by Upstate NY
Wed Jun 29th, 2005 at 06:27:36 AM EST
In my continuing update on the Cyprus problem and the negotiations surrounding it, the news this morning is not good.
EU Aid Boggle
Click on the "news" link on the left hand side, then the very first article titled "Bitter Stalemate."
I described the recent state of the problem in my initial diary on ET at this link:
Essentially, yesterday's scuppered meetings in Luxemborg are cause for disappointment on both sides of the island but also in the EU itself. A few weeks ago, commentators were very optimistic about a breakthrough when the Turkish and Greek Cypriots were working hard toward integrating the North with the EU. (The North of Cyprus is actually considered to be inside the EU per the Acquis Communitaire but since the recognized government has no control over it, it is still realistically on the outside). The deal-making involved two regulations adopted by the EU with regard to the north. One, a 259 million euro grant in aid. Two, a regulation allowing direct trade between the north and Europe. When initially proposed, the regulations were considered separately and passed separately by the EU. The Greek Cypriots approved of the 259 million grant in aid but they did not approve of the direct trade regulation on the basis that it would imply a formal recognition (i.e. a customs union that would allow trade). Subsequently, two things happened. One, the Greeks passed a new law allowing northern goods to move through Nicosia to the EU (Nicosia is divided between the two sectors) and, two, the EU then coupled the two regulations together. In other words, the aid would not go through if it weren't attached to the direct trade regulation.
This caused a stalemate in the problem for several months. Finally, the two sides sat at a table and began negotiating. Prior to the French and Dutch referenda, a lot of progress was being made. The Turkish Cypriots were coming around toward the decoupling of the regulations in exchange for a new form of direct trade. The Greek side had agreed to allow a port in Northern Cyprus for direct trade but only if it were jointly administered by both sides. The port would be located in Famagusta (a former resort city which is now an uninhabited ghost town, since 1974). The key sticking point was made absolutely clear in the negotiations: the Greek side is not interested in preventing trade between northern Cyprus and the EU, but rather they insist on absolutely no formal or informal recognition of the statelet in North Cyprus. By placing the Northern port under the aegis of a commission run by both Greeks and Turks and nominally placed under the Cypriot Republic's EU umbrella, the Turks could have their trade and the Greeks could prevent any form of recognition. This is what was on the table a few weeks ago under the Luxemborg presidency's auspices. After the referenda, things began to fall apart.
The Luxemborg president this week moved ahead with formal proposals on this issue. However, a letter that the Northern Cypriot PM Talat sent to the commission yesterday expressed his wish to reject the decoupling of the regulations. The UK seems to have taken that letter to heart. And thus the negotiations once again have ended in acrimony. These negotiations were key for two reasons.
One, Turkey, by accepting a customs union with the EU, is going to have a difficult time forming one with EU member Cyprus. Inside Turkey it is argued that ankara should not sign the Customs Union protocol since the Greek Cypriots are preventing direct trade between the EU and the north, which making it a difficult signature for the Erdogan gov't. Had the negotiations in Brussels been successful, direct trade could have opened up between the north and the EU, between Cyprus and Turkey, thus allowing Turkey an easier ride during negotiations. As it stands now, Cyprus will demand that Turkey sign the customs union with the EU and it will also demand that the customs union be implemented. That's something Turkey will have a lot of difficulty doing.
Essentially, from a Greek Cypriot point-of-view, what happened during the negotiations is this: the North of Cyprus showed itself to be much more interested in the diplomatic contingencies of direct trade than it was in the actual benefits of it. In other words, much more stock was placed on developing a customs relationship, as a sovereign entity, with the EU than on actually moving goods from the north to Europe. If you reverse this point-of-view, then you begin to understand that this is exactly what the Greeks have been trying to combat in the first place.
In other words, this isn't about the movement of goods from the north to the EU. That problem could be solved. This is about the indirect recognition of the north in a customs union and, for the Greeks, the prevention of that indirect recognition.
That's what's at stake. And it has a lot of ramifications for Turkey's accession.