The Lisbon Treaty Shines a Ray of Hope on Cyprus
The Lisbon Treaty Shines a Ray of Hope on Cyprus
Fresh Thinking Needed on Cyprus
Fresh Thinking Needed on Cyprus

The Lisbon Treaty Shines a Ray of Hope on Cyprus

With Turkish Cypriot leadership elections on Sunday, the future of the Cypriot negotiations are under question. It is clear from the candidates’ platforms that a victory for incumbent Mehmet Ali Talat will make it easier and quicker to reach a deal on a true federal state. But alongside this, far from the island, Brussels has won a chance to push for a breakthrough on Cyprus as an unexpected consequence of the European Union’s new Lisbon Treaty. If the EU seizes this opportunity to keep its previously broken promise of direct Turkish Cypriot trade with EU states, and make amends with Turkish Cypriots, it could re-energise the vital but struggling talks on a Cyprus settlement. Along the way, it can undo one of the principal knots that hamstring Europe’s relationship with Turkey.

Today, Turkish Cypriots cannot directly trade with the EU, even though they are technically European citizens. This could change under the new Lisbon Treaty, which gives the European Parliament a co-decision-making role in trade agreements. A “Direct Trade Regulation” for Turkish Cypriots, first suggested by the European Council in April 2004 but blocked by Greek Cypriots since Cyprus joined the EU one month later, now has a chance of moving forward. As a pending trade deal, the measure was automatically re-introduced to the European Parliament on 1 March and will be under active consideration in the coming months. The European Commission has long believed the trade measure is the right thing to do, but as one official in Brussels put it: “frankly, this consequence of Lisbon caught us all on the hop.”

Direct Trade is no alternative for a comprehensive settlement to create a bicommunal, bizonal federal state. But by helping break the isolation of the Turkish Cypriots, it could make them more trusting of their Greek Cypriot compatriots and more willing to compromise on hard to resolve aspects of the settlement. Since intensive negotiations began in 2008 between Greek Cypriot leader Demetris Christofias and his Turkish Cypriot counterpart Mehmet Ali Talat, there has been progress, slow but remarkable nevertheless. For instance:

  • Some 70 rounds of talks over two years between the Greek and Turkish Cypriot leaders have sketched out many more areas of understanding than most Cypriots probably realise.
  • The process has produced joint statements of political goals, contributed to a normalised atmosphere on the island and resulted in the opening of one busy new crossing point between the two communal zones and work on opening another soon.
  • The current governments of Turkey and Greece are both pressing strongly for a settlement in constructive ways rarely seen before.
  • Since February, top Turkish leaders have for the first time met Greek Cypriot civil society groups directly and continue to seek engagement.
  • The Greek Cypriot church, a leading opponent of compromise in the past, has broken taboos to initiate contact with Ankara, with the Greek Cypriot archbishop being welcomed in the Turkish Cypriot zone and planning a visit to Turkey to meet officials.
  • Recent judgments on property compensation, one in the European Court of Justice that favours Greek Cypriot arguments, and one in the European Court of Human Rights that favours Turkish Cypriot arguments, have shown both sides that time is not on their side and a rapid political settlement is by far the best solution to resolve property disputes.

The Direct Trade Regulation issue dates back to April 2004, when the European Union wanted to reward the Turkish Cypriots for voting 65 per cent in favour of a referendum on the UN-mediated Annan Plan to reunify the island. In the same referendum, 76 per cent of Greek Cypriots voted against the plan, even though it was backed by the UN, U.S., Turkey and the EU itself. Turkish Cypriots were thus unjustly left out in the cold. Long-standing EU politics — and Turkey’s steadfast refusal before 2003 to brook much compromise — had made it inevitable that the EU would accept the membership of Cyprus one week after the referendum, even though it is to all intents and purposes run solely by the Greek Cypriots, who make up four-fifths of the island’s one million people.

It is worth recalling what EU governments wanted for the Turkish Cypriots when they gathered for a European Council meeting on 27 April 2004. They expressed “strong regret” that Cyprus had not been unified before accession; noted that they were “determined to put an end to the isolation of the Turkish Cypriot community” who had “expressed their clear desire for a future within the EU”; and said this to send a “signal of encouragement” to Turkish Cypriots.

The Council then “invited the Commission to bring forward comprehensive proposals to this end, with particular emphasis on the economic integration of the island and on improving contact between the two communities and with the EU.” This was done on 7 July 2004 in a European Commission proposal of a preferential regime for Turkish Cypriot goods entering the EU customs territory (with exceptions such as animals and animal products), and including the acceptance of the Turkish Cypriot Chamber of Commerce’s authority to certify origin (a group separate from the Turkish Cypriot administration). The proposal took further note of UN Secretary General Kofi Annan’s 28 May 2004 recommendation that UN Security Council members “give a strong lead to all States to cooperate both bilaterally and in international bodies to eliminate unnecessary restrictions and barriers that have the effect of isolating the Turkish Cypriots and impeding their development.”

