An Island in Europe: The EU and the Transformation of Cyprus 9780755619665, 9781848856783

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EDITORS AND CONTRIBUTORS

Derya Beyatlı is a management consultant and former spokesperson of the Turkish Cypriot Chamber of Commerce’s EU Information Centre. Hubert Faustmann is Associate Professor of History and Political Science at the University of Nicosia and Editor of The Cyprus Review. Christina Ioannou is Lecturer in European Studies in the Department of European Studies and International Relations, University of Nicosia. Engin Karatas completed a PhD on the Cyprus issue and is Executive Secretary of the German-Cypriot Forum George Kentas is Assistant Professor in the Department of European Studies and International Relations, University of Nicosia. James Ker-Lindsay is Eurobank EFG Senior Research Fellow on the Politics of South East Europe at the London School of Economics. Fiona Mullen is Director of Sapienta Economics and Adviser on Economic Issues to the UN Secretary-General’s Special Adviser on Cyprus. Nikos Skoutaris is a University Lecturer in the International and European Law Department, Maastricht University.

ABBREVIATIONS

AKEL AKP CFSP CTP DIKO DISY EC EEC EFTA ERM ESDP EU Evroko FATF FDI GDP NAM NATO NGO OECD QMV TAIEX TRNC UK UN UNFICYP VAT WEU

Progressive Party of the Working People Justice and Development Party (Turkey) Common Foreign and Security Policy Republican Turkish Party Democratic Party Democratic Rally European Community European Economic Community European Free Trade Area Exchange Rate Mechanism European Security and Defence Policy European Union European Party Financial Action Task Force Foreign Direct Investment Gross Domestic Product Non-Aligned Movement North Atlantic Treaty Organisation Non-governmental organisation Organisation for Economic Cooperation & Development Qualified majority voting Technical Assistance Information Exchange Instrument Turkish Republic of Northern Cyprus United Kingdom United Nations UN Peacekeeping Force in Cyprus Value Added Tax Western European Union

INTRODUCTION James Ker-Lindsay, Hubert Faustmann and Fiona Mullen

On 1 May 2004 Cyprus joined the European Union along with Malta and eight post-communist states of Central and Eastern Europe. It marked the culmination of a process that had started fourteen years earlier, when Cyprus had first applied to join the Union, and the end of six years of complicated and intense negotiations. As with every other acceding state, the accession process had been rigorous and had led to many changes in all spheres of activity. The island’s politics, economics and society all underwent a profound transformation as the Republic of Cyprus harmonised its laws with the 80,000 pages of legislation, and thirty one chapters, of the acquis communautaire, the EU’s body of laws. However, the process of accession was just part of the story. After it joined the Union, the island continued, and continues, to change. Quite apart from the ongoing efforts to ensure that the island continued to implement new European legislation, membership has had far wider reaching, and often unexpected, effects. Cyprus after EU accession is a profoundly different place to the country that existed before. This is seen in any number of ways. For instance, new rules and regulations introduced to end discrimination have led to an overall modernisation of society. Indeed, the very definition of Cypriot society has radically changed. There has been a massive surge in immigration to the island from across the European Union and beyond. Located at the junction of Europe, the Middle East and Africa, the island has become a magnet for illegal immigrants hoping to get into Europe. Indeed, Cyprus now has the highest population

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of immigrants per head of any EU member state. Naturally, this has had a profound impact on a country of less than a million inhabitants. At the same time, the island has had to adjust to membership in many other ways. For instance, the economy of the Cyprus has changed beyond recognition. The old offshore business sector that made the island a hub for business in the Middle East has technically disappeared and is now treated the same as domestically based companies. So too has the shady reputation the island developed in the 1990s as a haven for Russians and Serbians escaping political turmoil in the former Soviet Union and the Balkans. Instead, Cyprus is trying to reinvent itself in a way that capitalises on its new status as a member of the EU. Meanwhile, accession has also brought about a profound change in the island’s interactions with the outside world. No longer just a small island in the Eastern Mediterranean, Cyprus has also had to develop a whole new set of relations, both with the other members of the EU and with its neighbours. In addition to Greece and Britain, with which Cyprus has a history of relations, Cypriot officials have found themselves increasingly engaged in discussions with officials from Portugal, Latvia, the Czech Republic and the rest of the states that make up the 27-member EU. Its status as an EU member has also changed its relationship with the United States and Russia as well as its immediate neighbours in the Middle East. In the first instance, therefore, this work examines all these issues and seeks to show how the process of accession and the first few years of membership have affected the social, economic and domestic political fabric of the island.

The Cyprus Issue and accession However, and as is always the case with Cyprus, these issues represent a sideshow to the issue that, more than any other, preoccupies the people of Cyprus: the ongoing division of the island. Looking back it is often easy to forget that the island’s accession to the European Union had never been a foregone conclusion. Of all the new members that joined the EU in 2004, the question of Cyprus’s accession had always been the most problematic politically.

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Divided since 1974, when Turkish forces invaded in response to a Greek led coup, many observers felt that taking in the island would either be far too risky or far too problematic. For some, any move to accept the island could lead to a serious confrontation with Turkey. For years, successive Turkish Governments had been threatening to respond in the strongest possible terms if the European Union went ahead and allowed the island to join. Some Turkish politicians suggested that this would lead to the annexation of northern Cyprus by Turkey. Others presented an even more dangerous scenario. There was even the suggestion in some quarters that the island’s accession may lead to some form of direct military retaliation. Many members did not feel it was worth risking a confrontation with Turkey over such a small island. Similarly, there were those members who felt uncomfortable about the prospect of importing such a major problem into the Union. As a result, some countries, such as France, harboured a deep-seated belief that accession should only take place after a solution had been reached. However, this eventually proved to be a minority view. Instead, a number of other countries believed that the island should be allowed to join. This was based on two main arguments. First of all, there was a belief that barring Cyprus would in effect amount to punishment for Turkey’s invasion and occupation of the island. Moreover, acceding to Turkish threats would in effect give Turkey, which was not a member of the Union, a veto over which countries could and could not join. Many members therefore saw Cypriot accession as morally correct and politically important. At the same time, there was a widespread view that the process of accession could actually help create the conditions for a settlement. In fact, the prospect of accession could serve as a catalyst for an agreement. In the end, those who believed that accession could open up the conditions for a settlement were to an extent proved correct. As it became ever more obvious that the European Union was going to admit the Republic of Cyprus even without a solution, and that the threats of reprisals were having no effect, the Turkish Government and the Turkish Cypriot leader, Rauf Denktash, decided to initiate a new peacemaking effort. However, this was not aimed at reaching a solution, but was instead a ploy designed to encourage the EU to

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delay the island’s accession in order to give negotiations a chance of success. However, what could not have been foreseen by Denktash at the time was that a new government would come to power in Turkey that favoured the reunification of the island as a core part of an effort to open the way for eventual Turkish membership of the European Union. With less than three months to go before the island joined the Union an intensive new effort to reach a settlement was initiated that eventually led to a comprehensive UN peace plan. However, hopes that a settlement might in fact be reached before accession fell apart on 24 April, when the plan was rejected in an island wide referendum. However, this time the failure was not a result of Turkish and Turkish Cypriot intransigence. Instead, the blueprint was overwhelmingly rejected by the Greek Cypriots. This referendum result was to have a major effect on the island’s relationship with the European Union. In the aftermath of this vote, many international observers, including a number of senior officials from the European Commission as well as senior politicians from the member states criticised the Greek Cypriot leadership for its opposition to an agreement that many had seen as offering the best chance in a generation to bring about the reunification of the island. Many felt personally aggrieved at the result. After having worked for many years to ensure that the island’s accession would not be held hostage to Turkey’s refusal to reach an equitable settlement, there was a deep sense of frustration and betrayal at the way in which the Greek Cypriots had rejected what many saw as workable and viable solution. Moreover, the fact that one of the main reasons why the Greek Cypriots had rejected the plan was because they believed that they could use their membership of the European Union as a way to achieve a better agreement, only served to make matters worse. For most international observers, therefore, Cyprus’s accession on 1 May was not the joyous occasion that had been expected. Instead, there was a sense that it should not have happened.

Facilitating a settlement The fact that Cyprus joined the European Union under such negative circumstances meant that the post-accession period has been marked

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by recurring tensions between Cyprus and its EU partners. Quite apart from the residual tensions from the referendum, disputes have arisen over the steps that should be taken to help the Turkish Cypriots, as well as the Cypriot Government’s approach to the question of Turkish membership. Many outsiders felt that the Turkish Cypriots deserved to be rewarded for their change of direction. However, the Cypriot Government opposed many of the measures, arguing that they would lead to the recognition, in one way or another, of the Turkish Cypriot state. This fundamental difference of opinion over the issue meant that deep division emerged between Cyprus and some of its partners, such as Britain. However, the question of assistance to the Turkish Cypriots soon became more of a sideshow. Of far greater significance was the decision of the Cypriot Government to try to impose a number of conditions on Turkey’s EU accession process. Despite the fact that the initial shopping list of demands was eventually watered down following pressure from its EU partners, the Cypriot Government nevertheless used every opportunity available to press home its new advantage over Turkey. Rapidly, and contrary to hopes prior to the island’s accession, it was clear that Nicosia intended to use its membership to full effect as it sought to find a settlement. Naturally, the next question that many observers are asking is the degree to which accession has changed the parameters for a settlement. This is not an easy question to answer and much depends on the particular aspect of the issue being examined. For instance, it is questionable whether accession has given the Turkish Cypriots a greater desire to reach a settlement. As citizens of the Republic of Cyprus, many Turkish Cypriots have managed to claim many of the benefits of EU membership, without the associated costs. They can travel freely around Europe and settle or work where they wish.

Seeking security in Europe But the idea that accession would change the parameters of a solution in favour of the Greek Cypriots was just one part of the reason for membership. In fact, it could be argued that throughout the accession process this reason was actually rather secondary.

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Instead, a recurring argument made in favour of membership was that it would give the island an unprecedented degree of security. Even if the membership did not bring about a solution, either prior to accession or after, there was the widespread view that EU membership would, at the very least, give the Greek Cypriots protection against Turkey. The overriding belief was that once the island joined the Union, Turkey would not dare to take action against Cyprus. At the same time, Europe would not allow Ankara to threaten the island. The importance of this factor in Cypriot thinking cannot be understated. Outsiders often felt mystified about the degree to which Greek Cypriot continued to believe that Turkey would, if given a chance, take the opportunity to seize more of the island. To be sure, most foreign observers felt that there was little justification for this view. Turkey had achieved what it needed in 1974. As for taking any more of the island, this seemed unlikely as it would almost certainly lead to the deepest opprobrium on the international stage. The idea that Turkey harboured a desire to take the whole of the island was considered by most to be absurd. However, such views, while probably a more accurate assessment of the situation than those held by many Greek Cypriots, nevertheless fail to understand the deep sense of insecurity on the island. For those who had lived through the events of 1974, the threat posed by Turkey was not imaginary. A large proportion of the Cypriot population had witnessed at first hand the military power of their neighbour during the invasion. It was also at that time that they realised just how powerless they were, both militarily and diplomatically, to defend themselves against such force. The National Guard was in no state to defend the island against such overwhelming odds. Nor was Greece able to do anything. After seven years of military rule, the armed forces of Greece were, somewhat paradoxically, all but useless. Meanwhile, no one else was willing to come to the defence of Cyprus. The UN peacekeeping force on the island was, with the notable exception of the operation to hold the airport in Nicosia, forced to stand aside and observe as wave after wave of Turkish troops landed on the island. In this sense, while it might seem unlikely to outsiders that Turkey would ever take any more action, Greek Cypriots were nevertheless, and

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understandably, driven by a belief that the European Union would at last provide them with a sense of security that they had never had before.

Lack of knowledge The corollary of this underlying political emphasis on accession as a means of reaching a settlement or ensuring security was that the process of EU accession took place with almost no real debate. There was not, for an example, a referendum on joining the Union – although few, if any, would cast doubt on the view that membership would have been supported overwhelmingly for the reasons of security just mentioned. Nevertheless, to many of those observing the situation, the process of accession was somewhat unreal. In almost every sphere of economic, social and political activity, profound and irreversible changes were taking place and yet the Cypriots in many ways seemed almost indifferent to the events taking place around them. Indeed, it was also notable that studies – including one published by the Office of the Chief Negotiator, in September 2002 – showed that the Cypriots were in fact the least well informed of all the new entrants to the EU. Naturally, a large part of the reason for this lack of discussion was due to the political imperative of joining the EU. In the eyes of the Cypriots almost any price, save for the acceptance of the division of the island, was a price worth paying for the security many believed would come with accession. In view of this national consensus in favour of membership, no one wanted to discuss the negative effects of accession. However, another reason for the lack of debate was the way in which accession was a rather different process for Cyprus, and for Malta, than it was for the eight Central and Eastern European countries that also joined the Union on 1 May 2004. Along with Malta, Cyprus had in fact been a British colony and therefore did not fall under Soviet influence at the end of the Second World War. Instead, both became independent states in the 1960s and in both countries a democratic system of government and a free market, albeit with strong elements of state control, existed. Moreover, both

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had acquired rather high standards of living before they even applied to join the union. In this regard, both Cyprus and Malta did not face many of the toughest elements of transition that were faced by Poland, the Czech Republic, Slovakia, Hungary and the three Baltic republics. (Slovenia, as a former republic of Yugoslavia, in turn also had a rather different experience.) In this regard, many of the elements of accession were relatively painless, at least as compared with the often difficult problems associated with accession elsewhere. However, there was also a negative element to this. Unlike the other new members, where accession had brought about a profound change to the very structures of their economies and had in fact allowed them to become more competitive by reforming the labour markets, this did not happen in Cyprus. To be sure, a number of measures had to be introduced that would bring the Cypriot economy into line. However, all too often this did not lead to fundamental reform. In this sense, accession, although leading to profound transformations, nevertheless did not require or result in the sort of changes that many had felt would be most beneficial to the island.

Structure of the work The volume is organised around seven chapters. Chapter One explores the long standing relationship of the Republic of Cyprus with the European Economic Community, the European Community and the European Union. It describes the opposition of Turkey and the Turkish Cypriot leadership to the decision of the Republic of Cyprus to apply for membership, as well as their opposition to the ensuing accession process. It also demonstrates the original reluctance of the EU member states to consider Cypriot membership without a prior solution to the political problem. However, as is explained, the Republic ultimately managed to overcome this resistance and eventually joined the EU as a divided island, in large part due to the efforts of the Greek government. .The contribution shows how the EU process worked as a catalyst on all sides in the conflict, bringing them closer than ever to reunification. The chapter ends with reflections on the consequences of the failure

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to reunify the island for the future of EU relations with Turkey and the Turkish Cypriots. Chapter Two explores the complex legal issues that arose as a result of the failure to reunify Cyprus prior to accession. As will be shown, the accession of a divided island has created a number of very serious complications for the European Union. In order to manage this, the Union has sought where possible to depoliticise the issue as much as possible and adopt a technical approach to the problems that have arisen. It explores the Union has managed to absorb some of the stresses of the division by concentrating on enhancing the lives of most of the inhabitants on the island and has tried to support the normalisation of the relations between the two communities as well as between the Turkish Cypriot community and the Union. The paper follows the structure of Protocol No 10 and analyses the relevant Union legislation and case law that have played a major part in this process. The next two chapters examine the ways in which EU accession has affected Cyprus. Chapter Three examines the way in which EU accession and membership fundamentally altered the economic and commercial environment of the island. It shows how membership of the European Union has forced Cyprus to reform its offshore business sector and dismantle capital and immigration controls in ways that have had a long-lasting and largely positive impact on the economy. However, it also shows that, in a small economy where much business is still conducted on the basis of personal connections, the impact on competitiveness has been less profound than might have been expected and that this has potentially farreaching consequences for a small eurozone economy. Following on from that, Chapter Four explores the wider social and societal impact of accession on the island. It shows that, as was the case with the economic effects of membership, many of the most profound changes actually took place in the pre-accession period. In fact, a large majority of the EU directives were transposed in the Cypriot legal framework during the harmonisation period. There has been, however, a problem with the cognitive dimension of change. While the laws may have changed, public attitudes have often been slower to catch up. This normative-cognitive gap is demonstrated in

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this chapter across a number of social and societal sectors. Subjects such as public health, gender equality, environmental concerns and immigration are all explored. Chapter Five explores the way in which accession has affected the island’s external relations more generally, not just with regard to its European partners, but also with other states. In addition to transforming the relationship the island has with Britain and Greece, the two countries in the EU with which Cyprus has traditionally had the closest relationship, membership has also forced Cyprus to extend the range of its ties to other members. As a result, it has built close ties with countries such as France and Austria, which are the leading opponents of Turkish membership within the European Union. At the same time, it has also found that it has to establish relationships with the other member states of the Union. But accession has also changed the island’s relationship with many other countries. For instance, Cyprus now has a greater political significance in Russian eyes. Similarly, membership has also had an interesting effect on the island’s relationship with the United States. In a wider, regional sense, accession has also transformed the way in which Cyprus views the Middle East. Chapter Six looks at the Turkish Cypriots within Europe. Although given the opportunity to participate in the accession process, the Turkish Cypriot leader, Rauf Denktash, instead opted to reject any association with the EU and pushed for closer ties with Turkey. By the time a decision was made to find a solution, it was too late. The Turkish Cypriots had missed their chance to be a part of the EU. The fact that the EU has been unable to end their isolation since the island’s accession has meant that there has been a growing sense of frustration towards Europe. Are the Turkish Cypriots now turning their backs on the EU? Finally, Chapter Seven examines the role the European Union has played in the Cyprus Problem since accession. Its main thesis is that that six years of EU membership (and the accession process) are – with respect to the Cyprus problem – littered with false hopes, miscalculations and misperceptions by all main actors. The chapter focuses on three aspects that have dominated the relations between the EU and Cyprus. Firstly, it reconstructs the failed attempts of

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powerful actors within the European Union to overcome Greek Cypriot resistance in its efforts to implement the EU pledge from 2004 to end the isolation of the Turkish Cypriots. Secondly, the chapter examines the repeated attempts of the Greek Cypriots to utilise their membership as well as the Turkish aspirations to join the Union in order to press Ankara for concession in the Cyprus Question. Lastly, a critical assessment is made to what extend the proponents of a so called ‘European Solution’, who argue that Cyprus’ accession has fundamentally altered the very parameters of a settlement, are basing their political demands on a accurate perception of liberal democracy and the European Union as a political actor in ethnic and inner state conflict.

A note on language, terminology and scope One of the most difficult problems confronting anyone who tries to write on Cyprus is the use of language and terminology. In the case of Cyprus, almost every phrase or term used to describe the situation, or even one or other side or community, is politically loaded. To Turkish Cypriots and Turks, the Republic of Cyprus is ‘South Cyprus’, and is unrecognised. At the same time, the Turkish Republic of Northern Cyprus, which is only recognised by Turkey on the World stage, is usually referred to by the Greek Cypriots as the occupied areas, or northern Cyprus. Indeed, even using the term ‘Northern Cyprus’, as opposed to ‘northern Cyprus’, without the capitalisation of northern, has been known to cause problems. All this naturally presents a number of problems for anyone attempting to write a relatively neutral or unbiased account of the situation; if, indeed, such a thing is even possible. In conformity with widespread practice, this work adopts a legal view of the situation in as much as there is only one Cypriot state in existence, the Republic of Cyprus. When Cyprus joined the European Union on 1 May 2004, it did so as a whole, legally if not politically. Under international law, as well as within the European Union, there is no formal recognition of a separate state in the north of the island, even if there is a recognition that there is a part of the island over which the Government of Cyprus has no direct control

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and in which the EU acquis communautaire is suspended – a decision taken at the formal request of the Cypriot Government. Therefore, except where noted otherwise, any references to Cyprus should be read to mean the internationally recognised Republic of Cyprus. Similarly, all references to the Cypriot Government should be read as shorthand for the Government of the Republic of Cyprus as recognised under international law as the legitimate government of the entire territory – apart from the British Sovereign Base Areas. However, when reference is made to specific individual and officials, it is far easier simply to refer to them by the titles they use themselves or are widely recognised to hold, even if not legally valid. The book will not adopt the standard Greek Cypriot approach of attaching the words ‘pseudo’ or ‘so-called’ in front of various terms. The rigid application of this by Greek Cypriots, albeit understandable, can nevertheless have rather surreal results. Lastly, it is worth saying a few words on the scope of this work and its intended audience. This book should not be viewed as an examination of the government, politics, society and economics of Cyprus. While each of these issues are examined, the work instead seeks to examine the specific ways in which European Union accession has affected various aspects of life in Cyprus and the way in which it has changed the island’s interactions with the wider world. Therefore, the chapter on the economic implications of accession does not attempt to provide an in depth examination of the Cypriot economy in its entirety. A single chapter would be clearly insufficient to do justice to such a topic. The same approach applies to each of the chapters, and the work as a whole should be read with this in mind. Likewise, the work has not been written for any particular audience, academic or otherwise. Instead, it seeks to provide an account that is accessible to anyone interested in understanding in the broadest terms possible how European Union accession and membership has affected the island.

1 THE POLITICS OF ACCESSION Engin Karatas

The European Union exists to put an end to the conflicts of the past and to bring peace, justice and well-being to our peoples.1

The fifth enlargement of the European Union (EU) was also the largest in its 50-year history. On 1 May 2004, the EU expanded from 15 to 25 Member States. Along with eight countries from eastern and central Europe, two Mediterranean island states – Cyprus and Malta – also acceded. The accession of Cyprus, the third-largest Mediterranean island, was, and is still, a sensitive issue as the island has been divided into two mono-ethnic areas since 1974. The Greek Cypriots live in the south, the Turkish Cypriots in the north. Meanwhile, United Nations (UN) peacekeepers stand along a 218kilometre long demarcation line. The island’s capital, Nicosia is, as Berlin once was, divided by walls and barbed wire. For over 35 years a kind of cold war has dominated the island. The politically explosive nature of Cyprus’ admission is even more emphasised by the fact that the northern part denies the legitimacy of the accession under reference to international agreements. Additionally, the Turkish Cypriots also protest against the EU’s belief that the EU membership application had been submitted on behalf of the entire island. Former Turkish Cypriot leader Rauf Denktash had repeatedly warned as early as 1990 that an eventual unilateral EU accession would lead to cementing the division of the island, to a failure of all reunification efforts and to a destabilisation of security in the eastern Mediterranean region.

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Despite these warnings, the European Commission started accession negotiations with the Republic of Cyprus in 1998. The EU believed it could contribute positively to the reunification efforts on the island. The idea of a ‘catalytic effect’ was postulated, namely that, ‘the accession process and accession itself could serve as a catalyst for the peace effort aimed at achieving a political solution to the problem of the partition of the island.’2 Both the momentum of integration as well as the economic incentives of joining the EU would be able to create a fertile climate for the reunification negotiations under UN auspices. Nevertheless, the UN mediation efforts failed in the end: on 1 May 2004 Cyprus acceded to the EU as a divided island. If the EU-accession of Cyprus is analyzed in detail, a threefold emerges. First of all, in the past, the EU had set up the irrefutable condition that disputes between ethnic groups within accession candidates have to be solved prior to accession. A good example of this policy is Estonia: it was only after Estonia was able to settle its internal problems and differences with the Russian minority by institutional arrangements that the EU Commission approved the beginning of accession negotiations on 15 July 1997. The paradox now is that in the same enlargement round another candidate country, Cyprus, was neither denied the start of accession negotiations nor accession itself despite the fact that since 1963 a more violent and complex conflict has existed on the island, the fact that a considerable number of hostile foreign troops are stationed on the island, the fact that an internationally unrecognised entity has declared independence in the north, and the fact that the conflict has had sufficient potential in the past to manoeuvre two Aegean neighbours to the brink of war. One can reasonably argue that with the inclusion of the Mediterranean island the EU has imported the long-lasting conflict into its institutions and bodies, and thus, paradoxically, has failed to comply with its own procedures. Secondly, on 24 April 2004, just days before the formal completion of the fifth enlargement round, a referendum took place on both sides of the island on whether the island should reunify and become an EU member as the ‘United Cyprus Republic’. The overall result of the referendum, however, caused disenchantment in New York and

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Brussels: while the Turkish Cypriots in the north supported the reunification plan with about 65 percent of the vote, the Greek Cypriots in the south rejected the plan with an overwhelming majority of more than 75 percent. Cyprus, whose EU membership had been guaranteed by the signing of the Accession Treaty in April 2003, joined the EU not united, but as a divided island. De jure the membership embraces the whole island. However, de facto only the southern part, where the Greek Cypriots live, can enjoy the rules and legal standards of the EU. In the north the application of the acquis communautaire is suspended. As the EU is a creation of law and a community by law it is quite legitimate to argue that the Turkish Cypriots in the northern part are excluded from the EU and its benefits, even though they voted in favour of a solution. Conversely, the community that had expressed its opposition to the reunification plan and voted against the recommendation of the UN and particularly the EU, qualified for membership. Thirdly, the membership of Cyprus appears all the more paradoxical from the perspective of international law. Concerning the situation in Cyprus, the UN concludes in its resolutions that the proclamation of the ‘Turkish Republic of Northern Cyprus’ (TRNC) is void. The international community collectively refuses any recognition of this entity. Hence, only one state exists on the island, the Republic of Cyprus, whose northern part is occupied by foreign forces. Classified as illegal under international law, the occupation of the northern part leads automatically to an illegal occupation of EU territory since Cyprus’ accession. This assessment is not easy to tackle, particularly because official EU documents take up the diction of ‘Turkish occupation of northern Cyprus’.3 Nevertheless, Brussels remains silent about this fact. Furthermore, the occupying power, namely Turkey, wants to become an EU member state. Regardless of the illegal occupation of EU territory, accession negotiations with Turkey were officially opened on 3 October 2005. However, the pinnacle of the paradox is this: these negotiations began with the consent of the occupied Member State, the Republic of Cyprus. Against this background, the article tries to answer, in all due brevity, the question of why the island was accepted as a member state despite the division and the ongoing ethnic conflict, as well as

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why the presumed ‘catalytic effect’ did not unfold in light of Cyprus’ accession to EU membership. In order to resolve these issues raised the article is divided into six interdependent parts. The first section will outline the history of EU-Cyprus relations till 1990; the second section will explain the reasons for the membership application of the predominantly Greek Cypriot government of the Republic; the third section will review the Turkish Cypriot reaction to it; how the EU dealt with the application is then described in the fourth section; the fifth section will focus on Cyprus’ accession process against the background of Greek diplomatic efforts; in the sixth section the reasons for the failure of the UN negotiations efforts and the ‘catalytic effect’ will be discussed, before concluding with a number of remarks on the accession process in the last section.

