this, telling us that the two 
communities, like French and English speakers in Quebec, 
would most likely end up living in "two solitudes" 
post-solution, at least initially. End Comment). 
 
------------------------------------------- 
No history lessons, Accentuate the Positive 
------------------------------------------- 
 
¶11. (C) Downer said that he told both leaders to "stop 
wasting" time at the Leaders' meetings  over interminable and 
divisive historical debates on which they would never agree 
and urged them to put a "positive" spin on the talks in their 
public comments. Downer said that Christofias, whom he has 
characterized as "not robust" and surprisingly "sensitive to 
criticism" for a seasoned politician, had complained to him 
that every time he "utters something positive" the G/C 
"rejectionists" attack him. Downer had been unable with 
either Iacovou or Christofias to determine what public 
relations strategy would best help them politically. 
Consequently, Downer said Christofias' negativity was either 
meant to muffle domestic critics or as a negotiating tactic 
to pressure the T/Cs. He did not agree with Nami's theory, 
related by the Charg, that Christofias disliked the present 
process because he believed the result would resemble the 
Annan plan and would consequently be "unsellable" to the 
G/Cs. Downer, however, was heartened by Christofias' August 6 
statement when, for the first time in months, the G/C leader 
voiced "cautious optimism" and admitted that there had indeed 
been some progress in the first round. 
 
------------- 
Going forward 
------------- 
 
¶12. (C) Downer repeated that he was "cautiously optimistic" 
about the prospects for the rest of the talks and for 
eventual referenda. He noted that the job of selling the deal 
in the run-up to the referenda clearly belonged to the 
leaders, not the UN Good Offices Mission. He dubbed the 
implementation of a solution a "massive job" that would bring 
"crisis after crisis" and warned us to be prepared. The 
Charg responded that we were aware of the task and had 
already started to figure this equation into our Mission 
strategic planning. Downer was unhappy that the Ambassador 
had raised with U/SYG Lynn Pascoe during their July 31 
meeting the need for Downer to spend more time on the island, 
claiming that this had put him under "enormous pressure." The 
Charg responded that in the next phase there would be an 
increasing number of problems that only Downer could resolve 
 
NICOSIA 00000532  004 OF 005 
 
 
and that the atmospherics were better on both sides when he 
was here.  Downer said he would return for the first two 
leaders meetings (September 3 and 10) and then planned to be 
around "for most of October and November" for the end of the 
second reading and for the start of the purported "give and 
take" phase. 
 
------------------------------------------- 
Limnitis/Yesilirmak Road Crisis Subsides... 
------------------------------------------- 
 
¶13. (C) Downer thanked the Charg for the Embassy's 
"incredible help" in calming the sides the previous day 
regarding the Limnitis/Yesilirmak road route dispute per Ref 
E-Mails.  He said the talks had been "on the edge of 
collapse" for a couple of days; with the G/Cs calling foul 
and pushing back fiercely over a T/C proposal to change the 
route of the road for the crossing point by 200 meters to 
avoid a small military armory and camp. The G/Cs, he said, 
feared that this would cause a delay that would leave them 
vulnerable to rejectionists criticism. He said he tried to 
get the sides to agree at the August 6 Leaders' meeting to 
setting time limits for the construction project based on a 
planned feasibility study. Christofias was accommodating on 
everything regarding the Limnitis/Yesilirmak opening, 
including the time limit proposal, but would not, at least 
officially, budge on the T/C proposal to change the route. 
 
¶14. (C) Downer added that the route change was clearly 
mandated by the Turkish Army to avoid civilian traffic 
passing next to the aforementioned Turkish military armory 
(part of a small base) astride the existing road. He 
dismissed as "pure rot" Nami's contention that the new route 
would be cheaper or quicker to implement, but said that in 
any case the "talks would either 'crash and burn' or be 
successful" before the road work could be completed. The 
important thing was to get it started quickly. Downer said 
that he met with Turkish Forces Commander Lt. General Hilmi 
 Akin Zorlu, who made no secret of the fact that the road 
route change was a military demand. Downer told Zorlu that he 
needs "peace and quiet" going into the next phase of the 
talks and that Zorlu, with whom Downer said he had developed 
a good rapport based in part on their experiences in 
Afghanistan, responded "positively" without going into detail. 
 
--------------------------------------------- - 
...With Possible Compromise Feasibility Tender 
--------------------------------------------- - 
 
¶15. (C) UNFICYP DCM Wlodek Cibor told Poloff on August 11 
that a August 10 trip by Nami and Iacovou to inspect the 
crossing point and proposed routes had "gone quiet well" 
(Cibor and UNFICYP Head Taye-Brook Zerihoun accompanied the 
group). Cibor said that a feasibility study draft tender had 
been given to the sides; if they approve, the tender 
announcement would be on the street this week, with a bid 
awarded by mid-September. To sweeten the deal for both sides, 
the draft tender proposal reduces the deadline for the study 
from eleven to eight weeks, while including the requirement 
of "possible construction" along with reconstruction, 
indicating that the road may take the new T/C proposed route. 
Cibor agreed that the issue had calmed for the present and 
that the G/Cs, who want the road finished as soon as 
possible, would not risk delays by further fighting or 
carping at this stage. Cibor added that he had "no doubt" 
that the new, proposed route would take longer to construct 
since part of it will be built from scratch, whereas the old 
route already has a narrow, hard-pack dirt road with some 
tarmac in places. He also hoped that the land in question 
proved to be T/C or state land, not private G/C holdings. 
Nami, he said, assured Iacovou it was state land. 
 
 
¶16. (C) Comment: The first reading lasted longer and proved 
harder than either leader and most observers expected.  Both 
leaders were surprised and frustrated by the divergences on 
key issues and on a general lack of flexibility in the first 
round.  They learned a lot about the shortcomings of the 
process they created, including the self-imposed need to find 
solutions with minimal, though often important, ad hoc input 
from outside experts.  Most importantly, the leaders stuck at 
it despite bumps in the road.  Downer has proven a steady 
hand and one that will be needed more frequently as the sides 
get jittery giving up old, untenable positions--as they must 
do if the there is to be a solution. He has also proven adept 
at understanding the challenging local political environment 
 
NICOSIA 00000532  005 OF 005 
 
 
that confronts both of the leaders every day.  For the 
moment, the key will be, as Downer told Zorlu, to keep things 
calm and quiet till the talks recommence on September 3. End 
Comment. 
 
 
 
 
 
 
 
Cohen