The proposed Direct Trade Regulation has however been blocked by the Republic of Cyprus ever since it joined the EU on 1 May 2004. Officially, the Greek Cypriots’ opposition is a dispute over the proposal’s legal basis. They see it as a fundamental Cyprus problem matter, falling under Protocol 10 of the Accession Treaty, which would require European Council unanimity to change. In a 25 August 2004 opinion, the European Council’s Legal Service agreed. The European Commission’s Legal Service disagreed, backing the Commission’s view that Turkish Cypriot trade came under Article 133 of the old treaty (now Article 207 of the Lisbon Treaty), which regulates EU’s trade with third countries and territories. Even though such opinions are non-binding, other EU states were reluctant to challenge Cyprus on the issue and the trade resolution became stuck in a limbo.

This has left the Turkish Cypriots in the same difficulty they have experienced since 1994 when Greek Cypriots won a case in the European Court of Justice against Turkish Cypriot exporters (triggered by the Turkish Cypriots’ ill-advised decision to change their pre-1974 Republic of Cyprus export authorisation stamps). The ECJ decision did not ban Turkish Cypriot products, but made them more expensive by removing their preferential tax rate. It also made Turkish Cypriots dependent on Greek Cypriot authorities for certain certificates, hard or impossible to get without a political settlement. The result was a drop in EU’s share in Turkish Cypriot exports from 78 per cent in 1990 to just over 20 per cent in 2008. It led to the loss of many Turkish Cypriot jobs in agriculture and textiles, drove a new wedge between Turkish Cypriots and Europe and increased their dependence on Turkey. Due to a variety of technical, political and psychological pressures, the post-2004 Green Line Regulation on intra-island trade, which allows Turkish Cypriots to export through southern ports, has also done almost nothing to improve their access to EU markets.

Now that the European Commission has asked the European Parliament to reconsider the matter, the parliament has appointed a rapporteur to look into the Direct Trade Regulation, will discuss his report and give its opinion. If successful, it will be sent to the Council. EU officials expect the measure to pass parliament but are unsure if the measure will attract the necessary firm ‘yes’ from a qualified majority in the Council. The entire process will likely take a few months.

The Republic of Cyprus, taken by surprise like everyone else, says, “our policy has not changed”. The Greek Cypriot government spokesman has reassured the Greek Cypriot public that their MEPs are working in Brussels to stop any new trade regulation going through. But while opposition to the measure is understandable in the context of the old-style diplomatic trench warfare in the Cyprus dispute, the best interest of the Greek Cypriots now is to let it pass.

Greek Cypriots’ fears that Turkish Cypriots want to use direct trade to reach recognition as an independent state are exaggerated. Even Turkey, the only country which has ever recognised the Turkish Republic of Northern Cyprus, has stopped advocating for international recognition of the entity. Instead, it fully supports the bicommunal, bizonal federal solution. Turkey’s Prime Minister Recep Tayyip Erdoğan has reached out to Greek Cypriots trying to build trust, most recently in a February meeting in Istanbul with six prominent members of Greek Cypriot civil society, including three journalists, Cyprus’s former EU negotiator, an academic and a party leader who was previously high in Cyprus’s Central Bank. In his usual blunt manner, and thanks to this rare moment of direct communication, Erdoğan left his visitors in no doubt that Turkey’s Plan A is a Cyprus settlement, after which Turkey will withdraw its troops and implement any deal reached by the parties involved. Such undertakings are not lightly given, as some Greek Cypriot leaders allege. Erdoğan was reading from talking points drawn up the Turkish Foreign Ministry, a pillar of the Turkish establishment. Privately, Turkish officials also clearly say they want to instigate a process of negotiation with the Greek Cypriots, Greece and the Turkish Cypriots, including a discussion on replacing the controversial old Treaty of Guarantee in a way that will reassure all sides on the sensitive matter of implementing the agreement and the island’s future security.

Greek Cypriots, as well as European Parliamentarians, now have a chance to trigger a virtuous circle. Approving the trade regulation would turn around Turkish Cypriot opinion, increasingly cynical and disillusioned about reunification. It would also challenge Ankara to fulfil its promise to respond by opening its ports to Greek Cypriot ships and aircraft, as it is obliged to do under the Customs Union it signed with the EU in 2005. Turkey’s Chief EU Negotiator Egemen Bağış again said on 25 March that “if the EU implements the regulation, we will open our ports”, a position confirmed by Turkish diplomats. If Turkey does open its ports, the EU would then be morally obliged to lift its related 2006 block on eight of Turkey’s 35 EU accession negotiating chapters, thus reassuring Turkey about its EU membership perspective. Finally, a Turkey with an open road in its EU talks will be even more ready to reach a compromise settlement with the Greek Cypriots. (As things stand, Turkey has opened only 12 chapters and has only four more difficult ones available to open, and its EU process is close to a standstill.)