Cyprus-EU Relations in the Cold War era Relations between the EU and Cyprus date back to the early 1960s, when all three guarantor powers (Greece, Turkey and the United Kingdom) were trying to tie themselves in different ways to the European Economic Community (EEC). While Greece and Turkey applied for associate membership in 1959 and 1960 respectively, the third guarantor power, the UK, was willing to bind itself more closely to the EEC and applied for full membership. This step, which was taken by Harold Macmillan in July 1961, indirectly brought Cyprus for the first time into the orbit of the EU. The former Crown colony’s most important economic ties were with the UK, since Cyprus was able to sell its goods free of customs duty into the UK market. For Cyprus, an EEC accession of the UK would have resulted in a sudden invalidation of all trade facilitation with its major trading partner. Therefore, the British application put Cyprus under pressure to establish ties with the EEC as well. However, Charles de Gaulle’s hostility to the British application for EEC membership rendered any plans about Cyprus obsolete in January 1963. For the time being there was no longer a need for integration into the EEC structures in order to uphold the free-trade agreement with Britain. It was only in 1971 when Britain renewed its efforts to join the EEC that the Republic again sought a deepening of its own

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relationship with the EEC for the same reasons. As Makarios’ policy of neutrality and his manoeuvring between the Western and Eastern bloc excluded any application for full membership, he confined himself to an application for association. A full membership application would have put in question Cyprus’ membership in the Non-Aligned Movement, a membership of which had already proved to be extremely valuable in terms of advantageous resolutions at the UN General Assembly. In toto, the decision of the Republic for association application derived from economic considerations, the absence of a membership application from strategic calculus. The EEC responded positively to the association application. In the era of bipolarity every state in Europe and the Mediterranean region that had not bound itself to one or the other side should be connected to the EEC as closely as possible via different means. On 19 December 1972 the association agreement, which laid the foundation for EU-Cyprus relations, was signed – almost coinciding with the EEC accession of the UK (1 January 1973). The two-stage agreement envisaged a gradual establishment of a customs union for industrial and agricultural products between Cyprus and the EEC and entered into force on 1 June 1973. The agreement safeguarded the preferential access to the EU market. However, the Turkish intervention or, depending on the standpoint, invasion of Cyprus a year later delayed the implementation of the Association Agreement. After several successive extensions of the first stage an Additional Protocol for the implementation of the second stage was signed in October 1987, with some ten years’ delay. This Protocol laid down the terms for the gradual establishment of the customs union. On 3 July 1990, the Government of the Republic of Cyprus applied for full membership in the European Coal and Steel Community (ECSC), the EEC and the European Atomic Energy Agency (EURATOM) on behalf of the whole island.

The logic of the Greek Cypriot membership application The application of the Republic is not comparable with the other nine candidates that applied for full EU membership after the collapse of the Soviet Union and its defence organisation, the

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Warsaw Pact. Unlike the Central and Eastern European Countries, who urgently sought guidance opportunities and precise structural blueprints in order to overcome the simultaneity of political, economical and social collapse,4 the Republic already had both a stable political democracy, despite the division, as well as a functional economic system. Therefore, the decision to apply for full membership was not mainly owing to a desire to readjust the internal state structures, but rather originated from different calculations, as will be discussed below. First, and most importantly, when Cyprus applied for membership, the international political system had changed. The fall of the Berlin Wall and the end of bipolarity provoked a reassessment of the Republic’s political course. The requirement of the Republic was to position itself in the new world order. The application was the first step out of political neutrality for Cyprus which until then had been expressed through its membership in the Non-Aligned Movement.5 A deviance from the neutral course pursued during the Cold War was very unlikely owing to the self-conception of the then Greek Cypriot governments. Any application for membership in the bipolar era would have implied the end of the equidistance policy towards the two military alliances. Moreover, after the partition of the island in 1974, in the midst of the Cold War, it was very unlikely that the EEC would have taken the risk of destabilizing the fragile relations between Greece and Turkey – two geopolitically and securitypolitically very important countries at the southern flank of the defence alliance NATO – by pursuing a full membership application of Cyprus. The collapse of the Eastern Bloc was the basic prerequisite for the membership application. Secondly, it can be concluded that economic motives were not the core element in the government’s decision to seek full membership of the EU. The preferential trade agreements enjoyed by Cyprus since the Association Agreement of 1973 were to be expanded to a customs union within 15 years, as envisaged in the Additional Protocol of 1987. Against this background the economic incorporation of Cyprus into the EU market was guaranteed and would have reached a relatively high degree even without membership application. Moreover, implementing the acquis

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communautaire would have had the side effect of curtailing some lucrative businesses that Cypriots engaged in, for example, the offshore banking or the relatively non-restricted registration of vessels under the Cypriot flag. Hence, even if the economic argument remains important, the motivation for the application was mainly political; that is, it related to the Cyprus problem. This leads to the third point. Greek Cypriot politicians perceived the application as a way to bring new impetus to the deadlock. After 26 years of fruitless UN negotiations and 16 years after the Turkish military intervention in Cyprus, it was quite unlikely that the UN would be able to produce any substantial success through its mediation efforts without a major change in the conflict framework. Turkish Cypriots and Turkey had been relatively satisfied with the status quo, which assured them, respectively, political selfdetermination and the military use of the strategically important island. The ‘No solution is the solution’ attitude shared by Turkish Cypriots and Turkey alike doomed any UN-led negotiations a priori to failure. Having been frustrated with what could be described as a lack of Turkish Cypriot political will to solve the problem, the utilisation of other international organisations seemed the only possible way out of the impasse. The necessary fundamental change in the basic framework of the conflict should be achieved by introducing the ‘EU dimension’. If Cyprus acceded as a unified island, Greek Cypriots would have solved the complex conflict. If Cyprus remained divided, the Republic would still be part of the EU, which would not only strengthen its international position, but turn Turkey into an occupier of EU territory, and provide the Greek Cypriots with a weighty voice that reaches far beyond Turkey’s accession process. From this perspective, it is not surprising that the driving force behind the application was Greece, which had acceded to the Community in 1981. Greek Prime Minister Papandreou urged Cypriot President Vassiliou during the Greek EU-presidency in the second half of 1988 to submit an application for full membership. This strong request was brought forward in order to involve the European Union more deeply in the conflict, as the Community pursued a policy of non-interference. The application for

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membership was first and foremost a strategy to internationalise the conflict to a broader extent. Fourthly, Greece and the Greek Cypriots did not expect the EU to take any active role in the conflict but rather to create an environment in which the negotiations under UN auspices would yield demonstrable results. In this context, Turkey’s EU application, which was submitted by Ankara in 1987, played an immense role. The Turkish Republic was ascribed a key position for the resolution of the conflict both by Athens and Nicosia as well as the EU. If the Cypriot membership application would be pursued by the EU, the Cyprus question would no longer be a distant conflict for the EU but a conflict between two countries seeking membership. In that case, the EU would increasingly have to deal with the Cyprus problem. Consequently, the solution to the conflict would play a stronger role in the accession process of Turkey – a stronger role than Greece would ever have been able to achieve by lobbying in the relevant EU bodies. Turkey, whose position was perceived as intransigent by the Hellenic side, would hardly be able to block any conflict resolution initiatives as this would jeopardise its own accession process. An additional consideration was likewise very important: if the Turkish Cypriots deemed EU membership desirable and beneficial they would also alter their stance towards the resolution efforts, since unification would be the only way to achieve it. Hence, the ‘catalytic effect’ described in the beginning of this article is Janus-faced and refers both to Turkey as well as to the Turkish Cypriots. Fifthly, and finally, EU membership should provide protection against any new military action on the island by Ankara. In this context, former Cypriot president Glafkos Clerides pointed out in an interview with the daily newspaper Ta Nea that the Treaty of Guarantee, which legitimised Turkey’s intervention on the island to a certain degree, would de facto be nullified by accession to the Union: If Cyprus becomes an EU member, the intervention of Turkey in an EU country will become an imponderable action. We will thus remove the unilateral intervention right of Turkey under the Treaty of Guarantee, and in constitutional matters, and in many issues raised by the Turks, we will have the trump cards.6

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A new operation would essentially equal an operation against an EU member state and, thus, would be most improbable. All in all, Greek Cypriots reasoned that they could only gain politically and strengthen their position via the membership bid, even if the Turkish Cypriot government reacted harshly, as it did.

Turkish Cypriot reactions to the application The Turkish Cypriot leadership responded with strong opposition to the membership application. Nine days after the application a harsh, 21-paragraph memorandum was sent to the EU’s Council of Ministers, in which the de facto authorities expressed their strong disapproval of the application.7 The articulated concerns were twofold: on the one hand under constitutional law, on the other hand under international law. For the constitutional dimension, the Turkish Cypriots argued that the application was illegal, as the Greek Cypriot administration had no lawful authority to make such an application on behalf of the whole of Cyprus or on behalf of the Turkish Cypriot people. The memorandum notes that the bi-communality of the state and its government was a condition sine qua non for the establishment of the state in 1960; in the Constitution each community had received a constitutionally guaranteed co-determination right in perpetuity. Hence, when no community should dominate the other the proper course for the Council of Ministers, resulting from the Turkish Cypriots’ refusal, would be to take no action on the application. For the international law dimension, the Turkish Cypriots argued that the application would be open to objection arising from Article 1 of the Treaty of Guarantee which states that the Republic of Cyprus, ‘undertakes not to participate, in whole or in part, in any political or economic union with any State whatsoever.’ Turkish Cypriots left no doubt that they would continue to be politically and legally opposed to the accession of Cyprus to a community of which Greece was a full member but Turkey was not. However, it is not difficult to realise that the Turkish Cypriot line of reasoning is flawed. The Turkish Cypriots insisted on the independence of their entity while

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also emphasizing that the Constitution of 1960 was still in force and the Turkish Cypriots, therefore, would have a perpetual codetermination right in foreign affairs of the island. Without going into the details of the aforementioned arguments it may be interesting to analyze the motives behind this ‘juridical façade’ of objection. Four major points can be identified. First, the security dimension plays the decisive role for understanding the attitude of Turkish Cypriots. Based on the experiences of the past the guarantee of security – apart from the question of maintaining their ethnic identity – represents the most important issue in domestic policy. In regard to the application the Turkish Cypriots were generally of the opinion that Cyprus’ accession, whether in whole or in part, could create a massive security gap. This conception is based on two trains of thought: after accession the government of the (predominantly Greek Cypriot) Republic of Cyprus could claim that a foreign power occupies EU territory. Brussels could ultimately ask for discussion; the stationing of troops on the island could become a burden in the relations between the EU and applicant Turkey. Moreover, it was feared that EU admission of Cyprus would lead to a de facto annulment of the Treaty of Guarantee and thus a negation of the Turkish intervention right. Secondly, the maintenance of TRNC statehood and independence was a major driving force for all political actions and, in this context, for the rejection of the application. The political elite of the TRNC, especially Rauf Denktash, perceived the membership application of the Greek Cypriots as a means of undermining existence and status of the TRNC. Against the background of the long-lasting struggle for international recognition, statehood and independence, an acceptance of the application was out of the question as this would have effectively conferred full legitimacy to the Republic of Cyprus government. Additionally, from a Turkish Cypriot perspective any action on the application by the EU would result in the denial of the existence of the TRNC. This causal connection made any cooperation by the Turkish Cypriots with the EU from the very start questionable. The Turkish Cypriots insisted that the Republic of Cyprus was not entitled to represent the whole of Cyprus, especially in such a fundamental issue as the acquisition of EU membership.

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Thirdly, the Turkish Cypriot elite saw no need to alter the status quo of the island. For Denktash and his supporters the intervention of Turkey, the subsequent division, and the proclamation of the TRNC had already solved the Cyprus issue. Contrary to all solution endeavours, the continuation of an independent state represented the optimal solution and international recognition of the TRNC was seen by many Turkish Cypriots as key to the final solution to the conflict. Even if it was argued that the TRNC was only proclaimed in order to re-establish the defunct partnership state in a federal form, in which the TRNC would form the federated Turkish Cypriot wing of a future federal republic of Cyprus, the Turkish Cypriots favoured a confederal solution. As the status quo on the island was indirectly contested by the application, the Turkish Cypriot elite rejected it. Fourthly, and lastly, the Turkish Cypriots took the view that with accession of the island the Greek dream of Enosis (union with Greece) would come close to realisation, at least as long as Turkey was not a full member. As noted in the memorandum: “The Greek Cypriot application violates the international and constitutional ban on Enosis.” Comments of Greek Cypriot politicians contributed to these fears: ‘By attaining the union of Cyprus with the EU we are, at the same time, attaining its union with Greece.’8 Furthermore, it was feared that a full implementation of the fundamental freedoms stipulated within the acquis communautaire – free movement of goods, persons, services and capital – would annul the 1977 and 1979 High Level Agreements. Whether these claims were right or not, the accession reinforced Turkish Cypriot fears of being demoted to a minority as well as fears that free movement and settlement for individuals would lead to confrontations fuelled by property claims and hatred. Needless to say, the Turkish Cypriots were fully supported by Ankara in their objections. For Turkey, the government of the Republic of Cyprus can obviously not be the sole representative of Cyprus, as Ankara recognises only the TRNC, thus, the application was not binding for the entire island from Turkey’s viewpoint. Additionally, Ankara’s strong objections were of course also based on the fear that their accession aspirations could be negatively affected by the Greek Cypriot application. If the (predominantly

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Greek Cypriot) Republic of Cyprus joined the Community, there would be two potential Greek vetoes in the EU against Turkey. The danger that Cyprus could become an obstacle to Turkey’s membership application intensified with the Greek Cypriot application. In this context, it is easy to understand why the Turkish government went so far as to claim that regional stability would be severely jeopardised by Cyprus’s accession to the EU. Furthermore, Ankara countered the Greek Cypriot membership application with the threat that if membership negotiations of the Republic of Cyprus were opened, Ankara and the Turkish Cypriot political élite would also proceed with preparations for further integration of the TRNC into Turkey. The application implied incalculable risks to the status quo on the island and the Turkish accession ambitions, and, hence, was rejected harshly.

Implications of the Cypriot Application for the EU With the end of the Cold War several domestic religious and ethnic conflicts in the Mediterranean region came to light which were until then concealed by the disciplinary corset of bipolarity. The upheavals in the region had very specific implications for the West. The term ‘Southern Threat’ – which refers to a range of phenomena, such as the spread of Islamic fundamentalism, the rise of drug trafficking, organised crime, the proliferation of weapons of mass destruction, rising migration rates, and also international terrorism – broadened the Community’s strategic vocabulary. The Western model of liberal democracy had triumphed over its rival in the competition of systems. But this did not lead to the desired end of all confrontation, but altered the global conflict to a diffuse rugged, regional threat, in which religion seems to have replaced political ideology as the key conflict parameter. In this chaotic situation of the Mediterranean region, all steps were to be avoided which could cause a resurgence of latent conflicts. Therefore, the EU Member States did not want to get involved in the Cyprus conflict at all. Particularly because no danger was emanating from Cyprus in terms of the ‘Southern Threat’: the island was westoriented and politically stable on both sides of the island, despite the

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division. Finding a coherent approach to balancing the conflicting interests in the confused Cyprus situation was very delicate. From an historical viewpoint it is interesting to note that apart from a number of declarations and resolutions, the Community has never played an important role in the dispute nor ever suggested a concrete plan for its solution. Greece and Turkey pursued diametrically opposed interests with regard to the island and its membership application. Any action by the European Union on the Cyprus imbroglio would be considered as a zero sum game by the two ‘mother countries’ and implicated a simultaneous change in the relationship to both – either in favour of Greece and disadvantage of Turkey or vice versa. Finding a longterm strategy, which could meet the EU claim of equidistance towards the two countries, was extremely difficult, if not impossible. The relationship between the two Mediterranean neighbouring countries is one of mutual distrust, indicated also by the fact that after the Second World War Greece and Turkey were on the brink of war half a dozen times. The European Union feared that any involvement of theirs in the conflict could lead towards a cementing of the division on the island, to a serious crisis in the relationship with Turkey, itself another accession applicant, and to a massive escalation in tension. Undoubtedly, the European Union had to walk a tightrope, accommodating the conflicting views of all parties historically involved in the dispute in Cyprus. The fact that Britain and Greece, two of the three guarantor powers, became members in 1973 and 1981, respectively, indicates that the EEC/EU has no credibility to mediate in the conflict as an impartial interlocutor. Consequently, the EU acknowledges the fact that for the Turkish Cypriots, as long as their ‘mother country’ is not a full member, the United Nations is the only accepted and acceptable international organisation with the perceived neutrality to negotiate a settlement in Cyprus. Additionally, the fact that the Turkish Cypriots harboured no interest in any cooperation with regard to the ‘illegal’ application showed the Community a priori how difficult it would be to find any basis for cooperation with the Turkish Cypriots in the wake of a possible accession process.

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Against the background of the aforementioned political dilemmas, the first action of the EU to avoid deeper involvement was a calculated inaction, a kind of ‘intentional lethargy’:9 It took the Commission three years to respond to the application in the form of an Avis on 30 June 1993.10 With the Avis itself the Commission confirmed in principle the accession eligibility of the island. However, the Avis pointed out the central concerns of a possible accession very explicitly. The Commission noted: This opinion has also shown that Cyprus’s integration with the Community implies a peaceful, balanced and lasting settlement of the Cyprus question – a settlement which will make it possible for the two communities to be reconciled, for confidence to be re-established and for their respective leaders to work together…the Commission feels that a positive signal should be sent to the authorities and the people of Cyprus as a country eligible for membership and that as soon as the prospect of a settlement is surer, the EU is ready to start the process with Cyprus that should eventually lead to its accession…The situation should be reassessed in view of the positions adopted by each party in the [UN-led] talks and that the question of Cyprus's accession to the Community should be reconsidered in January 1995.11 In other words, the achievement of a conflict solution or its appearance within reach was a clear condition for the beginning of the negotiations. ‘First solution, then membership’ was the Commission’s concise formula for any further progress towards accession. With this formula, the EU kept not only the balance between Greece and Turkey and consecutively its strategic interest in the region, but took up a totally flexible position. Moreover, with the remark to reassess the overall situation in January 1995 the EU postponed a clear commitment to a later date, hoping to win another 18 months – in which a settlement could be found – before further definite steps with regard to Cyprus would have to take place. Obviously, the conditionality of conflict resolution as a requirement for accession must have changed sometime between the

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issuing of the Avis and May 2004 as Cyprus became a member without solution to the conflict. The reasons for this change will be discussed in the next section.

The Greek role in the accession process It is the thesis of this chapter that the EU never wanted to integrate Cyprus as a divided state. The only reason for the accession of the Republic can be identified in the membership of Greece and its persistent lobbying for the Greek Cypriot side. After the confirmation of the general accession eligibility of the Republic, Athens was not only able to overcome the link between conflict resolution and the beginning of accession negotiations and to enable an early commencement of negotiations, but it also pushed Cyprus – a divided island with an unresolved conflict – into the EU, despite severe concerns of several Member States. In the analysis, three factors will be specified that contributed to the decision to open the door towards membership even without a solution to the conflict. a) Intergovernmental blocking tactic and tying of ‘package deals’ The first and most important factor in pushing Cyprus into the EU was the utilisation of the intergovernmental EU structures. Greece threatened to block certain fundamental EU decisions unless the application of the Republic of Cyprus was also considered. This veto policy was the legalistic mechanism which attempted gradually to erode the neutral stance of the EU and overcome the EU’s unwillingness to process with the application. As an EU member, Greece was part of the internal decision-making processes, and was therefore in a position to influence EU policy towards Cyprus to a large extent. It should be recalled that for several political or financial issues, e.g. enlargement, EU decisions in the European Council or Council of Ministers have to be taken unanimously. This fact was the basis for the intergovernmental blocking tactic, which can be observed in the most important decisions along Cyprus’ accession path. Already in June 1994, at the European Council meeting in Corfu, the Heads of State and Government took the decision that Cyprus

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should be included in the next enlargement phase. Neither the conflictual conditionality of the Avis was mentioned, nor the deadline taken into account, which stipulated a reassessment of the situation at the earliest in January 1995. Moreover, the conclusions are also inconsistent with the Council of Ministers’ decision of 4 October 1993, which confirmed the handling of the application proposed in the Avis. The dramatic change in the position had one simple reason: Athens had openly threatened to impede the fourth enlargement round (so-called ‘EFTA-Enlargement’) by a veto. As Pangalos put it on 4 June 1994: Not only will there not be any further enlargement if procedures for Cyprus’ accession do not commence and are concluded, but it might also be difficult for other Community developments to proceed, if those things which we have committed ourselves to do are not done.12 It was this blatant threat of blocking the accession of Austria, Finland and Sweden that caused the other Member States to omit an explicit statement of the conflictual conditionality. Barely one year later, on 6 March 1995, the General Affairs Council decided to open Cyprus’s accession negotiations within 6 months after the planned Intergovernmental Conference (IGC). This decision can be considered a turning point in the relations between the EU and Cyprus. Again, this change was induced by a Greek vetothreat, namely to block the customs union with Turkey. For the European Union, the denial of the completion of the customs union with Turkey was out of the question. Not only was the customs union envisaged since the Ankara Agreement of 1963, but Turkey, ‘is of immense political, strategic and economic importance for the whole of Europe…and as a bridge to the Islamic world, as a NATO partner and associated member of the WEU [Western European Union].’13 In the end, the EU was able to lift Greece’s veto by setting a date for the start of accession negotiations with Cyprus. Nevertheless, the EU did not specify what would happen if the Cypriot imbroglio was not solved by the time the accession negotiations were about to be concluded.

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At the European Council Helsinki on 10-11 December 1999 Greece used its strategy again:14 it threatened to veto Turkey’s candidate nomination in the forefront of the summit. Turkey, on the other hand, threatened to deny EU access to NATO facilities and equipment as long as no credible membership perspective would be offered. Access to NATO capacities was vital for the planned security architecture in order to complement the newly established ESDP. In the end, the summit facilitated a complex trade-off, in which all parties involved achieved their desired results: the EU statesmen assured the Republic for the first time that a settlement did not entail a precondition for membership. While at the European Council Corfu of 1994 the EU only omitted the conflictual conditionality in their conclusions, at Helsinki the finding of a solution to the ethnic conflict and membership were explicitly delinked. At the same time, Ankara was officially included in the candidate group of the Union. And lastly, the Greek-Turkish Aegean border dispute was mentioned in the Presidency Conclusions in the way Greece had stipulated it. However, it should be noted that the promise for accession to the Republic of Cyprus was still not unconditional. It is stated in the conclusions: If no settlement has been reached by the completion of accession negotiations, the Council’s decision on accession will be made without the above being a precondition. In this the Council will take account of all relevant factors.15 This simply meant that if the Union came to the conclusion that the Greek Cypriot compromising attitude failed to materialise into a settlement due to Turkish Cypriot intransigence, Cyprus would be allowed to join divided, with an unsettled conflict. In Helsinki, the EU drew the road map for the next 4 years.16 In the years with the pioneering EU decisions, 1995 and 1999, a pattern in the calculus of Athens can be found. Claims regarding Cyprus are directly linked to concession to Turkey on its way to membership. With this quid pro quo, Athens accommodated the EU’s reluctance to take any decision that would jeopardise the fragile

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balance in the eastern Mediterranean region. The conclusion of the Customs Union in 1995 and the nomination as a candidate in 1999, both important milestones on the arduous path towards full membership, acted as a ‘sedative’, which caused Ankara to hold still. Turkey’s decision of December 1997 to freeze EU relations was an unpleasant example of what could happen if major decisions in regard to Cyprus were taken without simultaneously rewarding Ankara for being conciliatory towards Cyprus’ ongoing accession process. The official invitation to the Republic of Cyprus to start accession talks by the Luxembourg European Council, while at the same deciding not to recognise Turkey as a candidate country, provoked a major rift in the relationship between the EU and Ankara, which was only closed two years later by the EU’s Helsinki decision to nominate Turkey as a candidate. Moreover, the fact that the leadership of the TRNC responded with a ban on all negotiation efforts between 1997 and 1999 proved once more the complex interwovenness of Turkey’s EU prospects, Cyprus’ EU accession and peace talks. It is also interesting to note that the tying of ‘package deals’ was constantly publicly denied by the involved parties. Neither Athens, nor Turkey, nor the EU, as such, was willing to admit that highly relevant political decisions were part of an institutionalised haggle. Athens had to avoid a negative image as abusing EU structures for the sake of national interest; Ankara was not interested in arousing the impression that their conflict stance as well as the future of the TRNC was a kind of bargaining card within its own membership ambition. However, the threats with regard to EFTA enlargement and Turkey were just the tip of the iceberg. In general, Greece’s vetothreat in regard to the CEEC enlargement was constantly existent and of course influenced every single decision of the EU towards Cyprus. Already in November 1996, Foreign Minister Pangalos made abundantly clear what would happen if Cyprus was not allowed in: If Cyprus is not admitted, then there will be no enlargement of the Community, and if there is no enlargement, there will be no end to the negotiations now going on for the revision of the

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treaties, and the Community will thus enter into an unprecedented crisis.17 The EU admission of the island was, however, never as clear and frictionless as some Greek Cypriot politicians have tried retrospectively to depict it. In advance and during the accession negotiations with Cyprus several Member States, notably France, Finland, Germany, Great Britain, and the Netherlands, unequivocally and repeatedly expressed reservations both about the catalytic idea as well as a possible accession of the island in a divided state. For example, in the first half of 1995, when France held the rotating presidency, Paris threatened not to convene any meetings of the EUCyprus Association Council if Athens did not give up its obstructive stance regarding Turkey’s Customs Union and the Fourth Financial Protocol.18 Or another example: just two weeks before the official opening of the negotiations with Cyprus in March 1998, concerns accumulated in another attempt to derail the accession negotiations before a settlement of the conflict. In this context, French President Chirac commented sharply: ‘If Cyprus has a vocation to join the EU, the Union does not have a vocation to take in only a piece of Cyprus and integrate conflicts that are not its own.’19 German Foreign Minister Kinkel concurred: ‘It is not our goal that a divided Cyprus becomes EU member.’20 However, all attempts to break Greece’s veto policy by spelling counter threats failed through Athens determination to make Cyprus an EU member by any means.21 In toto, Greece wielded the power of veto during the whole accession process, which led to the impression that the EU was driven to events more by Greek pressure than by a well-defined Cyprus strategy of its own. b) Greek Cypriot moral superiority in comparison to Turkish Cypriots Within the EU, voting power is not the exclusive decisive factor in the decision-making process. It is also important to convince through diplomacy. Greece was able to stabilise its veto policy by one cogent additional aspect: Greek and Greek Cypriot officials incessantly and persistently accused Turkey and the Turkish Cypriots of preventing a peaceful reunification of the island by rejecting all UN-proposed

