Unexpected Peace

Nobody has ever lost money betting on the failure of the Cyprus peace process. But this year, the best chance in decades to end this conflict has quietly crept up on local and international policy makers, and the European Union now has one last opportunity to undo past mistakes.

The first to switch direction were the Turkish Cypriots and Turkey, both eager to get closer to the EU. In 2004, the 250,000 Turkish Cypriots voted out their hard-line leader, Rauf Denktash, and agreed to the so-called Annan Plan, a United Nations-mediated, EU-approved plan for a new Cyprus federation and a Turkish troop pullout. The troops have been in place since 1974, when the Turkish military invaded the island's northern part to head off a planned Greek Cypriot coup designed to unite the island with Greece.

The 750,000 Greek Cypriots, though, voted overwhelmingly to reject the Annan plan. Perversely, they were immediately rewarded for this intransigence with full EU membership. Then the law of unintended consequences kicked in. EU membership has given Greek Cypriots such a sense of security that they now hardly even buy spare parts for their military. It has also empowered them to believe that they can at last negotiate a fair deal with the Turkish Cypriots, who are backed by Turkey's military might. At the same time, Greek Cypriots have realized that the uncompromising policies of their hard-line leader, Tassos Papadopoulos, was increasing international acknowledgment of the self-declared Turkish Republic of Northern Cyprus. They feared that another Kosovo was looming on their doorstep. And so in February, the Greek Cypriot electorate ousted Mr. Papadopoulos, who had campaigned on his rejection of the Annan Plan and vowed to block any such compromise settlement. Never before had a sitting Greek Cypriot leader lost in the first round of elections.

By contrast, the winner, pragmatic communist Demetris Christofias, campaigned for concessions with the Turkish Cypriots. Since coming to power, he has broken many taboos. He has accepted that Greek Cypriots may share responsibility for the conflict. He sent a wreath and a representative to the funeral of an exhumed Turkish Cypriot killed in the 1960s communal violence and met Turkish visitors who entered Cyprus directly from Turkey. On April 3, the two sides opened a new crossing in the heart of Nicosia's old city.

Mr. Christofias's initiatives went beyond mere confidence-building measures. He accepted that there will be a Turkish Cypriot administration after a settlement. He told his people that a deal wouldn't bring the return of all Greek Cypriot refugees displaced during Turkey's 1974 invasion. And he said he is ready to accept that 50,000 of the Turkish immigrants who have since moved to the north can stay in their adopted homeland. This is a contentious issue for Greek Cypriots who consider these immigrants as illegal settlers, sent by Ankara to change the island's demographic balance.

What's more, Mr. Christofias can count on broad-based political support for his bold approach. If anything, the main opposition party, the center-right Democratic Rally of Nicos Anastasiades, is pushing even harder for settling the conflict. This newfound taste for compromise is as much driven by economic necessity as by political pragmatism. The Greek Cypriot business community as well as the liberal media realize that by normalizing relations with Turkey, the island could relaunch a sagging tourism sector and better profit as a hub for financial and other services in a region that is increasingly turning to Turkey's strong economy. And most Greek Cypriots now accept that compromise is the only way to get compensation for lost property and win the withdrawal of the 25,000 to 43,000 Turkish troops from the island.

This is remarkable progress, suggesting the two sides could hammer out a deal within the next 12 months. On March 21, they formed 13 working groups and technical committees to discuss the basis of a settlement. One diplomat believes the two leaders "seem to have it all stitched up already."

Mr. Christofias and the Turkish Cypriot leader, Mehmet Ali Talat, agreed on May 23 on the outlines of a future agreement. They managed, linguistically at least, to square the circle between Greek Cypriot demands for unity and Turkish Cypriot demands for autonomy. Under the envisioned deal, Cyprus would have one "federal government" with a "single international personality" but two constituent states "of equal status." Importantly, this formula is similar to what the Turkish National Security Council proposed in April, suggesting Ankara would accept such a settlement.

The U.N.'s policy chief for Cyprus, Undersecretary-General Lynn Pascoe, who has expertly shepherded the talks this far, last week judged progress better than expected. "I really do think we are on the path that is going to make it work this time," he told a news conference.

Walking the balmy streets of Nicosia, it's hard to feel the Cyprus dispute. Amid honey-stoned British colonial villas and palm tree-lined roads full of gleaming sports cars, the island looks more like a prosperous East Mediterranean emirate than a frozen conflict. Yet the status quo is as deceptive as ever.

With the island's Greek Cypriot part now in the EU, failure in these talks will come at a cost for the rest of Europe, too. The Greek Cypriots are already causing trouble by blocking the discussion of energy coordination between Brussels and Ankara as part of Turkey's EU accession talks. If all goes wrong, the Greek Cypriots will certainly use their EU membership to wreck the bloc's relations with Turkey, just like Greece held up EU financial aid to Turkey with damaging results in the 1980s and 1990s.

Turkey, in its turn, is already using its NATO membership to punish the EU. Ankara is holding back on joining peacekeeping missions and blocking formal EU-NATO cooperation. Turkey will doubtless go even further if the current talks crash.

In short, it's time for European leaders to put Cyprus on the front burner. What better way to demonstrate the EU's relevance after the Irish treaty rejection than by bringing peace to Cyprus? Spreading democracy and prosperity has been the EU's most noble goal and biggest success. It can do so again by helping Messrs. Christofias and Talat get right in 2008 what everyone got so badly wrong in 2004.