There is still a chance for a bicommunal, bizonal solution to work. When asked how Turkey could show its sincerity and commitment to a solution, Greek Cypriot officials often answer: “by fulfilling its Customs Union obligations”. Letting the EU pass this trade regulation would be the best way to make that happen.


Former Analyst, Turkey and Cyprus
Former Director of Communications & Outreach

Fresh Thinking Needed on Cyprus

A new round of talks has begun in Cyprus and the key parties seem eager to reach a settlement. However, the official goal — a bizonal, bicommunal federation — has stymied negotiators for decades. It is possible that the time has come to consider a mutually agreed separation, within the European Union, of the Greek and Turkish parts of the island.

The closest the two sides have come to an agreement on federal reunification was a decade ago under the Annan Plan, named after United Nations Secretary General Kofi Annan. It built on decades of work and won the support of the UN, EU, United States, Turkey, and even Greece. Indeed, any federal deal will have to look pretty much like the one hammered out in those years of intense negotiations.

Yet the reality of public sentiment bit back. 76 percent of Greek Cypriots said no to this plan at referendum. As Annan wrote to the Security Council afterwards, “what was rejected was the [federal] solution itself rather than a mere blueprint.”

Today the two sides — whose infrastructure and administrative systems are almost completely separate — are, if anything, further apart. The numbers of people crossing the border have fallen, while polls show weakening support for a federal outcome. In 2004, the Turkish Cypriot side supported the Annan Plan with 65 percent of the vote. But in 2010, they firmly voted back to power a leader whose whole career has been dedicated to a two-state settlement. 

Miracles may happen — and there are many on the island who remain desperate for a settlement — but my judgment is that any federal deal will have an even tougher time succeeding now.

Fresh thinking is needed.The two sides should broaden the agenda alongside the well-worn process of UN-hosted talks between Greek Cypriot and Turkish Cypriot negotiators.

One idea that should be fully explored is what the terms might be if Greek Cypriots — the majority of the island’s population — were to offer Turkish Cypriots citizens full independence and fully support them to become members of the European Union. 

Such a deal would have to be agreed to by Greek Cypriots, voluntarily and through a referendum. This will be hard. Greek Cypriot public opinion still, in theory, absolutely rejects any partition. But even senior Greek Cypriot officials agree in private — especially around the dinner tables of business leaders seeking a way out of Cyprus’s crushing banking crisis of 2013 — that there is an increasingly urgent need for a new way forward for the economy and for society.

There is also a growing drumbeat of expert opinion urging Greek Cypriots to consider outcomes beyond the traditional federal goal, which has become so discredited that few on Cyprus are paying much attention to the new talks. International Crisis Group has just published Divided Cyprus: Coming to Terms on an Imperfect Reality, while the U .S. Congressional Research Service concluded last year that “a ‘two-state’ solution seems to have become a more prominent part of the Turkish Cypriot/Turkey rhetoric and unless a dramatic breakthrough occurs early in the negotiations… that reality may gain more momentum.”

Polls show that key parts of what Greek Cypriots and Turkish Cypriots really want can look surprisingly similar. The Greek Cypriots have long wanted a solution securely embedded in European values and structures. That is what Turkish Cypriots say they want too: to become part of the European Union, not part of Turkey, even if they do wish that, in extremis, Turkey would protect their small community. The European part is crucial.

This can only happen with voluntary Greek Cypriot agreement, something that will have to be persuasively won by Turkey and the Turkish Cypriots. They will need to offer convincing terms: withdraw all or almost all of Turkey’s 30,000 troops on the island; end the demand to continue the 1960s “guarantorship” so hated by Greek Cypriots; guarantee compensation of Greek Cypriots for the two-thirds of private property in the north that is owned by them; return the ghost resort of Varosha to its original owners; and pull back to hold 29 percent or less of the island. 

After what will necessarily be a multi-year transition, this will also produce the European solution that Greek Cypriots so often say they want. The two sides will share the same basic legal norms and regulations, the same currency, and the same visa regime. Secure and confident in their new sovereign rights, the Turkish Cypriot side will likely waive the un-European demand for “derogations,” or limits on property purchases by Greek Cypriots in the new entity. 

Nobody is completely right on Cyprus: all parties share responsibility for the frozen conflict on the island. At the end of the day, an independent Turkish Cypriot state within the EU is not rewarding one side or another. Europe will doubtless flinch at accepting a small new Turkish, Muslim state in its midst. 

But Europe helped create this situation, since Brussels breaking its own rules contributed to the clumsy 2004 accession of the disunited island to the EU. 

Moreover, at least 100,000 of the 170,000 Turkish Cypriots are already EU citizens through their Republic of Cyprus passports.

Europe will also be among those who gain from resolving a dispute that has for four decades burdened so many local and regional processes, not least the long-hamstrung relationship between the EU and NATO, and the new question of how the countries of the East Mediterranean can most quickly, profitably and safely exploit new offshore natural gas reserves. This is not partition: it is reunifying Cyprus within the EU.

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