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solutions, while, at the same time, the Greek Cypriots assured the EU of their acceptance of any UN-brokered peace blueprint. It was crucial that the EU took the view that all failure to the iterated reunification efforts on the island was due to Turkish and Turkish Cypriot intransigence. Whenever voices from within the EU suggested sticking to the conflictual conditionality, Greece and the Republic countered that these voices give Turkey and Turkish Cypriots a kind of veto over Cypriot membership. A rejection of the Greek Cypriot accession desire by Brussels would be tantamount to a punishment of 80 percent of conciliatory islanders for the intransigence of the remaining 20 percent, the Turkish Cypriots. The Greek Cypriots would be punished a second time for the military occupation of the aggressor Turkey, and the Turkish, TurkishCypriot intransigence would be indirectly rewarded. Former British Foreign Minister, Robin Cook, put it: It would be unfair to the majority of the people of Cyprus if its Government were to be excluded because of the continuing division…We believe that the application must be considered on its merits and cannot be vetoed by any third party.22 The Greek government’s arguments were conclusive in themselves, because Denktash’s statements and actions had awakened the impression that a solution could never be reached with him. It was the Turkish and Turkish Cypriot intransigence towards the conflict that seconded Greek veto policies with a kind of moral legitimacy, thus, justifying and stabilizing Greece’s blocking tactics and package deals. In toto, the intransigent attitude of the Turkish side appears as a moral complement to Athens’ technical exploitation of the intergovernmental mechanisms. The moral superiority, therefore, increased the stability of the Greek blocking tactics. Without the moral superiority it probably would have been almost impossible for Athens to continue with its blocking tactics. The pressure from other EU Member States not to mix up the accession of Cyprus with extraneous issues would probably have been much larger if the Turkish and Turkish Cypriot attitude towards the conflict had not been interpreted as completely intransigent by the

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EU. An ambiguity existed between the desirable (‘No accession without solution’) and the achievable (‘Fifth enlargement round only by admission of Cyprus’). The counterfactual considerations of what would have happened if either Greece had not dropped its vetolobbying for the Republic or the EU had not fulfilled the membership desire of the Republic are interesting. On the one hand, Greece would have felt the wrath of the other EU Member States and the nine other accession countries. On the other hand, if Athens had remained steadfast, the EU would have taken the risk of a public éclat, in which the EU’s capacity to act would have been downgraded to a harlequinade and the stability of the EU’s periphery called into question. Although the inclusion of a divided island never represented the preference of most EU Member States, none of them harboured an interest in jeopardizing the Eastern Enlargement. Furthermore, the Greek Cypriot leadership was seen as moderate and seriously searching for a solution, and prepared to make the compromises necessary for it in the eyes of the EU. As presidents Vassiliou and Clerides would have been willing to accept a moderate solution plan most probably, Papadopoulos’ commitment to strive for a solution turned out to be lip service. c) The ‘Catalytic Effect’ and its Premise The third important factor, which was repeatedly stressed by Athens from February 1994, was the notion that the accession process would have a positive “catalytic effect” on the conflict. Thus, progress towards the Cypriot accession process was enforced through the use of intergovernmental structures, but served in the Greek interpretation for a good cause: the solution of the conflict. Yannos Kranidiotis, Deputy Minister of Foreign Affairs of Greece, notes the following in a letter to the EU Foreign Affairs Council in 1994: The examination of Cyprus’ request for accession offers the EU its only opportunity to help the Secretary General of the UN in his efforts to find a solution through negotiations … to this effect a clear and unequivocal message stating to all concerned that the EU is willing to begin accession negotiations with Cyprus on a specific date, could change the negative attitude of

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The Union took on this line of argument for making Cyprus an EU candidate: the ‘catalytic effect’ became the main official legitimisation for pursuing the road to Cypriot membership. The idea of a ‘catalytic effect’ embraced two main rationales: in the first place, the EU had the expectation that membership could work as a carrot for Turkish Cypriots to compromise. Brussels sought to overcome Turkish Cypriot resistance by stressing the considerable economic benefits that EU accession would bring to the island’s poorer Turkish Community. Based on a functional logic, the EU hoped that as soon as the Turkish Cypriots perceived the advantages of the EU accession more clearly they would automatically join the accession track. In the second place, Turkey’s accession prospects would encourage Ankara not only to soften its tone over the Cyprus’ issue but, as long as Turkey was interested in a future as an EU Member State, to show a more conciliatory attitude. To state the matter differently, if Ankara did not want to see its EU accession prospect worsen, it would have to withdraw its soldiers, abandon any territorial claims, and persuade the political elite of the TRNC, especially its doyen Denktash, to endorse a (UN-brokered) solution. Unsurprisingly, the ‘catalytic effect’ was not directed at the Greek Cypriot stand towards the conflict. The EU believed in the Greek Cypriot assurances that they would always opt in favour of a solution plan. In toto, the idea of the ‘catalytic effect’ was a calculated risk that was based on multi-layered assumptions and a biased understanding of the complex conflict by the EU.

Attempts to solve Cyprus and the catalytic effect With the decisions of the Helsinki Summit in December 1999 Turkey was officially incorporated in the list of accession candidates. This new perspective of EU membership had one theoretical effect: that the more integrated Turkey felt and the clearer a membership prospect appeared, the more likely it would comply with conditional

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EU demands for membership. Against this background, the negotiations under UN auspices came to the fore more than ever. Between December 1999 and April 2004, the UN undertook intensive efforts to assist the two Cypriot communities in finding a comprehensive settlement to the conflict. The UN expressed its conviction that the EU accession perspective of the island constituted a unique opportunity to encourage all parties to behave in a conciliatory manner and thus enable the EU accession of a reunited Cyprus on 1 May 2004. Moreover, the decision taken at Helsinki with regard to Cyprus, namely to integrate the island without reunification being a precondition, made it very clear to the Turkish side that refusing to negotiate was no longer an option to block Cyprus’ accession to the EU. As a first step, proximity talks were launched in December 1999, which turned out to be extremely difficult from the very beginning due to the diametric opinions about the reunification parameters. When on 24 November 2000 Denktash refused to attend the sixth round of the talks, planned for January 2001, the UN attempt to resolve the differences between the two negotiating sides finally resulted in failure. It is worth taking note of the fact that Denktash’s withdrawal from the “proximity talks” was solidly backed by Turkey. The former Turkish Prime Minister Bülent Ecevit, who was catapulted back into the prime minister’s office in 1999, made it abundantly clear that, ‘Turkey is not willing to sacrifice North Cyprus for a potential EU membership.’24 In his view, the conflict had been resolved by the military operation of 1974, which was carried out under his first reign as prime minister. As long as Ecevit was in power, an unfolding of the ‘catalytic effect’ was hardly possible. Although UN-led negotiations resumed in December 2001, when Clerides and Denktash started to meet again after 13 months of inactivity, no breakthrough was achieved by June 2002. On 11 November 2002 the UN presented to both Cypriot communities a solution proposal with the title ‘Basis for Agreement on a comprehensive settlement on the Cyprus problem’, commonly known as the first version of the ‘Annan Plan’. This most comprehensive of all UN plans was meant to revive the deadlocked peace process. The Annan Plan speculated on the new, good

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relations between the two ‘mother countries’, the time pressure of EU accession, and above all on the outcome of the parliamentary elections in Turkey on 3 November 2002, in which the newly founded Justice and Development Party (AKP) rose to power – a reformist party that was expected to be more conciliatory in relation to the EU demands. However, the idea of settling the dispute by the Copenhagen European Council failed to materialise due to Denktash’s adamant resistance in December 2002. In order to reach an agreement before 16 April 2003, the day on which Cyprus’ accession treaty to the European Union was to be signed, the UN continued the dialogue with both communities. Nevertheless, on 10 March 2003, talks between the parties broke down when Denktash finally refused to conduct such a referendum in the north. In contrast, newly elected Greek Cypriot President Papadopoulos showed more conciliatoriness during the talks and promised to put the plan to a referendum. On 16 April 2003, Papadopoulos signed Cyprus’s EU Accession Treaty in Athens, and the island was set to become an official member by 1 May 2004. The whole island became a member, but the acquis communautaire would remain suspended in the north until the Council unanimously decided otherwise. The signing of the Act was not only a clear victory of the Hellenic strategies to push the island into the EU against all internal resistance, but conversely a failure of all attempts by Turkey and the TRNC to obstruct the EU accession of the island by various threats, such as annexation or the suspension of UN negotiations. Meanwhile, the pressure on Denktash rose inside the TRNC. The closer the one-sided accession of the island came, the more he lost support among his countrymen. The strong desire to become part of the EU mobilised the Turkish Cypriot community. On 23 April 2003, barely six weeks after his dictatorial, single-handed rejection of the referendum, Denktash had to bend to the popular outrage and gave up his policy of non-contact with the other side by lifting the almost impermeable ‘Green Line’ that had divided the island since 1974. The unexpected opening of the barriers acted as a sort of political valve. Real political change in Turkish Cypriot politics and policy began in December 2003, when the pro-solution CTP party under its

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chairman Mehmet Ali Talat, who promised to reunite the island, won the parliamentary elections in the TRNC. By then, Erdogan had successfully transformed Turkey’s sacrosanct dogmas on the conflict and had weakened the position of the military circles, consolidating Turkish backing of the Annan Plan. These developments led to the resurrection of the Annan Plan on 24 January 2004, when Erdogan asked Annan to re-launch negotiations to reach an agreement before 1 May 2004. One year after the Turkish and Turkish Cypriot rejection of the AP, they undertook a 180 degree turn in their positions, trying to resume the peace process on the basis of the refused plan – a solid evidence of the Turkish and Turkish Cypriot EU accession aspirations. When the new reunification negotiations in New York, Nicosia and Bürgenstock ended inconclusively, the UN stepped in as arbitrator on the last remaining sensitive details and presented the plan’s final version on 31 March. On 24 April, the plan was put before the two communities in simultaneous referenda. When the polling stations on both sides of the island closed, the UN and the EU, which backed the plan, were shocked. While in the north the plan received the support of some 65 percent of voters, in the south the overwhelming majority of about 76 percent voted ‘no’ and thus gave the UN-brokered solution a sharp rebuff. The hope for the inclusion of a reunited Cyprus into the ranks of the EU Member States had been shattered. The Turkish Cypriot ‘yes’ can be linked back mainly to the desire to become an EU member. Membership, instead of independence, was seen as the ‘silver bullet’ for an economic, political and social enhancement of their own existence. Denktash’s inability to offer a consolidated future to the Turkish Cypriots within three decades and that the north was still hovering in an international ‘no man’s land’ were two major reasons for the acceptance. The economic promise of EU membership, coupled with the end of the international legal vacuum, had prevailed against the so often evoked security concerns. The picture in the Greek Cypriot south could not have been more different: in general, most of the Greek Cypriots were fundamentally dissatisfied with the proposed model of state and its constitutional characteristics. Moreover, Cyprus’ accession was already agreed upon

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under international law by signing the Accession Treaty in March 2003, no matter what the outcome of the referendum in the south. Thus, any chance for the EU to exert conditional pressure on the Greek Cypriots had been lost long before the referendum. As Papadopoulos put it in his famous televised philippic on 7 April: One can reasonably ask what will be the repercussions if the people vote ‘No’ at the referendum. If the sovereign people reject the Plan by their vote, the Republic of Cyprus will become a full and equal member of the European Union. We would have achieved the strategic goal we have jointly set, i.e. to upgrade and shield politically the Republic of Cyprus.25 Another powerful argument in favour of rejection was that Cyprus would be in a stronger position to get a better deal once it was inside the EU. As Papadopoulos also stated in his address, ‘Shall we do away with our internationally recognised state exactly at the very moment it strengthens its political weight, with its accession to the European Union?’26 The guarantee of accession not only took away the major incentive to compromise, but made it – at least from a rational approach’s logic – more lucrative to wait for a settlement after membership. If the AP had failed to materialise due to Greek Cypriot rejection before the signing of the Accession Treaty, it is doubtful whether Greece would have been able to keep up the pressure for admission of Cyprus. The second factor, the moral superiority, in which the Greek Cypriots portrayed themselves as the compromising party, would have collapsed. It is almost certain that if the Greek Cypriot community had turned down a compromise agreement before accession treaty signature in April 2003, EU’s existing Member States would have stopped the accession process. After the outcome of the referendum in April 2004, the EU had to confess that its perception of the conflict was blurred. In concentrating their efforts on convincing Turkey and Turkish Cypriots, the EU had overlooked the problems on the other side of the ‘Green Line’. The ‘catalytic effect’ was only directed at Turkey and the Turkish Cypriots. This was a major shortcoming in the EU’s

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logic, based on the fact that it never expected the plan to fail due to Greek Cypriot resistance. The logic of the ‘catalytic effect’ provided the chance to break the intransigence on the Turkish Cypriot side. However, the election of a national hardliner on the part of the Greek Cypriots was never anticipated. It is rather unfortunate – or even ironic – that the ‘catalytic effect’, and with it a solution, failed to materialise due to Greek Cypriot intransigence.

Conclusion The unusual decision to allow the accession of a divided country is most of all the product of Greek persistent diplomatic efforts. The Greek threats and the insistence on an unconditional admission of the Mediterranean island broke the EU neutral stance and forced the EU repeatedly into concessions. Instead of a long-term strategy for dealing with Cyprus, the accession process of the island was an incremental process, owing to the utilisation of the intergovernmental unanimity requirements by Athens. Without the membership of Greece, the Cyprus imbroglio would have probably continued to remain a distant conflict and any membership application would have been put on ice, unless a solution to the ethnic conflict had been found. Thus, the EU membership of Greece, and its persistent lobbying for the Republic of Cyprus, is vital to understanding why the EU proceeded with its membership application. The analysis has also shown that the EU’s assumption, that only a change in Turkey’s position could induce a change in the Turkish Cypriot attitude towards the conflict, was right. The granting of an accession perspective to Turkey can probably be regarded as the crucial moment for a change in northern Cyprus’ position. Furthermore, with the victory of the reformist AKP in the parliamentary elections of November 2002, the political climate in northern Cyprus also began to change gradually. In particular during the home stretch of the Cypriot accession process, the EU infused a new dynamic into the impasse on the island. Cyprus has never been so close to a reunification as in April 2004. The mere fact that the communities were able to vote on

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reunification can be interpreted as a major achievement as far as the EU’s indirect involvement in the conflict is concerned. However, EU membership of the Republic of Cyprus has created a legalistic power asymmetry vis-à-vis the Turkish Cypriot community and Turkey on the one hand, and the Greek Cypriot community on the other. It is certain that the Greek Cypriots will exercise their EU membership in order to reach a more favourable settlement than the Annan Plan. There can be no doubt that the conflict in and over Cyprus will continue – expanded and made all the more complex by the ‘EU dimension’.

Endnotes 1. Romano Prodi, President of the European Commission, Statement at the Cyprus House of Representatives, 25 October 2001. 2. European Parliament, Resolution on Cyprus's membership application to the European Union and the state of negotiations, 5 September 2001. 3. Ibid. 4. From a European perspective it is remarkable that for nearly all countries in the EU periphery the sole and exclusive goal of all reorientation efforts was full EU membership. Any link to the EU below this status was undesirable and would have been interpreted as a failure or rejection. 5. Consequently, upon joining the European Union in May 2004 Cyprus seceded from the Non-Aligned Movement. 6. Phileleftheros, 25 April 1994. See also Agon, 18 and 25 July 1995. 7. Turkish Cypriot Memorandum addressed to the Council of Ministers of the European Communities in respect of an ‘Application’ for membership by ‘The Republic of Cyprus’, 12 July 1990. 8. Nicos Anastassiades, Chairman of the Greek Cypriot party DISY, 22 March 2001, in Heinz Kramer, ‘The Cyprus Problem and European Security’, Survival, Volume 39, Number 3, 1997, p. 25. 9. Jean-Joseph Schwed, ‘The European Community and Cyprus’, Friends of Cyprus, Report, Number 32 (1991), p.7. 10. In comparison, the whole accession process of Finland took less than three years (March 1992 till January 1995), with the Avis presented in eight months. 11. Commission of the European Communities, Opinion on the application by the Republic of Cyprus for Membership, 30 June 1993. 12. ‘Greece wants EU Cyprus accession talks commitment’, Athens News

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Agency, Bulletin, Athen, 4 June 1994. 13. Former German Foreign Minister Klaus Kinkel, ‘EU takes step towards Cyprus Membership’, The Times, 7 February 1995. 14. Presidency Conclusions, Helsinki European Council, 10-11 December 1999. 15. Ibid. 16. It is worth mentioning that when Clerides was president he credibly committed himself to find a solution, while the Turkish/Turkish Cypriot side was not interested in a settlement. Denktash and the Turkish governments assumed wrongly that the EU would never manoeuvre itself into a situation where it was brought into a confrontation with Turkey. 17. ‘Cyprus to be included in next EU enlargement’, Cyprus News Agency, 22 November 1996. 18. Heinz Jürgen Axt, ‘Cyprus and the EU, Avoiding Wishful Thinking and Designing German Foreign Policy’, in Susanne Baier-Allen (editor), Looking into the Future of Cyprus-EU Relations (Baden-Baden: Nomos 1999), p. 215. 19. Charles Bremner and Michael Binyon, ‘Turkish dilemma exposes EU rift’, The Times, 13 March 1998. 20. Quoted in Klaus-Dieter Frankenberger, ‘Streit um Aufnahmeverhandlungen mit Zypern entschärft’ [Controversy over accession negotiations with Cyprus eased], Frankfurter Allgemeine Zeitung, 16 March 1998. 21. See for the several attempts to stop the negotiation process with Cyprus: Susanne Baier-Allen, Exploring the linkage between EU accession and conflict resolution, The Cyprus case (Baden-Baden: Nomos, 2004), p. 158; and George Christou, The European Union and Enlargement (Basingstoke: Palgrave Macmillan, 2004), p. 81. 22. Quoted as in Carole Andrews, ‘EU Enlargement: The Political Process’, International Affairs and Defence Section, Research Paper 98/55, House of Commons Library, 1 May 1998, p. 18. 23. Yannos Kranidiotis, Greek Foreign Policy: Thoughts and Quandaries on the Eve of the 21st Century (Athens: Sideris, 1999), p. 209. 24. Quoted in Erhard Franz, ‘Die Türken vor Brüssel, Der lange Weg der Türkei in die Europäische Union’, in Hanspeter Mattes, Nahost Jahrbuch 2000 (Opladen: Deutsches Orient-Institut, 2001), p. 194. 25. Tassos Papadopoulos, Declaration by the President of the Republic Mr Tassos Papadopoulos regarding the referendum of 24th April 2004, 7 April 2004 26. Ibid.

2 LEGAL ASPECTS OF MEMBERSHIP Nikos Skoutaris

The EU’s historical success as a peacemaker between France and Germany has inspired many to wonder whether the Union may also bring peace to other conflict zones especially in Europe. Cyprus’ accession to the EU, however, despite the partial normalisation of relations between the two ethno-religious segments on the island, meant neither the reunification of the island nor the restoration of human rights nor a complete end to the political and economic isolation of the Turkish Cypriot community. Ironically enough, the accession of Cyprus to the EU actually added a new dimension to the division of the island. According to Protocol 10 on Cyprus of the Act of Accession 2003, the Republic of Cyprus joined the Union with its entire territory. However, due to the fact that its Government cannot exercise effective control over the whole island, pending a settlement, the application of the acquis communautaire, the EU’s body of laws, is ‘suspended in those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not have effective control’1, hereinafter referred to as the Areas. It is of critical importance to note, however, that the scope of the suspension is territorial: Cypriots residing in the northern part are able to enjoy, as far as possible, the rights attached to Union citizenship that are not linked to the territory as such.2 Moreover, until the withdrawal of the suspension takes place, Article 2 has allowed the Council to define the terms under which the provisions of EU law shall apply to the UN-monitored buffer zone that divides the two parts of Cyprus, commonly known as the Green Line.3 On

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the other hand, Article 3 allows measures with a view to promoting the economic development of the Areas, such as the Financial Aid Regulation.4 In addition to the above-mentioned legal matrix that allows the partial application of the acquis in northern Cyprus, there is the case-law of several national and international courts that discuss the suspension of the acquis directly or indirectly. By mapping the partial application of the acquis in northern Cyprus, this chapter shows how the Union has managed to accommodate the Cyprus dispute within its legal order by adopting a seemingly depoliticised and technical approach when dealing with issues arising from it. It argues that although, politically speaking, the situation remains far from ideal, still, the Union has managed to absorb some of the stresses of the partition of the island by offering a mechanism that has enhanced the lives of the inhabitants on the island and has supported the normalisation of the relations between the two ethno-religious segments but also between the Turkish Cypriot community and the Union. The paper follows the structure of Protocol No 10 and analyses the relevant Union legislation5 and case-law6 that have further implemented and interpreted its provisions.

The Suspension of the Acquis Cyprus became an EU Member State on 1 May 2004, a week after the Greek Cypriots massively rejected the UN-sponsored Comprehensive Settlement of the Cyprus Problem, commonly known as the Annan Plan, on terms provided inter alia in Protocol No 10 on Cyprus of the Act of Accession 2003. The unprecedented (for an EU Member-State) situation of not controlling part of its territory is acknowledged in Protocol No 10. Given that it was signed at a time when there was huge optimism about the reunification of the island, the EU Member States and the acceding States reaffirmed their commitment to a comprehensive settlement of the Cyprus problem, consistent with relevant UN Security Council Resolutions7 and their strong support for the efforts of the UN Secretary General in the preamble of Protocol No 10. However, since such a comprehensive settlement had not yet been reached, they considered

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that it was necessary to provide for the suspension of the application of the acquis in the Areas, a suspension which shall be lifted in the event of a solution. Thus, Article 1(1) of the Protocol provides that the application of the acquis is suspended in those Areas. The main scope of Article 1 is to limit the responsibilities and liability of Cyprus as a Member State under EU law. Although Cyprus joined the Union with its entire territory, its Government cannot guarantee effective implementation of the EU law in the north.8 In fact, according to international courts,9 Turkey exercises effective control in those Areas. With regard to the term acquis to which the Protocol refers, one has to note that it is neither a terminus technicus nor is it defined by Union legislation. It has been defined, however, by the Commission in texts adopted during the course of, or at the end of, each enlargement process.10 In its opinion on the accession of Cyprus and the other nine then candidate States to the EU, for example, the Union has stressed that the then applicant States have accepted, without reserve, ‘the Treaty on European Union and all its objectives, all decisions taken since the entry into force of the Treaties establishing the European Communities and the Treaty on European Union and the options taken in respect of the development and strengthening of those Communities and of the Union.’11 More importantly, however, it should be noted that the scope of the suspension is territorial. This means that the citizens of the Republic of Cyprus residing in the northern part of the island should be able to enjoy, as far as possible, the rights attached to Union citizenship that are not linked to the territory as such.12 In an area, however, where there are two competing claims of authority, it is not straightforward first, who, among the inhabitants of the Areas, are entitled to the nationality of this Member State; and second, how the rights attached to Union citizenship can be exercised in northern Cyprus, where the application of the acquis is suspended. Concerning the first question, the Republic of Cyprus continues to recognise the citizenship and the right to citizenship of all residents being Cypriots of Turkish origin, residing in the north, who can

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prove that they come under the scope ratione personae of Annex D of the Treaty of Establishment and The Republic of Cyprus Citizenship Law of 1967. Hence, one could argue that the Turkish Cypriots possess EU citizenship in ‘hibernation’ which can be activated if they provide proper documentation to the relevant authority of the only recognised Government in the island. In practice, the Republic of Cyprus regularly issues passports to Turkish Cypriots upon application.13 Apart from the Turkish Cypriot citizens of the Republic of Cyprus, there are many residents in the Areas who fall within the definition of national established by Article 67 of the Constitution of the internationally unrecognised Turkish Republic of Northern Cyprus (TRNC) and its citizenship law but are excluded from the nationality of the Republic of Cyprus because they come under the category of ‘settlers’. The Republic of Cyprus does not consider those alien persons, who have settled illegally and without permission in the areas under control of the Turkish forces, as legitimate claimants to Cypriot citizenship14 and thus they do not have access to EU citizenship via the citizenship laws of the Republic of Cyprus. According to the legislation of the Republic, they are considered to be illegal immigrants.15 By not recognising those persons as lawful claimants of the citizenship of the Republic of Cyprus, the Cypriot Government acts in conformity with its own Constitution, which was part of an international agreement, and within the wide limits of autonomy that the Member States enjoy in matters of nationality in accordance with the Micheletti principle developed by the European Court of Justice (ECJ).16 On the other hand, it also critically important to examine how the rights attached to Union citizenship17 could be exercised in an area where the application of the acquis is suspended. Obviously, the suspension of the acquis means that the Union citizens, whether residing in northern Cyprus or not, cannot invoke any rights derived from primary or secondary Union law against the administration in the north. Despite this, as already mentioned, such a suspension is territorial and thus the Union citizens residing in the Areas should be able to enjoy, as far as possible, the relevant rights that are not linked to the territory as such.18

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Firstly, pursuant to Article 190 EC, the people of each Member State should elect their own representatives in the European Parliament. Given that the vast majority of Turkish Cypriots have not participated in the constitutional life of the Cyprus Republic since 1963 and that the relevant Cypriot Law 72/79 does not provide for any separate electoral list for the Turkish Cypriot community in view of the post 1974 status quo, the impediments for the exercise of such electoral rights become evident. Interestingly enough, the political rights of the Turkish Cypriot ethno-religious segment attached to the concept of citizenship of the Republic and to Union citizenship are effectively protected in the aftermath of the judgment of the European Court of Human Rights in Aziz v. Cyprus.19 In that case, the Strasbourg Court found that the refusal of the Cypriot Ministry of Interior to enrol the applicant, a Turkish Cypriot, on the electoral roll in order to exercise his voting rights in the parliamentary elections of 2001 constituted of a breach of the obligations of the Republic as a Contracting Party to the Convention under Article 3 of Protocol No 1. According to that provision, the States should ‘hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature.’ Moreover, such a practice was a clear breach of the nondiscrimination principle contained in Article 14 of the Convention. In the aftermath of this decision, the Turkish Cypriots residing in the south can be included in the Greek Cypriot electoral system while Turkish Cypriots residing in northern Cyprus can cross the Green Line to vote in the south provided that they have registered there. With this decision, the Strasbourg Court not only acted as a guard of the bi-communal structure of the Republic since its judgment enhanced the electoral rights of the Turkish Cypriot citizens, but also indirectly enhanced the exercise of EU citizenship rights concerning the election of representatives to the European Parliament. Obviously, the situation is far from ideal20 given also that if the Annan Plan had been approved, the whole Turkish Cypriot community would have been participating in the electoral process and represented by two European Parliamentarians. Nevertheless, it should still be noted that, theoretically speaking at least, all the

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Turkish-speaking Cypriots could participate in the political life of the Union, although the Republic of Cyprus does not have an obligation to hold European Parliament elections in an area where the acquis is suspended.21 Recently, it has been suggested that the Union should create ‘forms of political representation for Turkish Cypriots which can be implemented without violating the suspension’ of the acquis ‘and the EU’s non-recognition policy towards the TRNC, while at the same time providing an effective voice to the Turkish Cypriots in EU public policy making.’22 More precisely, the introduction of some form of observer status for Turkish Cypriot representatives in the European Parliament has been recommended.23 In a way, such a development would be following the paradigm of the Parliamentary Assembly of the Council of Europe, which has developed a mechanism to meet the demands of the Turkish Cypriots for access to the political debates. In July 2007, however, the Conference of Presidents of the European Parliament rejected such a proposal. As, ‘from a legal point of view, it is not possible for the European Parliament to invite observers from the Turkish Cypriot community.’24 On the other hand, Turkish Cypriots can participate in Community programs25 and work in the institutions of the Union. With regard to the latter, in the first recruitment competition after Cyprus’s Union accession, the European Commission required that examinations should be passed in the Greek language.26 Two Turkish Cypriots brought an action before the Court of First Instance (CFI), arguing that this requirement constituted unlawful discrimination against Cypriot citizens whose mother tongue is not Greek. By its Order of 5 May 2007, the CFI held that the action was inadmissible.27 On 19 October, the Court of Justice upheld the order of the CFI.28 Undoubtedly, if it was not for the procedural issues, the judgment of the Court would have been particularly interesting. It would have been difficult for the Commission to justify what seems to be a breach of the equal treatment principle. Given the body of case-law concerning Union citizenship, there is a good possibility that the Court would have found in favour of the applicants. To that effect, it is not meaningless that, in the meantime, new recruitment

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competitions for Cypriots may be passed in any official Community language. Overall, we could safely conclude that the Turkish Cypriots residing in the north have access to the nationality of the Republic of Cyprus in accordance with the 1960 Constitution and thus to Union citizenship. However, the limits for the exercise of the rights that are associated with the Union citizenship concept are extremely narrow in an area where the application of European Union law is suspended. What will be further examined in the next part of this chapter is how the exercise of the rights connected with Article 18 EC concerning the free movement of persons have been facilitated by the Union through the Green Line Regulation, in an area that has been isolated from the rest of the world for 30 years. Before that, however, and in order to conclude our analysis concerning the suspension of the acquis, it is crucial to refer to how the Court of Justice understands the suspension of European Union law in northern Cyprus. According to Advocate General Kokott, the acquis ‘is to be suspended in that area and not in relation to that area.’29 This reading of the provision that is in accordance with the settled case-law30 of the Court of Justice, according to which, ‘provisions in an Act of Accession which permit exceptions to or derogations from rules laid down by the Treaty must be interpreted restrictively […] and must be limited to what is absolutely necessary’31 clearly sets a limit to the suspension. It is not surprising that this finding was also upheld by the Grand Chamber of the Court of Justice32 which also pointed out that ‘Protocol No 10 constitutes a transitional derogation based on the exceptional situation in Cyprus.’33 In that particular case, which was about the application of Regulation 44/2001 to a judgment given by a Cypriot court sitting in the Government-controlled area, but concerned land situated in the northern area, this meant that the suspension of the acquis ‘cannot be interpreted as meaning that it precludes the application of Regulation 44/2001 to the judgments concerned given by the Cypriot court.’34 Overall, it has been argued that the suspension should be understood as limiting ‘any unrealisable obligations for the Republic of Cyprus in relation to northern Cyprus which bring it into conflict with Community law.’35

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Concerning the withdrawal of the suspension, we have to note that according to Article 1(2), it is the Council, acting unanimously on the basis of a proposal from the Commission, which will eventually decide. Nothing in this provision prevents the partial withdrawal of the suspension. It should also be noted that, according to the preamble, a ‘comprehensive settlement’, to which the first two recitals refer, is not a precondition for the withdrawal of the suspension. A ‘solution’ to the Cyprus problem is deemed enough.36

Crossing the Green Line Until the withdrawal of the suspension takes place, Article 2 allows the Council, acting unanimously on the basis of a proposal from the Commission, to define the terms under which the provisions of EU law shall apply to the Green Line.37 This provision, together with Article 6 of Protocol No 3 of the Act of Accession, provided the legal basis for the adoption of the Green Line Regulation,38 which constitutes the main legislative device for the partial application of the acquis in the northern part of the island. As shall be seen, the framework provided by that Regulation has managed to lift partially but effectively39 the isolation of the Turkish Cypriot community without recognising any other authority on the island apart from the legitimate Government of the Republic. It consists of a prime example of the ‘pragmatic approach’ that the Union has adopted when dealing with this issues arising from this conundrum. Crossing of persons Given the suspension of the acquis, Article 18 of the EC Treaty, according to which every EU citizen has the ‘right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down’ in the Treaty and by the measures adopted to give it effect,40 does not apply. Instead, the Council of the EU has unanimously defined the terms under which the provisions of EU law, with regard to free movement of persons, apply to the line in the Green Line Regulation. Since the Government of Cyprus has declared the closure of the ports of entry into the island,41 situated north of the Green Line, the Regulation not

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only provides the rules for access to the Areas for EU citizens and third-country nationals but also for those lawfully residing in the north. The Regulation provides the terms under which those persons can move lawfully from Cyprus via the line to other destinations, and thus provides for the partial but effective lifting of their isolation. Therefore, although in principle the line does not constitute an external border of the EU,42 special rules are established by the Regulation concerning the crossing of persons, the prime responsibility for which belongs to the Republic of Cyprus. While taking into account the legitimate concerns of the Republic’s Government concerning the recognition of any authority in the Areas, it was deemed necessary that those special rules should enable EU citizens to exercise their free movement rights within the EU. This was achieved by setting minimum rules for carrying out checks on persons at the line and at the same time by ensuring the effective surveillance of the line in order to combat illegal immigration of third-country nationals, as well as any threat to public security and public policy.43 Hence, it was also deemed necessary to define the conditions under which third-country nationals are allowed to cross the line.44 More analytically, for the purpose of checks on persons, the term ‘line’ means the line between the Government-controlled areas and those areas in which the Government of the Republic of Cyprus does not exercise effective control.45 According to Article 2(1) of the Green Line Regulation, the Republic has the responsibility to carry out checks on all persons crossing the line with the aim of combating illegal immigration of third-country nationals and to detect and prevent any threat to public security and public policy. All persons crossing the line should undergo at least one such check in order to establish their identity.46 The line, however, can be crossed only at crossing points authorised by the competent authorities of the Republic of Cyprus.47 With regard to third-country nationals, Article 2(3) of the Green Line Regulation provides that they should only be allowed to cross the line provided they possess either a residence permit issued by the Republic or a valid travel document, and, if required, a valid visa for the Republic and as long as they do not represent a threat to public

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policy or public security.48 According to Article 1(2), the term ‘thirdcountry national’ is defined as any person who is not a citizen of the Union within the meaning of Article 17(1) of the EC Treaty. Given the special historical and political circumstances that have arisen in the post 1974 status quo, the seemingly technical and neutral definition of ‘third-country nationals’ has some important political connotations. The Union tries to get around the thorny issue of ‘settlers’ through those technical rules concerning the crossing of ‘third country nationals’. In other words, the Council of the EU deals effectively, without referring expressis verbis to it and in a rather depoliticised manner, with one of the most important aspects of the conflict, which also has implications for the partial application of the acquis in northern Cyprus. As previously mentioned, the Republic of Cyprus does not consider those alien persons who have settled in the Areas illegally and without permission as legitimate claimants of the Cypriot citizenship and, thus, they do not have access to EU citizenship via the citizenship laws of the Republic of Cyprus. Therefore, for the purposes of the Green Line Regulation, the ‘settlers’ are deemed to be third country nationals that may cross the line if they comply with the aforementioned criteria provided in Article 2(3). With regard to the ‘threat to public policy’ criterion, one has to note the criminal dimension of ‘settling’, which is recognised in the legislation of the Republic.49 As far as the ‘valid travel document’ criterion is concerned, one should point out that the vast majority of ‘settlers’ also hold the citizenship of the Turkish Republic. For Turkish nationals, a valid visa is required to visit the Republic. Given the well-known policy of Turkey not to recognise the Cyprus Republic, the practical impediments for Turkish citizens to access the Cypriot visa has become obvious. One has to note, however, that the situation on the ground with respect to ‘settlers’ married to Turkish Cypriots is slightly different than the Union legislation suggests. Although such individuals cannot claim the citizenship of the Republic, they may still lawfully cross the line. The customs authorities of the Republic of Cyprus have created another list including the names of those who can prove their marriage to a Turkish Cypriot on the basis of a marriage certificate.

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This practice started in 2003 and continued even after accession. This is also the case for the children of ‘settlers’ married to Turkish Cypriots.50 Overall, one has to emphasise that the Union has managed to ‘square the circle’ in a seemingly technical and depoliticised way. It has facilitated the free movement rights of Union citizens and third country nationals, legally residing in the north or entering the island through the Government-controlled areas, while at the same time it took into account the legitimate concerns of the Government of the Republic concerning the ‘settlers’ without explicitly referring to them. Crossing of goods The European Union’s ‘pragmatic approach’ to aspects arising from the Cyprus problem in the aftermath of the Republic’s accession to the EU is particularly evident in the adopted and proposed legislation concerning the Union’s trade relations with northern Cyprus. After the rejection of the Annan Plan and the consequent suspension of the acquis in the north, the Union had to create a legislative framework which would enable it to create trade relations with the Turkish Cypriot community without recognising any authority on the island other than the only internationally recognised Government of the Republic. The lifting of the economic isolation51 of the Union citizens residing in an area where the ports of entry have been declared closed 30 years ago has been deemed necessary in the aftermath of the ECJ judgments in the Anastasiou saga.52 In order to achieve the abovementioned scope,53 the EU in agreement with the Republic, has authorised the Turkish Cypriot Chamber of Commerce,54 through the Green Line Regulation, to issue accompanying documents so that goods originating in the Areas may cross the line at the crossing points listed in Annex I and the crossing points of Pergamos and Strovilia under the authority of the Eastern Sovereign Base Area, and be circulated into the EC market as Community goods. In effect, by the authorisation of a Turkish Cypriot NGO, the Union got around a fundamental recognition conflict in order to allow legal bilateral trade to take place both between the parties in dispute and between the Areas and EU Member States other than Cyprus.

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In addition, Article 5 of the Green Line Regulation provides for the rules that apply with regard to goods sent to northern Cyprus. According to paragraph 1 of that Article, goods which are allowed to cross the line should not be subject to export formalities. However, the necessary equivalent documentation should be provided upon request, in full respect of the internal legislation, by the authorities of the Republic. The breakaway state in the north, however, has passed a ‘law’ which makes any flow of trade from south to north subject to reciprocity on the basis of a so-called ‘Charter on limitation of export from the TRNC region to South Cyprus and of import from South Cyprus to the TRNC’. Furthermore, according to that ‘law’, which offers a clear depiction of the competing claims of authority on the island, the Republic of Cyprus has informed the Commission that no goods are accepted to cross the line to the Areas unless accompanied by a certificate from the Cyprus Chamber Of Commerce and Industry. In other words, ‘the Turkish Cypriot Community applies a licensing system which, in principle, ‘mirrors’ the restrictions of the Green Line Regulation.’55 Overall, although the Green Line Regulation regime has provided for a viable and working framework for the development of bilateral trade relations between the parties in the conflict and thus has brought the two ethno-religious segments closer, it has not become an effective device to enable goods originating in northern Cyprus to penetrate the EC market. Indeed, during the first four years of the life of the regime established by the Green Line Regulation, only in two cases were goods which had crossed the line subsequently subject to an intra-community transaction with another Member State.56 This is the main reason why the Commission, at every occasion, stresses the need for the adoption of a regulation that would allow direct trade relations between the Areas and Union Member States other than Cyprus. The relevant Commission proposal, known as the draft Direct Trade Regulation,57 however, has been criticised for a number of reasons, not least for its proposed legal basis. With regard to the legal basis, the critical question has been whether a Regulation, whose essential content is the free circulation of products originating in northern Cyprus and transported directly

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therefrom into the Community customs territory with ‘exemption from customs duties and charges having equivalent effect within the limits of annual tariff quotas’ determined by the Commission,58 foresees the partial ‘withdrawal of the suspension’ of the acquis. If that is the case, Article 1(2) of Protocol No 10 of the Act of Accession 2003 provides for a specific legal basis and procedure for withdrawing the suspension. If not, then the Article 133 EC, as proposed by the Commission, is the appropriate legal basis. Although, prima facie, the debate over the appropriate legal basis may seem too legalistic, in reality it is a political one. It is very important for the Republic that the Union recognises, even indirectly, that it is the same political anomaly that has led to the drafting of Protocol No 10 that also leads to the adoption of such a special measure. On the other hand, it is all too obvious that the political reason for the Commission to suggest Article 133 EC is that it would allow the Union to adopt such a measure through a qualified majority voting (QMV) procedure. Until now, and despite the efforts of the Luxembourg and the Finnish Presidencies, a compromise that would allow the adoption of such measure has not yet been achieved.59

Promoting the economic development of northern Cyprus The Commission has also pointed out that it was not the intention of the drafters of Protocol No 10 ‘to exclude the application of all provisions of Community law with a bearing on areas under the control of the Turkish Cypriot community.’60 To that effect, Article 3 allows measures with a view to promoting the economic development of those Areas and provides that such measures shall not affect the application of the acquis in any other part of the Republic. The existence of such a provision clarifies that the division of the island should not rule out the economic assistance from the Union to those Areas. Indeed, on 27 February 2006, the Council unanimously adopted the above-mentioned Financial Aid Regulation which establishes an instrument for encouraging the economic development of the Turkish Cypriot community. Although the legal basis for this Regulation was Article 308 EC, in the preamble there is also a reference to Article 3 of Protocol No 10.

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Pursuant to this Regulation, the Community can provide ‘assistance to facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community with particular emphasis on the economic integration of the island, on improving contacts between the two communities and with the EU, and on preparation for the acquis communautaire.’61 The assistance can be used for the promotion of social and economic development including restructuring; the development and restructuring of infrastructure; reconciliation, confidence building measures, and support to civil society; bringing the Turkish Cypriot community closer to the Union, through inter alia information on the European Union’s political and legal order; promotion of people to people contacts and Community scholarships; preparation of legal texts aligned with the acquis for the purpose of these being immediately applicable upon the entry into force of a comprehensive settlement of the Cyprus problem; and preparation for implementation of the acquis in view of the withdrawal of its suspension in accordance with Article 1 of Protocol No 10 to the Act of Accession.62 It is important to note that those objectives should be realised without the recognition of any other authority. In early 2008, the Greek Cypriots withdrew six cases filed under the Papadopoulos administration and two cases filed under the Christofias administration, over Commission aid programmes in the north, after winning a change in the labelling of Turkish Cypriot participation in a way that avoided any hint of recognition of any other authority on the island.63 The aforementioned objectives of the aid programme, which have been realised through two Commission Decisions,64 point to the limits of the Union’s role in the reunification of the island under Article 3 of Protocol No 10. The EU may facilitate the reunification of the island but Article 3 does not provide for a competence in order for the EU to become the ‘broker’ in a future initiative. On the other hand, it should be pointed out that the term ‘measures with a view to promoting the economic development of’ the Areas has been defined rather widely. It includes the strengthening of the civil society and the support of reconciliation and confidence building measures including support to the Committee on Missing Persons, a body under the auspices of the UN; the facilitation of contacts

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between the Turkish Cypriot community and the EU through a scholarship scheme, grants, etc.; and most importantly the preparation of legal texts as well as reinforcement to implement the acquis in view of the withdrawal of its suspension in accordance with Article 1(2) of Protocol No.10 to the Act of Accession, under the guidance of the Technical Assistance Information Exchange Instrument (TAIEX).65

Accommodating a settlement within the EU legal order Finally, in the event of a settlement, the Protocol provides for the Council to decide unanimously on adaptations of the terms concerning the accession of Cyprus with regard to the Turkish Cypriot community. Article 4 clearly depicts the willingness of the Union to accommodate the terms of a solution of the Cyprus issue in the Union legal order. Indeed, if the April 2004 referenda had approved the new state of affairs envisaged in the Annan Plan, the Council of the European Union, having regard to that Article, would have unanimously adopted the Draft Act of Adaptation of the Terms of Accession of the United Cyprus Republic to the European Union as a Regulation. It is worth noting that the Draft Act of Adaptation that was included in the Annan Plan as its Appendix D provides for a good example of the potential incompatibilities of a solution – based on the well-known framework of a bi-zonal and bi-communal federation – with the acquis. Such incompatibilities could be summarised in three different aspects: restrictions on the right of non-residents in the constituent states to purchase immovable property; restrictions on the right of Cypriot citizens to reside in a constituent state of which they do not hold the internal constituent state citizenship status; restrictions on the right not only of Greek and Turkish nationals but also of Union citizens to reside in Cyprus, after the comprehensive settlement takes place, in order for the demographic ratio between permanent residents, speaking either Greek or Turkish as mother tongue, not to be substantially altered. In any case, we have to mention that such an enabling clause provides for a simplified procedure for the amendment of the Act of Accession. Therefore, the relevant Council acts, adopted on the basis

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of Article 4 and accommodating the terms of a future comprehensive settlement, would constitute primary law, even if they contain some derogations from the acquis.66 In the light of the current bicommunal negotiations this is of particular significance. The reason for that is that if the bi-zonality of the future unified federal Cyprus were to be reflected in the fact that each ‘federated state would be administered by one community which would be guaranteed a clear majority of the population and of land ownership in its area’,67 as was the case in the Annan Plan, it is almost definite that certain permanent restrictions to the free movement of persons and capital will be deemed necessary in order for the particular national identity of the unified, bi-zonal and bi-communal Cyprus to be protected. So, such enabling clause means that possible derogations which a future settlement plan could entail, could be accommodated in the Union legal order, as part of the primary law, by the adoption of relevant legislation under Article 4. So, it is almost certain that a settlement plan, based on the agreed principles of bi-zonality, bi-communality and political equality and approved by both ethno-religious segments in Cyprus, will be accommodated within the Union legal order. This conclusion is far from unexpected given the importance of the public interest that is at stake, i.e. the reunification of the island, the expressed willingness of the Union to accommodate the terms of the settlement, as long as it is in compliance with the EU founding principles and the existence of the special legal basis of Article 4.

Conclusion Although the application of the acquis is suspended in northern Cyprus pursuant to Article 1 of Protocol No 10 of the Act of Accession 2003, the territorial character of the suspension and the adoption of the Green Line Regulation, along with the instrument of financial support, have allowed a limited integration of northern Cyprus within the EU. Obviously, more measures should be adopted in order for the Turkish Cypriot community to come even closer to the Union. In the meantime, it should be noted that, by (indirectly) allowing exceptions to the absolute suspension of the acquis north of

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the Green Line, mainly through the application of Union citizenship rights to Turkish Cypriot citizens of the Republic and through the Green Line Regulation regime, the Union has provided for a significant step in bridging the cleavages of Cypriot society and a possibility for differentiated integration of the Turkish Cypriot ethno-religious segment within the Union. However, the process of differentiated integration has clear limits. It is far from probable that it can offer solutions to all the pending thorny issues arising from the Cypriot Gordian knot. Thus, it is difficult to overstate the need for a comprehensive settlement to be achieved in the nearest possible future also given the recent developments in Kosovo and Caucasus. The Turkish Cypriot leader, Mehmet Ali Talat, has referred to those developments in a speech he delivered the day that the bi-communal negotiations were launched. Referring to the Greek Cypriot community, he mentioned that ‘[t]he world has been going through quite eventful days. I am aware that the recent developments in the Balkans and the Caucasian [sic] are causing concern on your part. You perceive these examples as ‘bad examples’. Unless we reach a just, viable and comprehensive solution for the Cyprus problem, you will continue to observe these ‘bad examples’ with concern.’68 It is imperative, however, to understand that the just and viable settlement of the Cyprus issue, to which both leaders refer, should be envisaged as a mechanism for the solution of all aspects of the ageold dispute rather than as the creation of a utopia on the island. It is true that ‘[t]he broader the settlement project, the more it appears that peacemaking is a project of envisaging utopias recognised as elusive even in western liberal democracies.’69 This is the reason why the future settlement plan, apart from creating a new political imagination within the citizens of the future federal Cypriot state, should also be characterised by viability and functionality. At the end of the day, a robust and well functioning democratic state structure is a conditio sine qua non for an effective EU membership.

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Endnotes 1. Article 1(1) of Protocol No 10 on Cyprus of the Act of Accession 2003 O.J. 2003 L 236/955. For a more detailed account of the terms of Cyprus’ Accession, see, in general M. Uebe, ‘Cyprus in the European Union’, German Yearbook of International Law, Vol.46, 2004, p.375. 2. Ibid., p.384. 3. Article 2(1) of Protocol No.10 on Cyprus. 4. Council Regulation (EC) No 389/2006 of 27 February 2006 establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community and amending Council Regulation (EC) No 2667/2000 on the European Agency for Reconstruction O.J. 2006, L 65/5. 5. Financial Aid Regulation; Council Regulation (EC) No 866/2004 of 29 April 2004 on a regime under Article 2 of Protocol No 10 of the Act of Accession 2003 O.J. 2004, L 206/51 (hereafter the Green Line Regulation). 6. Case C-420/07, Apostolides v. Orams, judgment 28 April 2009. 7. For a detailed list of the UN Security Council Resolutions about the Cyprus question see the Cypriot Ministry of Foreign Affairs website

8. See Opinion of Advocate General Kokott, Case C-420/07, Apostolides v. Orams, delivered on 18 December 2008), paras.40-41. 9. See inter alia Eur. Court H.R., Case Cyprus v. Turkey (Application No 25781/94), judgment 10 May 2001, para.77. 10. For a comprehensive analysis of the term acquis see C. Delcourt, ‘The acquis communautaire: Has the concept had its day?’, Common Market Law Review, Vol.38, No.4, 2001, p.829. 11. COM (2003) 79 final of 19 February 2003, point (9). 12. Uebe, ‘Cyprus in the European Union’, p.384. 13. The Republic of Cyprus has so far supplied 50,974 of the quarter of a million inhabitants of the north with EU passports. Some 81,805 have applied for and received ID cards (figures as of 18 April 2008 from Republic of Cyprus Press and Information Office, Nicosia). For a more detailed analysis see N. Skoutaris, ‘Differentiation in European Union Citizenship Law: The Cyprus Problem’ in A. Ott, A. and K. Inglis, (eds.), The Constitution for Europe and Enlarging Union: Unity in Diversity? (Groningen: Europa Law Publishing, 2005), p.160. 14. See in general U.S. Office of Personnel Management Investigation Service, Citizenship of the world, March 2001, page 62; available at

15. See in general Ο Περί Αλλοδαπών και Μεταναστεύσεως (Τροποποιητικός) Νόµος του 2004 [Aliens and Immigration (Amending) Act 2004)].

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16. Case C-369/90, Mario Vincente Micheletti and others v. Delegacion del Gobierno en Cantabria, ECR [1992] I-4258. In this case the Court of Justice upheld one of the primary tenets of international law, that Member States themselves are omnipotent as far as determination of nationality is concerned. Even though such a competence had to be exercised ‘having due regard to Commmunity law.’ (para.10) 17. Article 18 (ex 8a) EC : right to free movement and residence (subject to limitations) (the paper discusses the crossing of the Green Line in the next section); Article 19 (ex 8b) EC: electoral rights as far as it concerns the European Parliament and municipal elections; Article 20 (ex 8c) EC: diplomatic and consular protection; Article 21 (ex 8d) EC : access to Ombudsman; Article 22 (ex 8e) EC: right to petition the European Parliament. 18. Uebe, ‘Cyprus in the European Union’; F. Hoffmeister, Legal Aspects of the Cyprus Problem, Annan Plan and EU Accession (Leiden: Martinus Nijhoff Publishers, 2006), pp.207-215; A. De Mestral, ‘The Current Status of the Citizens of the Turkish Republic of Northern Cyprus in the Light of the Non-Application of the Acquis Communautaire’ in S. Breitenmoser, B. Ehrenzeller, M. Sassoli, W. Stoffel, W. and B. W. Pfeifer (eds.), Human Rights, Democracy and the Rule of Law: Liber Amicorum Luzius Wildhaber (Baden-Baden: Nomos, 2007), p.1423. 19. Eur. Court H.R., Case of Aziz v. Cyprus (Application No 69949/01), judgment 22 June 2004. 20. At the elections for the European Parliament on 13 June 2004, approximately 500 Turkish Cypriots were registered, out of which 97 actually voted. A Turkish Cypriot independent candidate received 681 votes. Hoffmeister, Legal Aspects of the Cyprus Problem, Annan Plan and EU Accession p. 209. 21. Case C-300/04, Eman and Sevinger v. College van burgemeester en wethouders van Den Haag [2006] ECR I-8055. 22. M. Brus, M. Akgün, S. Blockmans, S. Tiryaki, T. van den Hoogen, W. Douma, A Promise to Keep: Time to End the International Isolation of the Turkish Cypriots (Istanbul: Tesev Publications, 2008), p.36. 23. Ibid. 24. Ibid., p.42 citing PE392.496/cpg: Summary of Decisions of the Conference of Presidents Meeting on 12 July 2007. 25. See Commission Decision C(2006)6533 of 15 December 2006; and The European Union Scholarship Programme for the Turkish Cypriot Community: 26. EPSO/A/1/03. 27. Case T-455/04 Beyatli and Candan v Commission [2007] [not yet reported]. 28. Case C-238/07 P Beyatli and Candan v Commission [2007] [not yet

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reported]. 29. See Opinion of Advocate General Kokott, Case C-420/07, Apostolides v. Orams, delivered on 18 December 2008), para.34. 30. Case 231/78 Commission v. United Kingdom [1979] ECR 1447, para.13; Joined Cases 194/85 and 241/85 Commission v Greece [1988] ECR 1037, paras.19-21; Case C-3/87 Agegate [1989] ECR 4459, para.39; and Case C-233/97 KappAhl [1998] ECR I-8069, para.18. 31. See Opinion of Advocate General Kokott, Case C-420/07, Apostolides v. Orams, delivered on 18 December 2008), para.35. 32. Case C-420/07, Apostolides v. Orams, judgment 28 April 2009, paras.33 and 35. 33. Ibid., para 34. 34. Ibid., para 36. 35. Ibid., para 42. 36. Recital (4) of Protocol No 10 on Cyprus. The distinction between a ‘comprehensive settlement’ and a ‘solution’ is a fine one. According to Uebe it implies that a “solution” to the Cyprus issue requires something less than a fully-fledged “comprehensive settlement” plan such as the Annan Plan. Uebe, ‘Cyprus in the European Union’, p.386. 37. Article 2(1) of Protocol No 10 on Cyprus. 38. For a comprehensive analysis of the Green Line Regulation regime see N. Skoutaris, ‘The application of the acquis communautaire in the areas not under the effective control of the Republic of Cyprus: The Green Line Regulation’, Common Market Law Review, Vol.45, No.3, 2008, p.727. 39. However according to the findings of a recent PRIO Report one has to admit that the term ‘effectively’ is open to debate. The main reason for that is the existence of psychological barriers that ‘lead to a strong resistance to trade among Greek Cypriots and a strong resentment about trading among Turkish Cypriots’ M. Hatay, F. Mullen and J. Kalimeri, Intra-island trade in Cyprus Obstacles, oppositions and psychological barriers (Oslo: PRIO, 2008), pp.1-2 and pp.59-66. 40. For example, Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC O.J. 2004, L 229/35. 41. In the letter dated 19 August 2005, from the Chargé d’ affaires a.i. of the Permanent Mission of Cyprus to the UN addressed to the Secretary-General, it was stated: ‘On the specific matter of airports and ports in the occupied area of Cyprus, it should be stressed that, following the Turkish military invasion and occupation of the northern

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42. 43. 44. 45. 46. 47. 48.

49. 50. 51.

52.

53.

AN ISLAND IN EUROPE part of the island, the Government of the Republic of Cyprus declared all ports of entry into the Republic of Cyprus which are situated in those areas as closed.’ Recital (4) of the Green Line Regulation. Recitals (4) and (7) of the Green Line Regulation. Recital (7) of the Green Line Regulation. Article 1(1)(a) of the Green Line Regulation. Article 2(2) of the Green Line Regulation. Article 2(4) of the Green Line Regulation. For a more detailed account of how those terms are defined for EC law purposes see the case-law of the Court of Justice in the following cases: Case C-41/74 Van Duyn v. Home Office [1974] ECR 1337; Cases C-115 & 116/81 Adoui and Cornuaille v. Belgian State [1982] ECR 1665; Case C36/75 Rutili v. Minister of the Interior [1975] ECR 1219; Case C-67/74 Bonsignore v. Oberstadtdirektor der Stadt Koln [1975] ECR 297; Case C30/77 R. v. Bouchereau [1977] ECR 1999. See in general Ο Περί Αλλοδαπών και Μεταναστεύσεως (Τροποποιητικός) Νόµος του 2004 [Aliens and Immigration (Amending) Act 2004)]. Interviews with ‘TRNC’ officials. The EU’s General Affairs Council on 26 April 2004 said in its Conclusions (8566/04 (Presse 115)) that: ‘The Council is determined to put an end to the isolation of the Turkish Cypriot community and to facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community.’ Case C-432/92, Regina v. Minister of Agriculture, Fisheries and Food, ex parte S.P. Anastasiou (Pissouri) Ltd and Others (hereafter Anastasiou I) [1994] ECR I-3116; Case C-219/98 Regina v. Minister of Agriculture, Fisheries and Food, ex parte S.P. Anastasiou (Pissouri) Ltd and Others (hereafter Anastasiou II) [2000] ECR I-5241; Case C140/02 Regina v. Minister of Agriculture, Fisheries and Food, ex parte S.P. Anastasiou (Pissouri) Ltd and Others (hereafter Anastasiou III) [2003] ECR I-10635. According to those judgments, since the authorities in the areas not under the effective control of the Republic could not issue valid movement certificates, furnishing evidence of the Cypriot origin of the relevant goods, Turkish Cypriot goods could be imported into the Community but were treated as goods from a country not associated with the EC. Unlike the proposals for the direct trade and the financial aid regulations, the Green Line Regulation did not make specific reference to the economic isolation of the Turkish Cypriots. ‘However, since the Green Line Regulation was referred to in the same Council conclusions as “a signal of encouragement to the Turkish Cypriot community”, and since it was adopted only a few days after these conclusions, it gradually

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54.

55.

56.

57. 58. 59.

60. 61. 62. 63. 64. 65.

66.

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came to be associated with an overall package to reward Turkish Cypriots for supporting reunification.’ Moreover, as the other two regulations encountered difficulties with regard to their adoption, the Green Line regulation grew in relative importance. M. Hatay et al., Intra-island trade in Cyprus Obstacles, oppositions and psychological barriers, pp.10-11. Article 4(5) of the Green Line Regulation; Commission Decision 2004/604/EC of 7 July 2004 on the authorisation of the Turkish Cypriot Chamber of Commerce according to Article 4(5) of Council Regulation (EC) No 866/2004, O.J. 2004 L 272/12. Communication from the Commission Annual Report on the implementation of Council Regulation (EC) 866/2004 of 29 April 2004 and the situation resulting from its application, Brussels, 20 September 2007 COM(2007) 553), p.6. Communication from the Commission Annual Report on the implementation of Council Regulation (EC) 866/2004 of 29 April 2004 and the situation resulting from its application, Brussels 25 September 2006 COM(2006) 551 final (2006 Commission’s Report), p.5; 2007 Commission’s Report, p.11. Proposal for a Direct Trade Regulation Brussels, 7.7.2004 COM(2004) 466 final. Article 4(1) of the Proposal for a Direct Trade Regulation. For a more detailed analysis of the debate on the Proposal for a Direct Trade Regulation see Skoutaris ‘The application of the acquis communautaire in the areas not under the effective control of the Republic of Cyprus: The Green Line Regulation’, p.748. See Opinion of Advocate General Kokott, Case C-420/07, Apostolides v. Orams, delivered on 18 December 2008, para.40. Article 1(1) of the Financial Aid Regulation. Ibid. at Article 2. International Crisis Group, ‘Reunifying Cyprus: The Best Chance Yet’, Europe Report N°194-23 June 2008, p.2. Commission Decision C(2006)5000 of 27 October 2006; Commission Decision C(2006)6533 of 15 December 2006. Communication from the Commission to the European Parliament and the Council Annual Report 2006-2007 on the implementation of Community assistance under Council Regulation (EC) No 389/2006 of 26 February establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community (Brussels, 18 September 2007 COM(2007) 536). On the preparation of the legal texts see Commission Decision C(2006)2335/4 of 26 June 2006. Uebe, ‘Cyprus in the European Union’, p.390; M. Cremona and N.

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Skoutaris, ‘Speaking of the de…rogations’, Journal of Balkan and Near Eastern Studies, Vol.11, No.4, 2009, pp.387-389. 67. Report of the Secretary-General of 3 April 1992, S/1992/23780, para.20. 68. Accessed from the website of TRNC, page no longer available. 69. C. Bell, On the Law of Peace, Peace Agreements and the Lex Pacificatoria (Oxford: Oxford University Press, 2008), p.6.

3 ECONOMIC IMPACT OF MEMBERSHIP Fiona Mullen

Cyprus joined the EU in 2004, yet the first institutional arrangement between what is now the EU and Cyprus occurred as far back as 19 December 1972, with the signature of the Association Agreement. This chapter will attempt to demonstrate that the impact on the Cyprus economy of EU accession stretches both backwards into history and beyond into the future. This paper is therefore divided into three parts. The first part will examine the period between the implementation of the Association Agreement on 1 June 1973 and the advent of the Customs Union on 1 January 1988. The second section will study the period from the adoption of the Customs Union until accession negotiations, which began in March 1998. The third period will examine developments since then, which include the intensive pre-accession period prior to accession on 1 May 2004, the preparations for euro adoption on 1 January 2008 and the brief period from 2008 to date. While the initial intention was to treat this last part in three separate sections, it became clear that the cumulative impact of some of the developments that took place in the 1998–2008 period, most notably the fall in interest rates, had repercussions that are still being felt today, therefore it was better to treat them together. This chapter will conclude by making some qualitative projections about the future and Cyprus’s key challenges in the eurozone.

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The 1973 Association Agreement As in most trade agreements between the EU and other countries, the Association Agreement was weighted in favour of the third country. The European Community (EC) would open its market to the third country in return for a gradual opening on the part of the third country to EC markets. The first part of the Cyprus Association Agreement was initially supposed to last until 1977 but was first extended to the end of 1979 owing to the impact of the events of 1974, in which armed conflict and the advance of Turkish troops led to a huge disruption of the economy and dislocation of a large proportion of the population. It was extended again to 1981 while negotiations on the terms of the second period were being finalised. The main feature of the agreement was a 70 per cent cut in tariffs of industrial products from Cyprus, with a few exceptions such as textile and clothing products, which instead enjoyed an increase in quotas. Exports of citrus fruits from Cyprus enjoyed an immediate tariff reduction of 40 per cent. In return, Cyprus reduced tariffs on most EC products, initially by 15 per cent and rising to 35 per cent by the fifth year. There were also special arrangements for the UK, whose accession to the EC in 1973 had prompted Cyprus’ signature of the Association Agreement. The first extension of the first phase extended concessions on agricultural products and another extension from 1980 granted special arrangements for five key export products: potatoes, carrots, sweet peppers, aubergines and table grapes.1 The second stage came into force in July 1981 and by 1982 a range of vegetables and fruits, including large exporting items such as potatoes, were enjoying a standard tariff reduction of 60 per cent. The EC also provided financial and technical assistance during this period. Impact of the Association Agreement on foreign trade Assessing the impact of the association agreement on foreign trade is complicated by the events of 1974, after which the amount of agricultural land available to Greek Cypriots was reduced by 50 per cent.2 Nevertheless, a few trends can be discerned. First, production and exports of some key products increased in the first phase

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between 1972 and 1980. For example, production of potatoes rose from 174,752 tons in 1972 to 191,008 in 1980 and the value of exports of potatoes rose from C£7.1 million to C£12.7 million in the same period.3 The same was not true of citrus fruits, where production of oranges dropped from 146,812 tons in 1972 to 32,512 in 1980. However, since recorded production of this crop fell by almost 80 per cent in 1975 alone, this is more likely to have been because of the loss in 1974 of the key citrus-producing region of Morphou. Production of oranges fared better in the second phase of the Association Agreement rising to 51,000 tons by 1987, with exports of all citrus fruits rising from C£8.2 million in 1980 to C£15.5 million in 1987. Exports of potatoes almost doubled in value during this period, reaching C£22.2 million in 1987 but in tonnage terms production actually fell by 21 per cent. Since most potato produce was exported, this suggests a sharp increase in prices. As regards manufactured goods, data on total exports of domestically produced goods suggest that the impact was more mixed. Domestic exports of food and live animals to the whole world fell from 59.7 per cent of the total in 1972 to 30.7 per cent in 1987, whereas exports of most other major categories – minerals, fuels and lubricants, chemicals and the broad category of miscellaneous manufactures – increased their share of the total. Perhaps more surprising was the impact on the direction of trade, once the UK, which joined the EC in 1973, is excluded. Although exports rose in value terms, in proportional terms, exports to the six founding members – Belgium, Germany, France, Italy, Luxembourg and the Netherlands – actually fell from 20.9 per cent of the total in 1972 to 12.2 per cent in 1987. Even exports to the UK did not benefit, falling from 42.9 per cent of the total in 1972 to 28.4 per cent in 1987. The impact on imports was also fairly mild: imports from the core six countries rose from 26.5 per cent of the total in 1972 to 30.3 per cent of the total in 1987, while imports from the UK fell from 27.5 per cent to 14.3 per cent in the same period. The Ministry of Commerce attributes the fairly small impact on exports in the period 1973–1977 to the fact that the Association Agreement ‘concerned only a fraction of Cypriot agricultural products’.4 However, the addition of more products in the second

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phase appears to have made little difference. It is worth noting that during the same period, exports to Arab countries rose from 7.1 per cent of the total in 1972 to 35.3 per cent in 1987. This suggests that proximity to markets was far more influential in this period than tariffs or quotas.

The 1988 Customs Union The Customs Union between Cyprus and the EC was signed on 19 December 1987 and came into force on 1 January 1988. The agreement covered 43 agricultural products, 17 of which had not been included in the Association Agreement. The agreement was reciprocal: with a few exceptions such as table wine, Cyprus lifted restrictions on the same products. Quotas for bulk products such as potatoes were also increased. These products represented 85 per cent of unprocessed agricultural exports to the EC and only 0.2 per cent of imports from the EEC.5 As regards industrial goods, certain products enjoyed quota protection, including petroleum products, alcohol and cement. Similarly, reductions in tariffs would be slower for a further 80 products, including major export categories such as pharmaceuticals, chemicals and tobacco products. Imports of clothing and furniture were also subject to quotas.6 At that time, the major industrial products were foodstuffs, beverages and tobacco, followed by garments and shoes. Impact of the customs union on external trade Various changes in categorisation of data from 1988 mean that it is not possible to compare the 1988–1998 Customs Union period directly in the 1973–1987 Association Agreement period. However, certain patterns can be discerned. For example, there was a remarkable drop in exports of textiles products, which in 1988 had been the largest export category. These fell from 32.2 per cent of the total in 1988 to just 14.2 per cent by 1998.7 By contrast, exports of chemicals and related products – including pharmaceuticals, which today are the largest export item – climbed both in value and proportional terms, to reach 14.2 per cent of the total in 1998 from 7.2 per cent in 1988. During the same period, exports of prepared

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foodstuffs rose from 11.3 per cent to 13.3 per cent of the total. From this one can conclude that Cyprus was able to compete in higher value-added products, such as chemicals and foodstuffs where it has niche markets such as halloumi cheese but was unable to compete against both the reduction of tariffs and the accession of Spain and Portugal in the market for lower value-added products such as textiles. The impact on the direction of trade is more difficult to discern because of the changes in series. However, as before, the Customs Union does not appear to have had an impact on the direction of exports. By 1998 total exports to EU countries were 38 per cent of the total,8 compared with 47.4 per cent for domestic exports in 1987.9 Total exports to Arab countries also appear to have fallen in relative terms. They accounted for 22.4 per cent of total exports in 1988 compared with 35.3 per cent of domestic exports in 1987. There was also little change in this period in the proportion of imports from EU countries, which declined slightly from 56.9 per cent of the total in 1988 to 55.3 per cent in 1998. Perhaps the more longer-lasting impact of the Association Agreement and the Customs Union was its effect on the structure of GDP. From 17.2 per cent of GDP in 1972, agriculture had fallen to 3.9 per cent of GDP by 1998. Manufacturing had dropped from 15.2 per cent to 9.9 per cent, while services had climbed from 37.9 per cent to 73 per cent.10 Mining and quarrying had all but disappeared. Only the contributions of construction, at 7.1 per cent of GDP in 1998 and electricity, gas and water, at 1.9 per cent of GDP, remained largely unchanged compared with 1972.

EU accession negotiations from 1998 While the Customs Union and the Association Agreement that preceded it had an impact mainly on the manufacturing sector, the period from the start of accession negotiations onwards would have a much wider and deeper impact on the economy. EU accession negotiations began in March 2008 with the standard screening process, in which EU and local officials scan all relevant legislation to check its compatibility with the EU acquis communautaire – the 30,000

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or more pages that constitute the body of EU law. This process took around three years, and in August 2001 the government produced a report entitled the National Programme for the Adoption of the Acquis.11 This 589-page document was the first step in outlining the government’s plans for structural reform in the coming years. It was divided into four main parts. The first dealt with the ability to meet the political criteria for membership; the second dealt with the economic criteria; the third dealt with the ‘ability to assume the obligations of membership’; and the fourth with financial needs. By far the largest section was the third, split into seven sections dealing with every conceivable aspect of the economy from company law and fiscal policy to sweeteners in foodstuffs and health and safety at work. A full analysis of all of these aspects is beyond the scope of this chapter. Moreover, the impact of the structural reforms in many of these areas is difficult to measure in any tangible way. Therefore, the following paragraphs will concentrate on those areas that made the most visible differences, either in terms of the attention received or in terms of impact on macroeconomic performance. These are: competition policy, free movement of workers, taxation, liberalisation of capital controls and last but not least, the liberalisation of interest rates. Competition policy The period in the run-up to accession saw a range of measures to improve the regulatory environment for competition. This would eventually see the introduction of a small amount of competition in the areas of telecommunications and electricity production and tariff rebalancing so that commercial users did not subsidise household users or vice versa. In the area of public procurement, new rules were introduced to abolish preferential treatment of locally based suppliers. At the official level, the Commission for the Protection of Competition, which had been established in 1990 with limited powers, had its powers and independence enhanced in 2000.12 The number of staff was also gradually increased. Yet there are doubts about how effective it has really been. There have been few highprofile cases and a management scandal has not helped its reputation. In a country where business ties are closely knit, where price levels

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are still comparatively high,13 and where there is clearly an absence of competition in areas such as banking (see below), one has to ask whether the Commission has really been as effective as it could have been. The telecoms regulator has been rather more effective, frequently running head to head with the dominant state-owned operator, CyTA, over pricing policies. Free movement of EU workers and the impact on population Partly related to competition was the lifting of restrictions on EU workers, effective from 2004. As Cyprus and Malta were the smallest and wealthiest of the ten countries that joined the EU in 2004, the EU did not impose restrictions on the free movement of Cypriot or Maltese workers. In addition, perhaps because the chief negotiator former president, George Vassiliou, was a businessman who understood the labour shortages, Cyprus (unlike Malta) did not request any restrictions on the free movement of other EU members. This meant that upon accession citizens from all old and new EU member states could live and work in Cyprus. Two years later, when Romania and Bulgaria joined the EU, workers from these countries, who had long had a tradition of short-term visas in Cyprus, were also added to the list. Therefore, Cyprus became particularly attractive to citizens of new member states who did not have the automatic right to work elsewhere in the EU. The impact on the population was immediate but short lived. Almost as if in anticipation, net migration, which had not exceeded 5,000 since 1996, leapt from 4,650 in 2002 to 12,642 in 2003, 15,724 in 2004 and peaked at 15,724 in 2005. However, after that it began to fall, and by 2008 it had settled back to pre-accession levels.14 Some of the increase in migration was because of an increase in asylum applications, which peaked in 2004 at 9,859.15 However, that is not the entire explanation, since between 2004 and 2006 net migration exceeded the number of new applications. Clearly, the free movement of labour had a fairly significant impact in the first two years, with population growth rising at an annual average rate of 2.4 per cent, compared with 1.5 per cent in 2001–03.

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Tax reform and money laundering legislation One of the major EU-related reforms was tax reform. Prior to the reform, Cyprus levied a preferential rate of 4.25 per cent on what were then called offshore companies. Suspicions that it acted as a money laundering centre were raised as a result of its key role on exporting cash from the former Yugoslavia to Cyprus on behalf of the then president, Slobodan Milosevic.16 In 1999, the IMF grouped Cyprus together with other jurisdictions as ‘Offshore Financial Centres’. These were described as attracting funds ‘partly because they promise anonymity and the possibility of tax avoidance or evasion’.17 Cyprus was therefore included in the annual reviews of the Financial Action Task Force (FATF) of the Organisation for Economic Cooperation and Development (OECD) and, although Cyprus was never actually given the label of a non-cooperative country, it was finally taken off what has been locally referred to as the blacklist in June 2000, when it was deemed to have, ‘a comprehensive anti-money laundering system’.18 In the NPAA the government pledged to reform the anti-money laundering and tax systems further and from 2003 implemented a major overhaul. Reforms included harmonising the corporate income tax rate at 10 per cent for both offshore and local companies (local company corporate tax had been 25 per cent), a rise in the personal income tax threshold from C£6,000 to C£9,000 (€15,377) and a cut in the top rate of personal income tax to 30 per cent.19 The government was also obliged to increase the standard rate of value-added tax (VAT), which had first been introduced in 1992, to the minimum level of 15 per cent from its level of just 5 per cent when it was introduced and 8 per cent in 1994. This it did in several stages. The VAT rate was raised from 8 per cent to 10 per cent in July 2000, to 13 per cent in July 2002 and to 15 per cent in January 2003 and exemptions on other rates were harmonised with EU practices. In 2002–03 there were also increases in excise duties on alcohol, tobacco and petrol.20 Impact of tax reform on the budget As the government had expected, the immediate impact of tax reform on the budget was negative, especially as it happened to

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coincide with the effects on tourism of the Iraq war.21 The budget deficit rose from 4.4 per cent of GDP in 2002 to 6.5 per cent in 2003.22 However, thereafter and until 2008, the budget performance continued to improve. Moreover, by keeping tax rates low for the low-paid (social insurance contributions were only 6.3 per cent of salary), the tax reform continued to support what was already a fairly healthy labour market with low unemployment and high participation rates by EU standards.23 Impact of tax reform on business services Perhaps the most profound impact, however, was on exports of business services. With EU membership under their belts, a clean slate from the OECD and the lowest corporate tax rate in the EU, accountants and lawyers had a ready-made marketing tool. The impact of this on the legal and accounting professions, as well as on financial services, can be gleaned from balance-of-payments statistics. In 2002, exports of ‘other business services’, comprising mainly accounting, legal and merchanting (re-exports), accounted for 8.7 per cent of GDP. By 2006, they had climbed to at 9.6 per cent of GDP. They did drop back to 8.2 per cent of GDP in 2009 but were still getting close to matching income from tourism, which was 9.2 per cent of GDP in 2009 – much lower than the height of 21 per cent reached in 2001. Similarly, exports of financial services, while smaller in size, rose from 1.3 per cent of GDP in 2002 to 4.7 per cent of GDP in 2009.24 Tax reform combined with EU membership also appears to have had a favourable impact on company formation. New company registrations rose from around 9,000 per year in 2000–02 to a peak of 29,016 in 2007 and were still as high as 16,101 in the recession year of 2009.25 Capital controls In order to protect its small economy from sudden outflows of funds, the authorities used to impose a range of restrictions on capital flowing both in and out of the country. In the course of accession to the EU a whole range of controls were lifted.26 From July 2000 residents of Cyprus were allowed to make foreign direct investments abroad, although the Central Bank reserved the right to

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take measures in the case of large investments. Also from July 2000 EU residents were allowed, with a few exceptions including real estate, to make direct and portfolio investments into Cyprus. From December 2000, non-residents were allowed to borrow in Cyprus pounds and from January 2001 residents were allowed to take medium- and long-term loans in foreign currencies. Blocked accounts, which limited transfers abroad by non-residents, were abolished in the same month. The final phase was completed upon accession in May 2004. It included the lifting of restrictions on non-resident portfolio investments in Cyprus and of resident portfolio investments abroad; full liberalisation of real estate investments abroad; removal of barriers to loans granted to non-residents; and removal of restrictions on the physical export of money (although later EU rules imposed restrictions amounts above €10,000). Most restrictions on the purchase of real estate in Cyprus were also eventually lifted. Impact on bank deposits, FDI and foreign borrowing As a precautionary measure to accompany capital account liberalisation but also to prepare for eventual participation in the Exchange Rate Mechanism (ERM2), on 1 January 2001 the Central Bank of Cyprus widened the official fluctuation band of the Cyprus pound to the euro from ±2.5 per cent to ±15 per cent against a parity rate of 0.583274 Cyprus pounds per euro.27 However, in practice the pound barely ever moved beyond ±2.5 per cent.28 Capital account liberalisation certainly did not lead to an outflow of bank deposits. Indeed, the reverse seems to be the case, as there was a continuous inflow of deposits from both the euro area and beyond. Non-resident deposits rose from €7.5 billion in 2001 to €11.8 billion in 2005 and €18.8 billion at the end of 2007, before a short lived drop in 2008.29 Economies with closed capital accounts tend to attract less foreign direct investment (FDI), therefore the liberalisation of the capital account should in theory have had a positive impact on FDI. However, the performance of FDI has fluctuated. It rose from 2000 to reach 10.1 per cent of GDP in 2002, but hovered at around 6.8 per cent of GDP in 2003–05 and then fluctuated between 2006 and

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2009. One probable reason for this is that Cyprus has not undertaken any privatisation. In addition, foreign participation in the banking sector has to date been resisted. Impact on external debt One area in which capital account liberalisation had a very strong effect, however, was on external debt figures. Restrictions on shortterm borrowing in foreign currencies were liberalised on 1 May 2004, which led external debt to shoot up from 74.3 per cent of GDP in 2004 to 250.9 per cent in 2005. It carried on rising to a provisional 486.9 per cent of GDP (€82.5 billion) in 2009.30 While this figure appears alarming at first sight, Central Bank officials have told this author that most of the borrowing was being undertaken by international banks based in Cyprus who in turn were lending to non-residents. Although it had increased the exchange-rate risk until Cyprus adopted the euro in January 2008, this rapid increase in external borrowing did not have much of an impact on the local economy.

Removal of the interest-rate ceiling One of the major EU-related reforms, when measured in terms of its impact on the economy, was the removal of the statutory interestrate ceiling in January 2001, followed by full Central Bank independence in 2002. The intention of this law had been to prevent banks from over-charging for loans. However, by discouraging competition it probably kept commercial interest rates higher than they would otherwise have been and also made the Central Bank of Cyprus less active in setting interest rates. This changed after the abolition of the interest-rate ceiling. Having been set at 7.00 per cent for three years, the Lombard rate fell from 7.00 per cent at the end of 2000 to 5.50 per cent at the end of 2001. Commercial bank interest rates also trended downwards: the average housing loan rate fell from 8 per cent in 2000 to 7 per cent in 2001.31 The remaining period until the accession of Cyprus to the EU would see both official and commercial bank rates continue to fall. By March 2004, the Lombard rate had dropped to 4.50 per cent and

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the standard interest rate on housing loans had fallen to 6.3 per cent. This was interrupted for about ten months when the Central Bank of Cyprus raised interest rates in April 2004 by 1 percentage point, in response to rumours of a post-accession devaluation as well as political uncertainty surrounding the referendum on the Annan Plan that had taken place the previous week.32 But from February 2005 onwards, rates continued to fall. Thus, it appears that the removal of the interest-rate ceiling, combined with low inflation, led in the early years to a reduction in borrowing costs for both households and businesses. The Central Bank of Cyprus cut the minimum bid rate on the main refinancing operations from 4.50 per cent to 4.00 per cent on 21 December 2007, just a few days before the adoption of the euro on 1 January 2008, and thereby brought official interest rates in line with the equivalent rate in the euro area.33 This was the first time that official rates had been cut since mid-2005 and the fact that the Central Bank of Cyprus avoided dropping rates for as long as possible points to longer-term challenges for Cyprus that will be discussed below. Apart from an increase of 25 basis points in July 2008, official interest rates have fallen very steeply since, as the European Central Bank (ECB) responded to the global financial crisis. Between October 2008 and May 2009, the ECB reduced the interest rate on main financing operations seven times, to a low of 1 per cent with effect from 13 May 2009. As of July 2010 this rate remained unchanged. Commercial lending rates post-2008 It is now worth comparing what happened in Cyprus and what happened in the rest of the eurozone during the period after Cyprus adopted the euro. In theory, this rapid reduction in official interest rates, which reduced financing costs for the local banks, should again have led to a similar fall in commercial banks rate that would, in turn, have benefited the real economy by reducing costs for borrowers. However, this was not the case. Whereas official interest rates fell by 350 basis points between November 2007 and March 2010, in Cyprus the annual commercial bank rate charged on new consumer credit actually rose from 6.96 per cent to 7.55 per cent in the same

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period. The main business rate (the floating interest rate charged to non-financial corporations on new loans of up to one year) fell by only 64 basis points in the same period, from 6.59 per cent to 5.95 per cent.34 One of the main reasons was because risk-averse banks all over the euro area were reluctant to pass the cut in official interest rates onto their customers during a period of extreme economic uncertainty. However, this does not provide a full explanation, since the average equivalent rate on commercial loans in the eurozone in March 2010 was 271 basis points lower than that in Cyprus, at 3.24 per cent. Even the rate in crisis-ridden Greece was lower, at 4.98 per cent. Moreover, Cypriot banks were enjoying a much larger spread between deposit and loan rates than elsewhere. Whereas the spread on new business deposits of up to one year and the abovementioned new loans was 244 basis points on average in the eurozone, it was a rather more profitable 300 basis points in Cyprus – therefore closer to the 331 prevailing in Greece.35 Thus, despite the fact that Cypriot banks did not undergo any crisis during the global downturn, they were even more reluctant to pass on the reduction in official rates than most others. Clearly the introduction of the euro has not yet had the impact on retail banking which one might have expected. The adoption of the euro should, in theory, have raised competition for lending, as other banks in the eurozone or other non-Cypriot banks in Cyprus offered lower lending rates, at least to corporate clients. There are a number of plausible explanations why this has not happened. First, is the relative absence of competition. Cyprus is an island far from the centre of the eurozone. Even if there were full financial integration within the eurozone, which is not yet the case, it is physically more of a challenge even for a large corporate to travel to another country in search of a better borrowing rate elsewhere. Competition for retail lending therefore remains faily weak, with the three main banks accounting for around 50 per cent of the market. Second, despite the presence of many non-Cypriot banks in what used to be termed the international business sector, there are only five non-Cypriot banks in the retail banking sector of any significant size, and all but one of them (Société Générale) are Greek. Indeed,

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after Cyprus adopted the euro, competition from Greek banks was a factor in the increase of lending rates. In an effort to attract deposits, Greek banks in Cyprus started in late 2008 to offer very high deposit rates to selected customers.36 This, in turn, made Cypriot banks offer even higher rates on deposits. In October 2008, the average rate on new deposits of up to one year for business customers peaked at 4.71 per cent in Greece. Cypriot rates rose even higher, to 4.93 per cent, while the average eurozone rate was 4.25 per cent.37 The highest rate recorded during this period was for new deposits by households, which peaked at 6.15 per cent in January 2009.38 By April 2010 deposit rates were much lower, but at 3.22 per cent for business customers and 3.87 per cent for non-corporates, they were still higher than in Greece (1.71 per cent and 2.98 per cent respectively). Another likely reason why Cypriot banks were keen to keep their large profit margins was because they had few other sources of income. The government has yet to create a liquid secondary market in government bonds, which is a source of domestic income for many other banks in the euro area, and for this reason there is also barely a market in corporate bonds. Generally lacking in sophistication, therefore, local banks trade very little in advanced financial products and, apart from some trading in each others’ shares, they tend to focus on traditional lending and deposit-taking. While this means that they are highly capitalised, which proved to be blessing during the global financial crisis,39 it also put a premium on earning revenue from interest income. Another reason for keeping high margins was that banks’ own financing was also more costly than others in the euro area, because the government, as of July 2010, had not yet passed legislation on covered bonds that could be used as collateral to borrow cheaply from the ECB during the financial crisis. Finally, another probable reason why Cypriot banks maintain such large margins is regulatory requirements. The Central Bank of Cyprus uses what little monetary policy manoeuvre it has in the eurozone to impose tighter restrictions on liquidity. The most prominent requirement, which is stricter than elsewhere in the eurozone according to a senior Central Bank official, is the 70 per cent liquidity ratio for foreign deposits. In other words, banks can use only 30 per

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cent of their foreign-currency deposits for lending. Since foreigncurrency deposits are subject to exchange-rate risk and account for just under 20 per cent of all deposits and just under 100 per cent of GDP, it is a prudent requirement. However, it inevitably means that banks are forced to make profits on a smaller share of deposits. Impact of interest-rate cuts on lending Nevertheless, it is clear that the cumulative impact of cuts in official interest rates from 2001 onwards eventually had a significant impact on demand for loans, at least until 2008. Loans to the private sector had grown by a fairly sluggish 5.9 per cent per year on average in 2003–05,40 even as the economy recovered from slow real GDP growth in 2002–03. But from 2006 onwards lending growth exploded, rising on average by 19.7 per cent in the three years 2006– 08.41 Housing loans rose even faster, by an average 27 per cent in 2006–08. One additional reason for the strong growth in loans could have been Cyprus’s entry into the Exchange Rate Mechanism (ERM II) on 2 May 2005. This signalled that, barring any upsets, Cyprus would be adopting the euro within a few years, thus raising confidence. In addition, banks, encouraged by the reduction in perceived exchangerate risk, began to offer loans denominated in euros at lower rates than those on offer for loans denominated in Cyprus pounds. Foreign-currency loans therefore rose rapidly during this period. Between May 2005 and December 2007, foreign-currency loans doubled, from 11.2 per cent to 22.1 per cent of total resident loans. The fast growth in lending had a significant impact on household indebtedness. From 100.3 per cent in 2001,42 household debt shot up to 124.8 per cent of GDP by June 2009.43 This was also much higher than the average 63 per cent in the eurozone.44 Impact on construction Naturally, the initial pick-up and then rapid acceleration in lending for housing purposes had an impact on the construction and real estate sectors. In 1996–2000, gross value added in the construction sector had fallen every year, declining on average in real terms by 1.4 per cent per annum. From 2001, the year in which the interest-rate

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ceiling was abolished, growth in construction activity started to accelerate, rising by 3.7 per cent in 2001, 5.4 per cent in 2002 and 6.7 per cent in 2003.45 The pace of growth tapered off slightly to average 4.8 per cent in 2004–05 (the period in which interest rates had been raised by one percentage point) but picked up again to 6.8 per cent in 2006, peaking at growth of 7.7 per cent in 2007. Not surprisingly, therefore, construction as a proportion of GDP rose in the same period, from 6.3 per cent of GDP in current-price terms in 2000 to 8 per cent by 2007 and 8.2 per cent in 2008. The developments in housing construction in particular were even more dramatic, as the number of building permits authorised for dwellings units rose in double digits between 2001 and 2005, peaking at growth of 47.1 per cent in 2003.46 Growth in actual dwellings completed peaked at 49.1 per cent two years later. As well as strong local demand for new housing, another EU-related change boosted foreign demand for housing. From 2004 EU nationals had the right to live and work in Cyprus and the government relaxed restrictions on EU nationals buying property in Cyprus. With such a heady pace of growth, supply would inevitably eventually outstrip demand, especially as foreign demand began to weaken. In 2001, new dwelling stock had exceeded new households by just 163 dwelling units. By 2007, the excess was 10,000, dropping only by 300 to 9,700 in 2008.47 Not surprisingly, this led developers to a rapid reappraisal of requirements, with permits authorised for new dwellings falling by 2 per cent in 2008 and 16.9 per cent in 2009. Impact on real estate prices Strong demand for housing put upward pressure on the cost of housing. Like many countries in the EU, there is no official house price index. The nearest Cyprus ever got to an official index was the hedonic BuySell Home Price Index created from the year 2004 by Stelios Platis.48 Unlike prices quoted by real estate developers, who concentrate on newbuilds, the BuySell index, which was discontinued in early 2009, measured transaction prices for both new and resale residential property and incorporated adjustments for improvements in quality. This index showed an increase in residential prices rising by 7.2 per cent in 2004, 2.5 per cent in 2005 (the year of the interest-

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rate hike), 5.9 per cent in 2006, 19.2 per cent in 2007, when growth in housing loans was very strong, and 2.8 per cent in 2008. Anecdotal evidence suggests that prices of new apartments rose much faster. An unpublished index also prepared by Platis showed prices per square metre doubling between 2001 and 2007. Impact on the balance of payments Such strong demand for construction naturally led to rapid growth in imports of intermediate inputs such as construction materials, which rose on average by 21 per cent per year in 2005–07, before dropping by more than 40 per cent in 2009.49 Moreover, just as demand for housing was tailing off, another EU-related regulatory change kept up demand for other imports. In November 2006, the government cut excise duties on second hand cars in order to comply with EU rules on non-discrimination. Under pressure from interested parties, it also cut taxes on new cars at the same time.50 The government had already cut car taxes in late 2003, therefore the double reduction, combined with banks’ eagerness to lend, led to a rapid rise in passenger car registrations, which rose by 37.1 per cent in 2007.51 The strong increase in local demand for imported construction materials and cars was followed in 2008 by record high prices of oil, on which Cyprus depends for 97 per cent of its electricity needs.52 As this occurred at the same time as tourism income was again in decline (tourism arrivals fell in 2008 by 0.9 per cent but revenue fell by 3.5 per cent) the impact on the current-account deficit was dramatic.53 From a reasonably low 3.3 per cent of GDP in 2001, the currentaccount deficit rose to 5.6 per cent of GDP in 2005, 11.7 per cent in 2007 and a record 17.7 per cent (€3 billion) in 2008.54 These are the kinds of current-account deficit levels that often lead to currency crises as financial markets lose confidence that the deficit can be covered by inflows on what is called the financial account (formerly the capital account). Indeed, balance-of-payments data show that, because of a large net outflow of portfolio investment (mainly shares), Cyprus was unable to cover all of its current-account deficit in 2007 and 2008 by its usual means (foreign direct investment and non-resident bank deposits). It was forced instead to draw down nearly €0.5 billion in foreign exchange reserves over the two-year

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period. However, Cyprus was in many ways lucky. It did not experience a foreign-exchange crisis because it had just switched its currency to the euro in January of the same year. Moreover, even if Cyprus had still been using the Cyprus pound in 2008, it was in those days running a large budget surplus, of 3.5 per cent of GDP in 2008. This would have made it much easier, had it been necessary, for Cyprus to cover the current-account deficit by borrowing on international financial markets. Impact on competitiveness Nevertheless, if a country is running a large current-account deficit, it is something to be concerned about even if it is a eurozone economy, especially when accompanied by a large budget deficit, which is the case today. Cyprus recorded a budget deficit of 6.1 per cent of GDP in 2009 and as a result, was placed by the European Commission in an ‘excessive deficit procedure’ in June 2010.55 A large currentaccount deficit is both a sign that a country is consuming more than it can save and is often a sign of weak competitiveness. This is a particularly serious problem in a country that is a member of the eurozone, because regaining competitiveness via devaluation is no longer an option, as Greece painfully learned in 2010. The deterioration in Cyprus’ competitiveness was temporarily reflected in the World Economic Forum’s rankings. Cyprus joined the rankings in 2004 with a score of 4.56 and a ranking of 38, but dropped to 4.54 in 2005, 4.36 in 2006 and 4.23 in 2007. However, it rose to 4.53 in 2008 and 4.57 (ranked 34) in 2009.56 This may be because the World Economic Forum’s rankings are based on surveys and therefore rely heavily on businesses’ perceptions. They are therefore less likely to reflect underlying structural problems in the macroeconomy that will take time to bear fruit. Another indication of Cyprus’ lack of competitiveness is comparison of price levels. In the basic foodstuffs of milk, cheese and eggs, Cyprus had the highest prices in the EU in 2009.57 Another way of measuring changing competitiveness is the real effective exchange rate (REER), which measures a country’s relative exchange rate based on prices, or labour costs, in competitor countries. The European Commission’s statistical service, Eurostat,

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produces a number of indices based on relative consumer price, labour costs and other indicators. Here, Cyprus is in worrying company. Whereas Germany’s REER based on labour costs dropped from 100 in 1999 to 87.58 in 2009, that of the UK fell from 100 to 78.65 and that of Belgium–Luxembourg rose to only 102.35, the Cyprus REER rose from 100 to 111.11 in the same period. Similar or even higher levels were recorded by most of the PIIGS (Portugal, Ireland, Italy, Greece and Spain), the countries that have been most vulnerable in the recent global downturn. Portugal’s index was 112.97 in 2009, Ireland’s was 120.87, Italy’s was 111.18. Only Greece saw only a modest increase, with an index of 102.56, suggesting that its real problems lie elsewhere. The REER index for Cyprus no doubt rose because of the widespread practice of indexing wages to inflation. With a Central Bank survey suggesting that some 60 per cent of the labour force is unionised,58 this has a significant upward impact on labour costs, especially when high oil prices push up inflation. Indeed, the similarities between Cyprus and the countries that suffered most in the financial crisis are rather ominous. It has large ‘twin deficits’ – a budget deficit of 6.1 per cent of GDP and a current-account deficit of 8.5 per cent in 2009 – high household indebtedness, and an uncompetitive real exchange rate. By 2008, the latest data available, household debt had increased strongly to levels higher than 100 per cent of GDP in Ireland, Denmark, the Netherlands, the United Kingdom and Portugal, i.e. countries where the financial crisis was accompanied by a deteriorating performance of residential investment. Household debt was relatively low and had increased comparatively little in some Member States, which weathered the financial crisis relatively well despite considerable stress in their banking systems.59 A report on Portugal by the European Commission’s DirectorateGeneral for Economic and Financial Affairs in 2006 is also a cause for concern. Noting that the fall in real interest rates boosted demand for housing, it said:

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If this had been written in 2010, it could have easily been a description for Cyprus. The price Portugal paid for this combination of problems was years of slow growth and high unemployment as well as vulnerability in the recent downturn.

Conclusion The recent deterioration of some key macroeconomic indicators points to the longer-term challenges of EU accession for Cyprus. While there is no doubt that EU accession has brought tremendous benefits to the economy, inter alia, by opening up external trade, increasing competition, enforcing higher quality standards, creating more favourable conditions for foreign direct investment and allowing Cyprus to market itself as a good tax location, Cyprus will always face the challenge that in a single-currency area, nominal interest rates will generally be set with the larger, slower-growing economies in mind, and will therefore probably be lower than ideal for a small, faster-growing economy. This will tend to boost consumption, raise prices and push wages up to uncompetitive levels. The only effective policy response to such trends available to a eurozone government is to implement ‘supply-side’ reforms. These include loosening up the labour market (for example by reforming or abolishing the wage-indexation mechanism); cutting back the size of the public sector, which ‘crowds out’ the private sector both in the job market for talented graduates and in private-sector investment; investing in better transport infrastructure (inter-city public transport and air links to Europe); and encouraging foreign know-how through privatisation of utilities such as telecommunications and electricity as well as the national airline. However, these kinds of reforms are

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always unpopular and successive governments in Cyprus have been unwilling to implement them. The likelihood of the current, communist-led government implementing privatisation is even smaller. Yet in the worst-case scenario, the price paid by Cypriots of government inaction could in the long term be as high as that currently being paid by the PIIGS.

Endnotes 1. Ministry of Commerce, The Association Agreement Between the Republic of Cyprus and the European Economic Community, Press and Information Office of the Republic of Cyprus, 1982. 2. Ministry of Commerce, The European Community and the Agriculture of Cyprus, Press and Information Office of the Republic of Cyprus, 1991. 3. Statistical Service, Statistical Abstract 2000, Press and Information Office of the Republic of Cyprus, 2002. 4. Ministry of Commerce, The European Community and the Agriculture of Cyprus, Press and Information Office of the Republic of Cyprus, 1991, p.8. 5. Ministry of Commerce, The European Community and the Agriculture of Cyprus, Press and Information Office of the Republic of Cyprus, 1991, pp.11-12. 6. Ministry of Commerce, Cyprus Industry and the European Community, Press and Information Office of the Republic of Cyprus, 1991. 7. Statistical Service, Statistical Abstract 2000, Press and Information Office of the Republic of Cyprus, 2002. 8. Statistical Service, Statistical Abstract 2000, Press and Information Office of the Republic of Cyprus, 2002. 9. Department of Statistics and Research, Historical Data on the Economic of Cyprus 1960–1991, Republic of Cyprus, 1994. 10. Statistical Service, National Accounts (Excel file), 23 March 2010 . 11. Republic of Cyprus, National Programme for the Adoption of the Acquis, August 2001. 12. Republic of Cyprus, National Programme for the Adoption of the Acquis, August 2001. 13. Eurostat, ‘Comparison of price levels in the EU27 in 2009’, 94/2010, 28 June 2010. 14. Statistical Service, Demography (Excel file), 27 November 2009 . 15. See United Nations High Commission for Refugees (UNHCR), Statistical Yearbooks, 2005–08.

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16. Torkildsen, Morten, ‘Amended Expert Report sent to the International Criminal Tribunal for the Former Yugoslavia’, 7 June 2002. 17. International Monetary Fund (IMF), ‘Offshore Banking: An Analysis of Micro- and Macro-Prudential Issues’, Luca Errico and Alberto Musalem, IMF Working Paper 99/5, January 1999. Unger, Brigitte and Joras Ferwerda, ‘Regulating Money Laundering and Tax Havens: The Role of Blacklisting’, 15 March 2008, Paper prepared for the European Consortium for Political Research (ECPR) conference; (Re)Regulation in the Wake of Neoliberalism, Consequences of Three Decades of Privatization and Market Liberalization, Panel: Naming and Shaming, held at Utrecht University, 5–7 June 2008. 18. Financial Action Task Force on Money Laundering (FATF), Annual Report 1999–2000, 22 June 2000. 19. Economist Intelligence Unit (EIU), Country Report Cyprus, September 2002. 20. Central Bank of Cyprus, Monetary Policy Report, December 2002. 21. Before the war began in March 2003, there were rumours that Saddam Hussein had missiles that could reach as far as Israel and Cyprus, which had a detrimental impact on tourism bookings for that year. 22. Eurostat, Statistics by Theme, Economy and Finance, ec.europa.eu/eurostat, 2010. 23. Eurostat, Statistics by Theme, Population and Social Conditions, ec.europa.eu/eurostat, 2010. 24. See Central Bank of Cyprus, Annual Balance of Payments Statistics (Excel files), 2002–09. 25. Department of Registrar of Companies and Official Receiver, Companies Section Statistics, 2010. 26. See Republic of Cyprus, Pre-Accession Economic Programme of the Republic of Cyprus 2001–05. 27. Kyriacou, George, The current framework of exchange rate policy in Cyprus and recent developments, Cyprus Journal of European Studies, Volume 1, Number 2, 2002. 28. Central Bank of Cyprus, Monetary Policy Reports, August 2001-December 2007. 29. Statistical Service, Statistical Abstract 2008, Press and Information Office of the Republic of Cyprus, 2009; Central Bank of Cyprus, Monetary and Financial Statistics (Excel file), June 2010. 30. Central Bank of Cyprus, Annual Economic Indicators (Excel file), 17 June 2010. 31. Statistical Service, Statistical Abstract 2008, Press and Information Office of the Republic of Cyprus, 2009. 32. Syrichas, George, and Pany Karamanou, ‘Monetary Policy And Central Bank Communication: The Case of Cyprus’, Central Bank of Cyprus, 20

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September 2004. 33. European Central Bank, Key ECB interest rates, www.ecb.int, 2010. 34. Central Bank of Cyprus, Monetary and Financial Statistics (Excel file), June 2010. 35. Bank of Greece, Bulletin of Conjunctural Indicators, June-July 2010; European Central Bank, Monetary and Financial Statistics, www.ecb.int, 2010. 36. ‘Why are interest rates high in Cyprus?’, Financial Mirror, 21–27 January 2009; Costas Apostolides, ‘Financial sector conditions and interest rates’, Cyprus Weekly, 23–29 January 2009. 37. European Central Bank, Monetary and Financial Statistics, 2010.

38. Central Bank of Cyprus, Monetary and Financial Statistics (Excel file), June 2010. 39. Besim, Mustafa, and Fiona Mullen, ‘Cyprus in the Global Financial Crisis’, South European Society and Politics, Volume 14, Number 1, March 2009. 40. Central Bank of Cyprus, Monetary Policy Reports, August 2001-December 2007. 41. Central Bank of Cyprus, Monetary and Financial Statistics (Excel file), June 2010. There was a change in series in 2006, therefore the two periods are not strictly comparable. However, the old series shows a definite leap in claims on the private sector in 2006 from 6.2 per cent to 16.3 per cent. 42. Central Bank of Cyprus, Monetary Policy Reports, August 2001-December 2007. 43. Central Bank of Cyprus, Economic Bulletin, December 2009. 44. European Central Bank, Financial Stability Review, December 2009. 45. Statistical Service, National Accounts (Excel file), 23 March 2010 . 46. Statistical Service, Construction and Housing (Excel file), 22 February 2010 < www.mof.gov.cy/cystat >. 47. Statistical Service (2010a), Construction and Housing (Excel file), 22 February 2010 . 48. For more information on the methodology, see BuySell Home Price Index Methodology Paper: Rebased Oct 2005 . 49. Statistical Service (2009b), Intra-Extra EU Trade Statistics By Commodity And Country January–December 2008, Press and Information Office of the Republic of Cyprus, 2009. 50. Leonidou, Leo, ‘House set to back tax cuts on used cars’, Cyprus Mail, 12 October 2006. 51. Statistical Service, Transport, 1990-2009 (Excel file), 13 August 2010 .

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52. Eurostat (2005), ‘A statistical view of environmental issues’, 69/2005, May 2005. 53. The current-account deficit comprises exports of goods and services minus imports of goods and services, as well as net flows of interest income, profits and dividends, and net flows of transfers such as workers’ remittances. 54. Central Bank of Cyprus, Annual Balance of Payments Statistics (Excel files), 2002–09. 55. European Commission, Press Release IP/10/738, 15 June 2010. 56. See World Economic Forum, Global Competitiveness Reports, 2004–10. 57. Eurostat, ‘Comparison of price levels in the EU27 in 2009’, 94/2010, 28 June 2010. 58. Central Bank of Cyprus, Economic Bulletin, December 2009. 59. European Commission, Directorate for Economic and Financial Affairs, European Economic Forecast Spring 2010. 60. Abreu, Orlando, ‘Portugal’s boom and bust: lessons for euro newcomers’, ECFIN Country Focus, Volume 3, Issue 16, European Commission Directorate for Economic and Financial Affairs, 22 December 2006.

4 SOCIAL EFFECTS OF MEMBERSHIP Christina Ioannou and George Kentas

This chapter explores social developments in Cyprus in relation to the post-accession experience of membership of the European Union.1 There is a pervasive view that EU membership engenders a ‘Europeanised society’. But what is really the meaning of a ‘Europeanised society’? What are the practical implications of Europeanisation? Europeanisation is both a perception about a new socio-political identity and a new way of conducting politics and formulating policies. In this sense, a ‘Europeanised society’ is one that has seen the emergence of new norms, values, perceptions and practices that are widely shared across the societies of EU member states. Europeanisation however does not entail the homogenisation of European societies or cultures. In a nutshell, to ‘Europeanise’ is to adhere to some common basic rules and frameworks that, at the same time, permit some leeway for diversity.2 There is no doubt that Cyprus’ accession to the EU has broadened the normative horizons of Cypriot society. The transposition of the acquis communautaire in all relevant areas and domains resulted in a legal and technical Europeanisation. This alone, however, does not suffice for a cognitive transformation of Cypriot society. The way in which legal and technical Europeanisation squares with, or diverts from, cognitive Europeanisation is the subject of this particular investigation. Such an investigation, however, must take into account a basic socio-political dimension of Cyprus’ bid for European Union membership.

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Cyprus’ accession to the EU was governed by an instrumental logic.3 The Government of the Republic of Cyprus sought EU accession as a means of improving its negotiating position vis-à-vis Turkey. The public discourse concerning the country’s potential for EU membership was dominated by a perception that this would have a positive impact on the Cyprus problem. This perception was widely shared by the general public. Hence both the political elites and the society at large identified Cyprus’ accession to the EU with a political solution to the Cyprus problem. Failing that, the expectation was that Cyprus would enjoy at least increased leverage in future negotiations with Turkey and could strive for a different and more favourable settlement rather than that envisaged in the 2004 Annan Plan.4 It can thus be said that the country’s accession route was focused on a single issue. Although from a technical aspect Cyprus was successful in transposing the acquis into its national legal and regulatory framework in an effective manner, the practical implications of this transposition were neither communicated to the public, nor formed the basis of any public debate.5 For this reasons, it can be argued that, in the case of Cyprus, there was a cognitive deficit in the process of the country’s Europeanisation. The key question is whether this deficit persists. This cognitive deficit consists in a gap between normative and actual Europeanisation.6 In other words, this deficit is defined by the degree of divergence between the technical-legal harmonisation and the adaptation of social perceptions and habitual behaviour to the new milieu. It follows that the degree of adaptation of social perceptions and habitual behaviour is the yardstick against which socio-cultural adjustment must be measured. To what extent did Cypriot society’s perceptions and habits adapt to the new realities of the post-accession environment? Has Cypriot society become more tolerant? Have social inequalities and discrimination been addressed? Has the average Cypriot become more sensitive to issues concerning the environment? Cypriot society is characterised by a peculiar ambivalence: whereas at a technocratic level change can be smooth and swift, at a cognitive level change can prove very difficult. This was exactly the case in the country’s Europeanisation experience. While technocratic adaptation

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took place at an unprecedented speed and without requesting many significant derogations or experiencing serious delays,7 cognitive adaptation has been a ‘laggard’. As explained in previous works,8 the swift adaptation of the Cypriot legal and regulatory system to the provisions of the acquis can be accounted for by the instrumental rationale underlying Cyprus’ bid for EU membership (in other words, the potentially benign impact on the Cyprus problem), as well as by the country’s ‘goodness of fit’9 in a number of sectors. However, this technical harmonisation, which took place in the period preceding the country’s accession into the ranks of the Union, did not involve a cognitive dimension. Policy-makers were more concerned with the speed of technical harmonisation with the acquis rather than with effecting a grassroots change in society. This would arguably take a lot more time to materialise, as beyond its modern western outlook, Cypriot society has strong elements of conservativism. It is the aim of this chapter to examine the impact that EU accession has had in a range of social and societal sectors and to investigate changing attitudes and perceptions in these fields. More specifically, the areas selected for scrutiny here are, public health, gender equality, race equality and immigration, as well as public awareness and social attitudes towards the environment. By studying post-accession experience in these fields and juxtaposing legaltechnical and cognitive Europeanisation in these domains, we examine whether the new normative framework implemented in the country during the process of EU accession has empowered modernisers to initiate new policies and galvanise new perceptions. This analysis will shed light on whether the society of Cyprus has, in recent years, experienced a bridging of emerging post-accession gaps.

Post-Accession Expectations and Perceptions in Cypriot Society Cyprus joined the EU on 1 May 2004. At the time, a general climate of euphoria was created by elites and institutional actors, such as the Government, political parties and the media. The accession of the country to the EU was portrayed as the greatest achievement since 1960. This climate of euphoria, however, contradicted the ultimate political goal that was put forward by the same actors, namely the

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goal of settling the Cyprus problem prior to accession. Additionally, matters were further perplexed by the fact that many EU officials supported the UN Secretary-General’s plan for a comprehensive settlement of the Cyprus problem, which was overwhelmingly rejected by the Greek-Cypriot community on 24 April 2004. 10 Political elites and the media had already been promoting a different image of the EU. While they kept arguing that the terms of the political settlement of the Cyprus problem could still be renegotiated within the EU arena, EU accession was not just cast in terms of the Cyprus issue. Social factors also played an important part. In the run up to accession it was widely argued that the quality of life of the average Cypriot would be improved once the country’s citizens became ‘European citizens’. As a result, apart from its political dimension, EU participation has become almost synonymous with the idea of better social conditions.11 This is indeed the perception that is continuously being cultivated by elites in the minds of the people. For example, according to a former SecretaryGeneral of the House of Representatives of the Republic of Cyprus, ‘it is widely accepted among the public at large, that Cyprus’ accession to the EU constitutes the single most important event that took place since Cyprus gained its independence in 1960; the prevalent view has for years been that Cyprus’ accession to the EU would herald a new era of stability on the island, as well as offer its inhabitants a unique opportunity to prosper as members of the greater European family.’12 The widespread perception, therefore, was that the EU could offer the tools for initiating social change. In particular, marginalised groups felt that EU membership had the potential to provide them with a new arena from which to assume a better status. For a number of social and societal groups – and as far as the issues which affect them were concerned – Europeanisation became a motto for initiating change and creating new political space. Tolerance, multiculturalism, gender equality, higher health standards, consumer welfare, as well as environmental protection, are just some of the attributes that people have associated with EU membership. The European legal framework is, in other words, conceived as a source of legitimisation for promoting change in Cypriot society.

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The paradox here, however, is that the bulk of the technical-legal change in the country did not commence in the period following accession. Instead, it culminated with accession. Put simply, ‘Europeanisation’ did not begin the day Cyprus acceded to the ranks of the Union. It had already begun at least six years earlier, when, following the 1998 screening process, the Government of the Republic embarked upon the process of harmonisation of existing legislation with the EU acquis. In fact, during the whole period of the country’s accession negotiations, more than 80,000 pages of EU law in the 31 chapters of the acquis were transposed in the country’s legal system. However, the implementation of this acquis in the years leading up to accession was limited to the country’s institutionalbureaucratic level. This implementation did not actively involve the society at large. It is in this way that the gap identified in the introductory section above, and defined as a cognitive deficit, was created. The sectors reviewed in the following section give a panorama of existing gaps between technical-legal and cognitive Europeanisation and of initiatives to bridge them.

Technical Adaptation and Cognitive Change Public health Health standards in Cyprus compare favourably with the EU average.13 In 2000-2001 the average life expectancy at birth was 76.1 years for men and 81.0 years for women. In 2002, infant mortality was at 4.7 per 1000 births and the crude mortality rate was at 7.3 per 1000 population. The main causes of morbidity and mortality in Cyprus are cardiovascular diseases, cancer, diabetes, smoking and road accidents.14 In relation to the latter, it is worth noting that drink driving is particularly prevalent in the country, especially as the punishment for this offence is insufficient to act as a total deterrent. Both the popular practices of drink driving and of smoking reflect a broad-spectrum picture of a dominant sub-culture that conforms to the stereotype of a more laid-back Mediterranean outlook on life. It is this relaxed attitude of the average Cypriot that often leads to the marginalisation of health-related issues. The most adverse effect of this marginalisation is that most of these habits usually have an

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impact on other members of the society. The harmful effects of second-hand smoking, for example, are scientifically proven. In Cyprus, this issue has formed the basis of public discussions numerous times in the past. Intense debates with concrete results, however, had never been initiated until recently, when in the autumn of 2009, legislators, non-governmental organisations (NGOs) and affected interest groups embarked upon a discussion that led to the adoption of a law banning smoking in public places, which was effected in January 2010. But what was it that really led to this development and to a resulting mentality shift within Cypriot society in a relatively short period of time? In the recent Special Eurobarometer survey, published by the European Commission in May 2010, Cyprus ranks first in the daily consumption of cigarettes, with Cypriots smoking on average 21.7 cigarettes per day, compared to an EU average of 14 cigarettes per day.15 At the same time, the percentage of the smoking population over 15 in Cyprus stands at around one third (32 per cent) of the total population. Considering this ‘statistical reality’, which was always dominated by the perception that banning smoking in public places would prove impossible in Cyprus, a debate began in the House of Representatives in the autumn of 2009. The debate in fact started within the Parliamentary Committee on Legal and Judicial Issues while matters related to the problems surrounding the implementation of laws regulating the working hours of night clubs and the volume of music were being discussed in the presence of representatives from the police and the office of the Attorney General.16 It was in response to claims by the police that enforcement of such issues was almost impossible, that concerns by MPs were raised. The protest of some MPs was that, in view of the fact that the police could not enforce existing legislation concerning such establishments, how would the police cope with additional legal requirements within the framework of EU membership? An example raised concerned the publication, in June 2009, of a Commission Proposal for a Council Recommendation on smoke-free environments.17 Following this intense discussion, two proposals for legislation on the issue were subsequently submitted – one by the

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Cyprus Green Party and the other one by the main opposition party, Democratic Rally (DISY). Eventually, a law banning smoking in public places was adopted by the House of Representatives, which came into effect on 1 January 2010. According to the Cyprus Green Party’s MP, Yiorgos Perdikis, the main pressure for adopting this new legislation came from antismoking NGOs, as well as by a more concerted attempt to raise awareness on health-related issues and reduce smoking-related deaths (mainly due to various forms of cancer).18 ‘In a country where about 70 per cent [sic] of the population are non-smokers’, he said, ‘the social pressure for banning this habit in public places should be enormous.’ This was in fact a rare occasion in which legislators interacted with NGOs, interest groups and civil society, engaging in a public debate on a piece of legislation that went against deeply embedded social norms of a dominant sub-culture in Cyprus. The new legislation actually aims at promoting a new norm in the society: respect for the right of non-smokers to enjoy smoke-free environments in public places. The success or failure of such an initiative could ultimately indicate whether there is ground for cognitive adaptation in Cyprus. The public debate between civil society supporters of banning smoking in public places and owners of night clubs, pubs, restaurants, coffee shops and other such establishments was intense in the months preceding January 2010 when the ban was effected. Many had described the newly enforced no-smoking ban as ‘racist’, discriminating against smokers, and there was a huge wave of protest against the new law by establishment owners who feared that the law would have negative financial effects upon them. In other words, the Commission Proposal sparked a contingency that led to an extended public debate. The debate mainly centred around the rights of smokers and non-smokers. Many establishment owners still criticise the newly enforced ban, complaining that, especially during the winter and spring months, they have had fewer customers than in previous years. In many establishments non-smokers are requested to sit inside – even in the summer months – so as to reserve the outside seats for smokers. Interestingly, signs at a famous pub in Nicosia – whose owner has

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even started a petition against the new ban – humorously read, ‘Smoking Area Only. Non-Smokers Will be Asked to Leave.’ An empty bar miniature poster also states: ‘Seat occupied – just gone for a smoke.’ Even though both signs are displayed in a comical and sarcastic manner, the fact of the matter remains, that the smoking ban has indeed caused a huge impact across Cypriot society. A differentiation needs to be made, however, between the recent initiative to ban smoking in public places and an overall effort by the Government to create a non-smoking society. Such a large-scale effort has not yet been undertaken by authorities. At the end of June 2010 – almost six months after the ban was put into effect – the Government made it clear that it did not intend to raise cigarette duties in order to meet the EU average. Such an act would be widely unpopular. Even though the cost of tobacco products in Cyprus is 12 per cent below the EU average according to Eurostat,19 the Government has no intention to increase this cost to consumers. This clearly conveys once again the potency of a sub-culture that puts direct and indirect pressure on policy-makers. It is interesting that the latter do not attempt to raise cigarette duties, even at a time when the Cypriot economy is plagued by huge public deficits and the country statistically occupies the highest place in the EU when it comes to heavy smoking. Despite all this, however, the new legislation is being quite effectively implemented so far, albeit with some exceptions. According to the police spokesman, Michalis Katsounotos, by May 2010, 661 violations had been reported.20 Out of these 661 people, 292 were establishment owners and 369 were customers.21 Both MPs and NGOs who supported the legislation, have expressed satisfaction at the way in which society has responded to this new measure.22 Indeed, these figures would seem to be proof that a change has taken place within Cypriot society. This social transformation embraces a shift in mentality that, in turn, adds a significant cognitive dimension to this change. Therefore it seems as if Cypriot society is currently experiencing a domain-specific adjustment. The bridging of a legal-cognitive gap in an area that still remains strongly rooted in the dominant, yet weakening, sub-culture of indifference with regard to the effects of

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second-hand smoking is an interesting development. This domainspecific cognitive shift does not however engender a grassroots transformation of other powerful sub-cultures – such as drunkdriving, violation of speed limits and non-conformism to the road code, traffic law and safe driving practices. In other words, despite the changes that can be seen in terms of attitudes to smoking, strong elements of anti-conformism persist in Cypriot society. Gender equality The issue of gender equality constitutes yet another area for analysing societal norms and attitudes in Cyprus and identifying cognitive gaps. The Cypriot family is traditionally conservative and patriarchical, encompassing some strongly embedded role-identities. These roleidentities – namely the leading and superior role of men and the inferior role of women – are conventionally understood as being externally given and are therefore viewed as being unproblematic. Nevertheless, it should be noted that this long-established social structure leads to a gap between male and female societal roles and career opportunities in Cyprus. It must be acknowledged that there is a long history behind the efforts to effect change in this domain. Since the establishment of the Cyprus Republic there have been attempts to improve the status of women in society.23 Over the years, the promotion of gender equality has centred around a number of areas, such as the reduction of the risk of poverty among the female population, the encouragement of women’s representation in economic and political decision-making positions, the better division of family responsibilities and the reconciliation of work and family life for women, as well as the battling of domestic violence, which is most of the times directed against women and girls, and the problem of human trafficking that, once again, usually affects women. These efforts have been enhanced over the years by the ratification of a number of conventions and international agreements,24 and the adoption of legislation, as well as by public campaigns. In addition, numerous women’s organisations and movements (e.g. political parties’ women’s organisations) have been established. All these initiatives have raised awareness on the issue of gender equality and increased female participation in

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decision-making across numerous private and public institutions. One of the most prominent areas where intensive efforts to address gender inequalities have over the years been undertaken in the country, has been the labour sector. Prior to the opening of accession negotiations between Cyprus and the EU the regulatory framework was considered to be generally satisfactory.25 During the screening period, however, some substantial gaps between the national regulatory framework on these issues and the EU acquis were identified. Cyprus therefore had to harmonise its regulatory framework with a large body of European legislation on the issue of equality between men and women. This mainly concerned various Treaty provisions and Directives regarding access to employment, self-employment, equal pay, maternity protection, parental leave, social security and occupational social security, as well as the burden of proof in discrimination cases. As a result, rigorous effort to increase the regulatory framework in this area had to be undertaken in order to meet the provisions of the acquis.26 In fact, in the period 2002-03, in the framework of the country’s harmonisation process, six new pieces of legislation were adopted in Cyprus in relation to these issues.27 This encompassed a swift adaptation process which served the purpose of a fast accession to the EU. The effective transposition of this new legal framework has been explicitly recognised by top officials of the National Machinery for Women’s Rights, who believe that during the harmonisation period the legislative gaps that existed in the country were indeed successfully and swiftly addressed.28 Even though it is worth highlighting that this is another area where no social involvement took place in the period preceding accession, today – a number of years after Cyprus joined the European Union – there seems to be a better understanding of the significance of this issue. There generally seems to be increased awareness across Cypriot society regarding issues of gender equality. The National Machinery for Women’s Rights, which was originally set up in 1994, but whoe role was considerably enhanced in the post-accession period, plays an instrumental role in bringing together organisations and movements with very specific aims on issues concerning various aspects of gender equality.29 Its aims are the elimination of any kind of legal

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discrimination against women and the promotion of real and on-theground gender equality. This is done in a number of ways. For example, the Council for Women’s Rights is an institution of the National Machinery that consists of 17 women’s movements and NGOs.30 In addition, the National Machinery coordinates a National Committee for Women’s Rights that consists of the members of the aforementioned Council, the Machinery’s officials, as well as another 60 NGOs. The National Machinery is also involved with a number of EU funded programmes and provides funds for research on issues related to gender equality. It regularly advises the Council of Ministers on policies, programmes and laws aimed at promoting women’s rights. Finally, it is also involved in the coordination and evaluation of the implementation of the various laws and programmes and conducts frequent studies on their effectiveness. According to Maro Varnavidou, a high Official of the National Machinery, ‘public awareness and focused research on matters of gender equality have been enhanced in Cyprus…a number of studies reveal some areas of hidden discrimination; although there is a strong regulatory and legal framework, there is an evident gap between this framework and its actual implementation.’31 An example of this is the very low degree of female participation in politics and in decision making bodies.32 Politics in Cyprus still form part of a male-centric arena. In fact, economic, social and political power in Cyprus is generally concentrated in the hands of men. Women are almost absent from political offices, although the numbers of women entering into these posts has increased in recent years.33 Nevertheless, it is evident that women are most usually engaged in jobs of lesser status compared to men and remuneration is often at lower levels. In fact, a comparison of the monthly earnings of male and female employees reveals a significant gap, which was estimated to be at 19.3 per cent in the first quarter of 2010.34 In spite of a considerable enhancement of the legal and regulatory base in Cyprus, the evidence and examples cited above form proof that areas of hidden discrimination still exist within Cypriot society on matters related to gender equality. Other elements of hidden discrimination in this area can be seen in the difficulties that many women face in reconciling professional and family life. The increased

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rate of entry of women into the labour market has not signalled an end to the deeply-enhanced role-identities rooted in the society. On the contrary, for many working women this has only meant a double burden, as they had to deal both with their responsibilities inside the house as well as with their professional careers.35 According once again to Mrs Varnavidou, a survey conducted in the past year on behalf of the National Machinery for Women’s Rights revealed that there is a very strong model of family structure in Cyprus, which assigns a given role to women. ‘The house-caring economy is in fact almost totally taken up by women, while their career comes secondary most of the times.’ ‘This inequality,’ she continued, ‘persists in spite of the much higher education levels that most of the women now attain.’ In retrospect, it can be seen that, in relations to the issue of gender, EU membership has indeed enhanced the technical aspect of this area and assisted in the raising of awareness in the society. Moreover, increased participation by women in many fields, especially in the labour market, has also been promoted, while a national mechanism for enhancing the place of women in society – namely the National Machinery for Women’s Rights – has also contributed to improvements in this field. Yet, the strongly embedded role identities of Cypriot society persist. Hidden discrimination cannot be evaded by legislation alone. A total grassroots cognitive shift should also more rigorously form part of this social transformation. Immigration and racial equality As well as the question of gender equality, there are many other areas in Cypriot society where discrimination is prevalent. These areas are marked by considerable gaps between the country’s regulatory-legal provisions and societal perceptions. Examples include attitudes towards homosexuals or the disabled. This section, however, focuses on two other very important areas where such gaps can be identified. These are race equality and attitudes towards foreigners in general, as well as the more specific case of perceptions towards immigrants and asylum seekers. This section will examine how or whether such attitudes prevail across Cypriot society and how or whether they have been affected by EU membership.

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A number of offences relating to combating racism and intolerance have been created over the years. These offences include the incitement to racial hatred, participation in organisations promoting racial discrimination, and the public expression of racially insulting ideas. According to a study conducted by the European Network Against Racism (ENAR), however, these provisions have not been used so far.36 Moreover, according to the same study, ‘…there is no provision penalising common offences – with a racist nature – as specific offences, or explicitly enabling the racist motives of the offender to be taken into consideration as an aggravating factor in sentencing. Racism as such is not penalised.’ In January 2004 – about five months prior to the country’s accession – the EU Directive on race equality was enshrined in the Cypriot legal system.37 The Law explicitly criminalised offences motivated by racial discrimination. The only measure that was additionally adopted in relation to this issue in view of accession was the enhancement of the provision concerning the right of the Commissioner of Administration (Ombudsman) to investigate complaints related to racial offences. More explicitly, based on the harmonised legislation, the Ombudsman can now set into motion an out-of-court complaint investigation mechanism, while s/he can also conduct independent investigations and publish reports in relation to racial discrimination offences. The Ombudsman can act, in other words, as an ‘extra judicial authority’ that has the power to examine complaints for racially motivated discrimination.38 It is worth noting, however, that even though the Law also provides for the adoption of positive action, no such actions have been taken by the state up to now. Moreover, even though the EU Directive contains a provision for independent financial assistance and state aid to victims of racial discrimination, no such assistance is provided and NGOs are not financed by the state in order to undertake such a task.39 In 2007, a new Strategy for the Employment of Foreign Workers was adopted by the Council of Ministers. The aim of the Strategy is to secure equal treatment between local and foreign workers as regards terms and conditions of employment. Nevertheless, it is openly acknowledged that adequately protecting migrant workers is difficult in the Cypriot labour market. According to the Minister of

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Labour and Social Insurance, Sotiroula Charalambous, ‘as in many European countries, migrant workers from third countries constitute a major challenge.’40 This problem is particularly significant if one considers the number of documented migrant workers residing in Cyprus, which is currently estimated to be at 70,000.41 This translates into around 10 per cent of the country’s population. Moreover, the number of asylum seekers in the country has today reached extremely high levels. This mainly owes to the uncontrolled movement of illegal immigrants from the north of the island, which is not under the effective control of the Republic of Cyprus.42 As for legislation, the relevant Community acquis on migration, which has been transposed in the Cypriot legal system prior to accession to the EU, calls for the right of migrants to family reunification, and the granting of long-term resident status for third country nationals who have legally resided for five years in the country.43 However, the Directive on illegal immigration and return,44 which was adopted by the European Parliament and Council of the EU on 16 December 2008, has not yet (at the time of writing this chapter) been adopted in Cyprus.45 Nevertheless, even in spite of some improvements to the Cypriot legal framework on matters of race equality and immigration following the country’s harmonisation with the EU acquis, hidden elements of discrimination persist. According to ENAR, ‘the huge number of migrants appealing for help to NGOs, reports in the media, the Ombudsman, ECRI (Council of Europe), RAX-EN (EU Monitoring Centre on Racism and Xenophobia) etc., indicate growing discrimination and racism.’ ‘Migrants,’ it emphasised, ’are victims of institutional racism, stereotyping and stigmatisation and are used as scapegoats for many social and economic problems.’46 These findings clearly reveal once again the extent of the large gap between the country’s legal framework and perceptions prevalent in Cypriot society. In fact, one of the main challenges facing Cyprus today in relation to this area is, ‘to acknowledge the failure of the present system of migration, accept that it is a multicultural society and develop policies and practices to promote social integration, enrich society and create conditions of equality for all its residents, irrespective of national, ethnic, racial or other origin.’47

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Public Awareness and Societal Attitudes towards the Environment In all the areas examined above, NGOs appear to play an important part in bridging the gap between the legal aspects of the reform process and society’s willingness to change its behaviour. Environmental policy constitutes yet another important sector where NGO involvement is pivotal. In fact, a study of how public awareness is enhanced and societal attitudes are formed and transformed in this policy domain, highlights the overriding mediating role that both NGOs and civil society have in instigating social adjustment.48 Even though a considerable legal framework existed in Cyprus prior to EU accession, a significant amount of new legislation was transposed in the country during the process of harmonisation. In fact, Chapter 22 of the Community acquis (Environment) comprised over 200 legal acts. These covered horizontal legislation, water and air pollution, management of waste and chemicals, biotechnology, nature protection, industrial pollution and risk management, noise, and radiation protection.49 Even though Cyprus effectively harmonised with most of these EU requirements prior to accession, thus bridging the legislative gaps that existed between national and EU regulatory standards, what remained to be seen was how the country would perform when it came to the actual implementation of this acquis. What is interesting to examine, in other words, is how change has been effected on the ground since the country’s entry to the Union and whether this massive bulk of acquis brought about any cognitive adjustment. Cypriots do not, generally speaking, have a high sense of environmental social and corporate responsibility compared with other EU members. For example, the 2009 Flash Eurobarometer, which recorded citizens’ attitudes towards sustainable development and eco-labelling,50 ranked Cyprus in last position (together with Lithuania and Bulgaria) on the issue of awareness regarding the impact of various products on the environment.51 Cyprus also ranked last in terms of the consumption of energy-efficient products.52 Unlike the countries of Northern Europe, Cyprus does not have a good record regarding environmental consciousness in general. While it is not possible to examine this topic in depth as environmental

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consciousness in fact embraces a wide range of issues, it is possible to illustrate this point by focusing on one particular issue: recycling. This is an area where there has been increased mobilisation recorded in the post-accession period. Cyprus has been a latecomer to the ‘recycling culture’. The idea of environmental consciousness among the citizens of the country is relatively premature. In fact, it is only after accession that the problem of waste management started to be vigorously addressed, as it was an obligation under the EU’s relevant legal framework. Recycling in Cyprus was first seriously pursued as a concerted policy in 2003 and it is still in its infancy. It is not coincidental that the country ranks very low on this matter in comparison with other EU members.53 According to Theodoros Vrikkis, a high official of the Strovolos municipal office (the biggest municipality of Nicosia), Cyprus is in one of the worst positions in Europe in terms of waste production.54 It is estimated, he notes, that more than 500 kg of waste is produced per citizen every year. The source of the problem lies in the fact that recycling seriously began to be pursued as a policy in Cyprus because of the country’s relevant membership obligation on this issue. It was not initiated, in other words, out of a general realisation of the environmental consequences of the lack of a policy on waste management, but rather as a result of the requirements of the country’s EU membership. In the past few years, however, a positive response has emerged within society on the question of recycling. Apart from some government-related initiatives, and activities organised by the Cyprus Green Party, the biggest role in raising public awareness is actually played by NGOs.55 In fact, NGOs, in cooperation with municipalities, have initiated a number of activities related to recycling.56 This active involvement of both public and private agents in waste management initiatives has helped to create an emerging norm in Cypriot society regarding the habit of recycling, which Cypriots seem ever more willing to embrace. This in turn points to a maturing society on this field. It is worth noting that increased activity can also be observed in a number of other environmental sectors, such as water management, air pollution, management of chemicals and industrial pollution.

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Moreover, the establishment of the Office of Environment Commissioner, in March 2008, also marked a considerable development in this field. The Commissioner himself, Charalambos Theopemptou, is very active and has given a new impetus to environment-related initiatives.57 Nevertheless, according to the Environment Commissioner, in spite of a marked progress in a number of environmental fields, and the development of environmental awareness among many members of the society, there is still a great deal to be done in relation to the implementation of some of the new legislation on environmental issues.58 In addition, as statistical data show, Cyprus has a rather long way to go before meeting the high environmental standards of its Northern European counterparts.59 The fact that Cypriot society is maturing regarding recycling does not necessarily point towards an attitude shift in other environment-related areas. A lot still needs to be done in order to construct a true ‘environmental culture’ across Cypriot society.

Conclusion This chapter has identified areas of cognitive deficit in relation to Cypriot society’s post-accession experience. It was demonstrated that the technical-legal harmonisation of the country’s regulatory framework with the EU acquis does not suffice to create a ‘Europeanised society’. The analysis in the domains examined in this chapter revealed a number of gaps between technical-legal and cognitive adjustment. New legislation alone has no direct impact on society. The impact of EU directives is in fact mediated by national agents, such as NGOs, institutions, national machineries and civil society. It was thus shown that, in the areas under examination, the activities of these mediating agents are vital in the process of cultivating new norms, attitudes and perceptions. It must be noted that Cypriot society – like any other society – is not a homogeneous entity. It is a highly stratified and diverse unit. A number of sub-cultures may in fact exist and prevail in many different areas and this is what is sometimes attracts particular media attention. This chapter, however, did not seek to draw any generalisations out of sub-cultural actions or emerging trends.

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Rather, it sought to demonstrate the complexity of a process that leads to cognitive adaptation – both in a sector specific-way, as well as cross-sectorally – in a highly diversified society that is made up of various groups and social strata. It must thus be expected that the impact of EU pressures in different social and societal fields will vary across the different layers of the society. Moreover, as a final word of caution, it should be emphasised that beyond Europeanisation, Cypriot society – like other societies – is also exposed to copious other influences that may produce social change; for instance, globalisation. In this sense, EU pressures and influences must be considered as just one, albeit dominant, force inducing social and societal change in Cyprus. Endnotes 1. Our discussion is confined to the areas under the control of the Government of the Republic of Cyprus (as these areas are specified in Protocol 10 of Cyprus’ Accession Treaty). 2. For a more detailed analysis of ‘Europeanisation’, see Simon J. Bulmer and Claudio M. Radaelli, ‘The Europeanisation of National Policy?’, Queen’s Papers on Europeanisation, School of Politics, International Studies and Philosophy (Queens University of Belfast, 2004); Kevin Featherstone, and Claudio M. Radaelli, (eds.), The Politics of Europeanization. (Oxford: Oxford University Press, 2003); C.M. Radaelli, ‘Wither Europeanisation? Concept Stretching and Substantive Change’, paper prepared for the International Workshop ‘Europeanisation: Concept and Reality’, Bradford University, 5-6 May 2000; Claudio. M. Radaelli, ‘Policy Transfer in the European Union: Institutional Isomorphism as a Source of Legitimacy’, Governance, Vol. 13, No. 1, 2000, pp. 25-43. 3. This is a concept we discussed in previous works; Christina Ioannou and George Kentas, ‘The Mediating Impact of Corporatism on the Europeanisation of the Cypriot Labour Sector’, The Cyprus Review, Volume 21, Number 2, 2009, pp.115-135; Christina Ioannou and George Kentas, ‘Internalising EU pressures in Cyprus: The Cypriot Corporatist Tradition and Political Sophistication amidst EU Adaptation Forces’, Paper presented at the 5th ECPR General Conference, Potsdam, Germany, 10-12 September 2009. 4. Hubert Faustmann examines this issue in Chapter 7 of this volume. 5. Cypriot legislators overtly acknowledge that they ratified a big bulk of EU directives without careful examination of their provisions.

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6. Our reference to normative Europeanisation pertains to the potential adaptation of Cypriot society’s behavioural habits to legal standards and norms which are widely shared and adhered to by the EU member states’ societies. It is widely acknowledged that in the pre-accession period, Cypriot society had a socio-cultural capital similar to western European societies. This alone, however, does not suffice for a swift adaptation to EU social and cultural standards, which are pertinent to the technical/legal Europeanisation of the country’s framework. Actual Europeanisation, on the other hand, refers to the degree of behavioural and perceptual adaptation to the technical/legal requirements of the EU. 7. For a more detailed discussion on this, see Christina Ioannou, ‘The Europeanisation of Cypriot Social Policy: An Apolitical Europeanisation Process’, Journal of Modern Hellenism, Winter 2008-9 (25-6); Ioannou and Kentas, ‘The Mediating Impact of Corporatism on the Europeanisation of the Cypriot Labour Sector’, 2009. 8. Ibid. 9. For a detailed analysis of the ‘goodness of fit’ logic, see Tanja A. Börzel, and T. Risse, ‘Conceptualizing the Domestic Impact of Europe’ in Kevin Featherstone, and C.M. Radaelli, (eds.), The Politics of Europeanization. (Oxford: Oxford University Press, 2003), pp. 57-80. 10. For a discussion on this issue, see for example the Special Edition of The Cyprus Review, Volume 16, Number 2, Fall 2004. 11. It must be clarified, however, that the positive image of the EU is from time to time overshadowed by negative social developments that are attributed to the EU. For example, the recent economic crisis across EU member states led to the adoption of a new tax policy by the Cypriot government. In the spring of 2010 the prices of petroleum products were increased due to the imposition of new taxes. 12. Christophoros Christophorou, ‘Preface’, in Cconstantin Stefanou (editor), Cyprus and the EU: The Road to Accession (Aldershot: Ashgate, 2005), xvii-xviii. 13. World Health Organisation (Regional Office for Europe), ‘Statistical Survey on Basic Health Indicators of EU Countries’, 2002, Copenhagen, Denmark. 14. It is worth noting that cardiovascular disease is in fact the most common cause of death in Cyprus, accounting for around 40 per cent. 15. European Commission, ‘Tobacco’, Special Eurobarometer 332, May 2010. 16. The details of this meeting have been drawn on interviews with MPs who were present at the specific meeting. 17. Proposal by the European Commission, COM (2009) 328 final, of 30 June 2009, for a Council Recommendation on smoke-free

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18. 19. 20. 21. 22. 23.

24.

25.

26. 27.

AN ISLAND IN EUROPE environments. There is also a previous Council Recommendation, 2003/54/EC, of 2 December 2002, on the prevention of smoking and on initiatives to improve tobacco control [Official Journal L22 of 25.01.2003]. It is worth noting that the Commission Proposal does not constitute a binding requirement for member states of the EU. Interview with Y. Perdikis, June 2010. Eurostat, Comparison of price levels in the EU27 in 2009, 2010. ‘Police seek harsher smoking penalties’, Cyprus Mail, 22 May 2010. It is also worth noting that, out of the 661 reported cases, 538 were in Limassol. Interviews with MPs, with officials from The Cyprus Association of Cancer Patients and Friends, and with officials from the Cyprus Youth Council, June 2010. The 1960 Constitution of the Republic of Cyprus provided for the equality of all citizens before the law, the administration and justice, and prohibited inter alia, gender-based discrimination. It ought to be noted, however, that this attempt to improve the status of women in Cypriot society has not been a very consistent one. Interestingly, the first female parliamentarian joined parliament in the 1970s and, arguably, massive increase took place only since the 1980s. International agreements and conventions were ratified over the years and endorsed in the legislation of the Republic. Most notable among these were the European Convention against human rights abuses and in support of the basic freedoms (Law 39/62), and the International Convention by the United Nations against every form of discrimination against women (Law 78/85). The Government of the Republic of Cyprus had over the years ratified a number of ILO Conventions. Most notably, these included ILO Convention 100/1951 for equal pay between men and women for work of equal value (Law 213/87), and ILO Convention 111/1958 against discrimination in employment (Law 3/68). Further to these ILO Conventions, which signified in Cyprus the de jure equality between men and women, some national legislation in the country also covered aspects of social security, maternity protection, protection of pregnant women and equal pay. For a more detailed analysis on this, see Ioannou, ‘The Europeanisation of Cypriot Social Policy’, Winter 2008-9. These included Law 177(I)/2002 on ‘equal pay between men and women for the same work or for work to which equal value is attributed’, Law 205(I)/2002 on ‘equal treatment for men and women in employment and vocational training’, Law 64(I)/2002 on the ‘protection of maternity’, Law 69(I)/2002 on ‘parental leave and leave on grounds of force majeure’, Law 51(I)/2001 on ‘equal treatment for

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28. 29. 30. 31. 32.

33.

34. 35.

36. 37.

38. 39.

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men and women in matters of social security’ and Law 133(I)/2002 on ‘equal treatment for men and women in occupational social security schemes.’ Interviews with officials from the National Machinery for Women’s Rights, June 2010. The National Machinery for Women’s Rights was set up by a decision of the Council of Ministers. It is a system of four bodies, which comes under the Minister of Justice and Public Order. Two of these organisations are Turkish-Cypriot NGOs, which joined the Machinery on 28 July 2004. Interview with Mrs M. Varnavidou, official of the National Machinery for Women’s Rights, June 2010. It is worth mentioning that Erato Kozakou Markoulli was the only woman involved in the fully fledged negotiations until she was appointed minister. She was the only woman who stayed on after the preparatory phase. As far as the Turkish Cypriot community is concerned, there are a few women involved, but most of them are notetakers. In fact, out of the 25 independent officials of the Republic of Cyprus (including common utility organisations’ officials), only four are women: the Auditory General, the Commissioner for Administration, the Commissioner for Personal Data Protection, and the President of the Cyprus Bioethics Committee. Statistical Service of the Republic of Cyprus, Social Insurance Register, 2010. It is worth noting that part-time work is also at very low levels in Cyprus, in comparison to other EU countries, which implies few opportunities for working mothers. In fact, part-time employment as a share of total employment (within the age group of 15-64 years) was estimated at 7.4 per cent in 2009 (Eurostat, Labour Force Survey, 2010). ENAR, ‘Responding to Racism in Cyprus’, Brussels 2009. Directive 2000/43/EC of 29 June 2000, implementing the principle of equal treatment between persons irrespective of racial or ethnic origin. A Directive which relates to cases of discrimination in matters of employment has also been transposed by the Government. This is specifically, Directive 2000/78/EC of 27 November 2000, establishing a general framework for equal treatment in employment and occupation. ENAR, ‘Responding to Racism in Cyprus’, Brussels 2009. According to ENAR, no legal aid is provided in Cyprus with regard to administrative and labour law. When it comes to other spheres, legal aid is limited to certain categories of human rights violation, including

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40.

41. 42. 43.

44.

45. 46. 47. 48.

49. 50. 51.

52.

AN ISLAND IN EUROPE the Convention for the Elimination of Racial Discrimination and Protocol 12 of the European Convention for Human Rights. According to the same study, as far as cases that rest on the basis of the Race Equality Directive are concerned, these are not covered by legal aid. This deprives NGOs and victims of racial discrimination of the power to pursue their rights before the courts. ENAR, ‘Responding to Racism in Cyprus’, Brussels 2009. S. Charalambous, ‘Policies for Social Cohesion and Well-being for all – a Vision for the Future’, Speech given at the Council of Europe Conference of Ministers responsible for Social Cohesion, Moscow, 2627 February 2009. ENAR, ‘Responding to Racism in Cyprus’, Brussels 2009. Ibid. The acquis in this area comprises Directive 2003/86/EC of 22 September 2003 on the right to family reunification, and Directive 2003/109/EC of 25 November 2003 on a long-term resident status for third country nationals who have legally resided for five years in the territory of a Member State. As far foreign students are concerned, the acquis contains Directive 2004/114 of 13 December 2004 on the conditions of admission of third-country nationals for the purposes of studies, pupil exchange, unremunerated training or voluntary service. This concerns Directive 2008/115/EC on common standards and procedures in Member States for returning illegally staying thirdcountry nationals, as published in the Official Journal (L 348 of 24.12.2008). The transposition deadline for the Member States is 24.10.2010. The transposition deadline given to the Member States is 24.10.2010. ENAR, ‘Responding to Racism in Cyprus’, Brussels 2009. Ibid. The creation of environmental and ecological movements in Cyprus dates back to the 1980s. In 1988, the Federation of Environmental and Ecological Organisations was established. Today, this Federation enjoys 17 NGO-members. European Commission, ‘Comprehensive Monitoring Report on Cyprus's Preparations for Membership’, November 2003. European Commission, ‘Europeans’ Attitudes towards the Issue of Sustainable Consumption and Production’, Flash Eurobarometer, April 2009. More specifically, when asked whether upon buying or using products citizens are fully aware of or know about the most significant impacts of these products on the environment, around 60% of respondents in Cyprus said that they knew little or nothing about such impacts. More specifically, when citizens were asked how often they took

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53. 54. 55. 56.

57. 58. 59.

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products’ energy-efficiency into consideration (both electricity and fuel), the percentage for Cyprus was 59 per cent. This was the lowest percentage recorded. The highest was recorded in Germany (85 per cent). European Commission, ‘Europeans’ Attitudes towards the Issue of Sustainable Consumption and Production’, Flash Eurobarometer, April 2009. Young Reporters, ‘Recycling in Cyprus’, (last accessed 6 May 2010). One of the most prominent NGOs in this field is Green Dot Public Co Ltd. These activities include the collection and management of waste, by breaking it up into three different categories (paper, glass and PMD) and arranging for their collection on different week days, and the installation of special waste bins in key positions in the municipalities. For more see: Interview with C. Theopemptou, May 2010. European Commission, ‘Europeans’ Attitudes towards the Issue of Sustainable Consumption and Production’, Flash Eurobarometer, April 2009.

5 MEMBERSHIP AND FOREIGN POLICY James Ker-Lindsay

As was the case across a range of policy areas, in pursuing membership of the European Union Cyprus was required to harmonise its foreign policy. The terms for this were laid down in the chapter of the acquis communautaire on ‘Foreign Security and Defence Policy’, which covered the Common Foreign and Security Policy (CFSP) and the European Security and Defence Policy (ESDP). This meant that Cyprus was, ‘required to progressively align with EU statements, and to apply sanctions and restrictive measures when and where required.’1 Outwardly, none of this proved to be unduly difficult to achieve. In a summary of overall efforts to harmonise Cypriot laws and policies prior to accession, the EU Co-ordination Office noted that, in terms of foreign and security policy, ‘no problems are foreseen in accepting the acquis and no transitional period or derogation to the acquis is requested.’2 Indeed, on the key foreign policy question – the division of the island – accession to the European Union was seen to be particularly advantageous by the Greek Cypriot leadership. The EU was, legally and officially at least, entirely on the side of the Cypriot Government; even if, as seen in Chapter 2, Cyprus did come into conflict with members of the EU and certain institutions on the question of actual EU policy towards the Turkish Cypriots. Given the stand that Cyprus had joined as a united entity and that the TRNC was illegal under Security Council resolutions, Nicosia’s view was that Cyprus’ position would in fact be significantly strengthened by membership. No country would dare to recognise the self-proclaimed Turkish Cypriot

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state and thus incur possible sanctions from the Union. This view would seem to be correct. However, since May 2004, and leaving aside the vexed question of EU-Turkey relations, the Cyprus issue has on the whole played very little role in EU external relations with the wider world – albeit with one notable exception. An attempt by the Turkish Government to include a Turkish Cypriot delegation in a high-profile and extremely symbolic summit between the EU and the Organisation of the Islamic Conference (OIC), which was due to be held in Istanbul in the autumn of 2004, resulted in the cancellation of the meeting.3 Meanwhile, in other areas, there have been far more pronounced changes. Even though it was claimed that adhering to CFSP and ESDP was not problematic, in reality EU accession did in fact necessitate a profound change in Cypriot foreign policy. Specifically, Cyprus had to abandon its longstanding adherence to the principle of non-alignment and thus leave the Non-Aligned Movement (NAM). This was a major step for Cyprus, which had been one of the founders of the Movement.4 In the years that followed, membership served the Greek Cypriots well. For example, in 1964, it ensured that a NATO-based peacekeeping force was not established on the island following the first outbreak of inter-communal violence.5 More recently, the NAM, which includes many Muslim states amongst its members, had played a vital part in Greek Cypriot efforts to prevent the recognition of the ‘Turkish Republic of Northern Cyprus’. Therefore, while Cyprus was able to retain a status as a Special Observer, and promised to act as a bridge between the EU and the NAM, the decision to leave the NAM in order to join the EU nevertheless marked a major step. But as with so much else, this decision faced little if any opposition internally. As the Foreign Ministry made clear, EU membership was the island’s, ‘prime foreign policy objective’.6 Despite the requirement to leave the Non-Aligned Movement, Cyprus has nevertheless maintained its clear distance from NATO. While membership of NATO is not a requirement for EU membership, most EU members are part of the alliance and Cyprus and Malta were the only two entrants in 2004 that were not members of the organisation.7 Notably, even those EU members that officially

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maintained a policy of neutrality in their external relations had opted to join Partnership for Peace (PfP), a programme designed to promote co-operation between NATO and third countries.8 In contrast, Cyprus chose not to do so. In part, this reflected the longstanding mistrust of NATO, which was long held to be inherently pro-Turkish. However, this position is now being increasingly questioned by parties across the political spectrum, such as DISY, the main opposition party, as well as DIKO and EDEK – all of which favour PfP membership.9 The exception is AKEL, which refuses to countenance any move that would bring Cyprus closer to an organisation it fundamentally mistrusts.10 But even if Nicosia were to change its mind, any decision to move closer to NATO would also require Turkish acceptance. This is unlikely for as long as the Cyprus Issue continues. Indeed, Turkey’s opposition to possible Cypriot participation in EU peacekeeping missions held up an important agreement – Berlin Plus – that allowed the EU to draw on NATO assets.11 Despite this restriction on co-operation in missions that require a substantive NATO contribution, Cyprus has in fact played a part in a number of ESDP missions in Congo, Darfur, BosniaHerzegovina and the Former Yugoslav Republic of Macedonia (FYROM).12 As for foreign policy more generally, since joining the EU Cyprus has, for the most part, accepted the will of the majority on most major foreign policy issues that have confronted the Union. In part, this is a reflection of its small size. It cannot be expected to formulate its own positions on many issues arising in South America, Africa or Asia. Indeed, even medium and large members often have problems doing so.13 Of course, this is not to say that it is ignorant or indifferent to these parts of the world. In certain cases, such as opening up EU relations with Cuba, it does take a clear stand.14 At the same time, Nicosia’s decision to align with its partners appears also to be designed to ensure that where possible relations with other member states are not unnecessarily disturbed. No one in the Cypriot Government wishes to see relations with the island’s partners put under undue or unnecessary strain. However, there is one major issue where Cyprus has taken a stance that runs contrary to the policy of the overwhelming majority of its

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partners: Kosovo. While most of the EU decided to recognise Kosovo following its unilateral declaration of independence (UDI), in February 2008, Cyprus was one of five countries – the others being Greece, Romania, Slovakia and Spain – that have resolutely refused to accept the new state of affairs in the disputed territory.15 Although the states supporting independence have claimed that Kosovo represents a unique case and cannot be a precedent for any other conflicts, Nicosia argues that the declaration of independence represents a violation of international law and rejects it as a, ‘matter of principle’. Of course, underlying this position is the view that Kosovo’s unilateral secession from Serbia could give strength to Turkish Cypriot attempts to gain recognition of the TRNC. Despite this deep opposition to independence, and after some cajoling, Cyprus nevertheless agreed to support the creation of the post-UDI European Union law and order mission (EULEX) to Kosovo.16

The relationship with EU partners In addition to the need to ensure that its broader foreign policy goals and statements are aligned with that of the other EU member states, EU membership has also had a significant effect on the way that Cyprus conducts its bilateral relationships. This is seen as much in terms of its relationships with fellow EU members as it is with third countries. Indeed, one can see major changes in the way in which Cyprus interacts with states with which it has long standing ties. The most prominent example is Greece. No one would doubt for a moment that the relationship between Cyprus and Greece is exceptionally strong. Quite apart from the shared heritage of language and culture that exists, since the island’s independence in 1960 the two countries have cooperated closely politically. Likewise, Cyprus has also been heavily dependent upon Greece for its defence and security. Even more importantly, Athens was also the strongest supporter of Cypriot accession. Indeed, had it not been for the fact that Greece made it clear on numerous occasions that it would block enlargement as a whole if Cyprus were not included, it is certainly possible that the island would not have joined the Union without having first solved the issue of the island’s division.

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As a result, prior to Cypriot accession, there was a widespread view that once the island joined the European Union it would in effect become a second Greek vote. And yet, despite the fact that the two countries are so closely linked, a new relationship has emerged between the two countries that has defied the expectations of most observers. Certainly, there are many occasions when the positions of the two states have been closely aligned, such as on maritime questions. However, Cyprus has proven to be far more independent minded in its thinking than many had believed possible. To be sure, there is close co-operation between the two countries. However, few believe that their policies are jointly formed or that, under usual circumstances, there is any untoward collusion between Nicosia and Athens.17 Nowhere was this divergence seen more clearly than in terms of the issue of Turkish EU membership. On this key question, it is clear that the positions of the two countries in fact diverged significantly in the years immediately following accession. Whereas, Greece sought to try to keep Turkey on the path to membership in the hope that this would lead to greater reforms and democratisation, Cyprus saw its veto as a key weapon to use against Turkey. While professing a wish to see Turkey join the European Union, one could not help but believe that many in Cyprus were pleased to have gained a massive strategic advantage over Turkey.18 Of course, it would be wrong to read any of this as evidence of an estrangement between Greece and Cyprus. The two countries will always remain close. However, the differences that have emerged on the question of Turkish membership, and Nicosia’s willingness to formulate its own stand on other issues, is clearly indicative of the fact that not only does Cyprus see itself as an independent member of the European Union it is regarded as such by Athens. In this sense EU accession has seen a major change in the way Cyprus interacts with its most important ally. Rather than become a second Greek vote, the relationship between Cyprus and Greece is now more akin to various other cases in the EU where linguistic, cultural and historical ties bind two member states, but the political decisionmaking remains undeniably autonomous. After Greece, the most significant relationship Cyprus has with another member of the European Union is with the United

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Kingdom. By all accounts it is an extremely difficult and complex relationship that is often misunderstood and misinterpreted by outsiders. On the one hand, there are very strong ties between the two countries. Just as many tens of thousands of Cypriots live, work and study in Britain, Cyprus has become home to many thousands of British, both before EU accession and after, and every summer many tens of thousands of British holidaymakers visit the island’s east and west coast resorts. And yet, at the political level, the relationship has been marked by deep mistrust and occasional periods of tension. In part this can only be expected. As the former colonial power, against which they fought, the United Kingdom will always hold a special role in Greek Cypriot consciousness, especially given its continued role as a ‘guarantor’ Cypriot independence and by virtue of the fact that it retains two sovereign military bases on the island. However, this is compounded by a perceived catalogue of slights and betrayals. From encouraging divisions between the two countries, failing to act in 1974 and being the strongest supporter within the EU of Turkey’s membership aspirations, a widespread view exists in many quarters that Britain has played a duplicitous role in the affairs of Cyprus. And yet, the stark reality is that Cypriot membership of the European Union was as much a product of British support as it was the result of lobbying by Athens.19 Britain not only supported Cyprus’ application to join the Union, it also argued strongly that accession would not be a violation of the 1960 treaties. At the same time, in discussions with Turkish officials, British diplomats and politicians would repeatedly stress their support for Cypriot membership of the EU, and called on Turkey and the Turkish Cypriot community to help reunite the island prior to accession. At the same time, Britain also offered practical support for the island as it prepared for joining the Union. For instance, the British Council, working in conjunction with the High Commission, organised numerous workshops and seminars on diverse aspects of EU accession. Likewise, just as Cypriot officials travelled to Britain to speak with counterparts, British officials would regularly come to Cyprus to advise their colleagues in various ministries. Certainly, other countries also played a part in this process. However, no other country offered as much practical support as the United Kingdom.20

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However, for all the good co-operation that existed in the preaccession period, old tensions came to the fore when Cyprus joined the Union.21 In large part, this was a legacy of the April 2004 referendum. Like many others in the EU, Britain was deeply angered by the way in which the Cypriot Government had behaved during the final talks and throughout the referendum campaign. As a result, unwisely, London took a lead role in trying to end the isolation of the Turkish Cypriots. While few would doubt that the Turkish Cypriots deserved to be recognised for their efforts to reach a settlement, there was nevertheless a view that Britain was simply too vociferous in its efforts to push their case. This in turn fed the view that London was trying to punish the Greek Cypriots. Meanwhile, as the Greek Cypriots sought to use their membership to introduce conditions on Turkey’s accession, the British Government was working to ensure that Nicosia’ impact of Ankara’s prospects for EU membership were minimised. All this led to a major deterioration in relations.22 The nadir came in Spring 2005, when Dimitris Christofias, who was then President of the House of Representatives, in a speech before leading members of the London Cypriot community referred to the United Kingdom as the ‘nemesis’ of the Greek Cypriots – a view tacitly accepted by President Tassos Papadopoulos when he was questioned about the comments.23 In the opinion of many observers the use of such language by the senior officials of one EU member state against another was completely unacceptable. In the period since then, however, relations have steadily improved – albeit with occasional setbacks. For instance, while a joint consultative process was establish to promote greater contacts between the two governments on areas of mutual concern, Nicosia was angry at the release of a joint memorandum between Britain and Turkey that, erroneously, referred to the ‘TRNC authorities/universities’ in reference to ending the isolation of the Turkish Cypriots.24 However, on balance relations are certainly improving. In June 2008, following a meeting between President Chritofias and Gordon Brown, the British prime minister, a memorandum of understanding was issued between Cyprus and the United Kingdom.25 This saw an improvement in relations inasmuch as it reaffirmed Britain’s full commitment to UN Security Council

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Resolution 541, which declared the TRNC to be illegal, and stressed that, ‘the UK will not support any moves towards the partition of the island or the recognition or up-grading of any separate political entity on the island.’26 Therefore, while few would doubt that the relationship between Cyprus and Britain has been the most tumultuous of all the relations Cyprus has within the EU, and that the legacy of the past will continue to linger for quite some time to come, it is clear that in terms of day-to-day co-operation, and areas of shared interest, Cyprus and Britain are learning to adapt to the changed relationship that has emerged since the island joined the EU. Needless to say, EU membership has not just been about managing a transformation of its relationships with Greece and the United Kingdom, the two countries with which the island has traditionally had the closest relationship. As part of the European Union, Cyprus has also had to develop or enhance its ties with the other 22 (24 after the accession of Bulgaria and Romania in 2007) members of the Union. This has led to the significant expansion of the Foreign Ministry, not only in order to be able to send more officials to Brussels, but to establish many new embassies in member states.27 Similarly, many EU members established diplomatic missions on the island.28 At the same time, there has been a major growth in the number of official visits, with Cypriot politicians regularly travelling to other member states and a steady flow of leaders and officials from across the EU and its institutions to Cyprus.29 The requirement for consultation and coordinated action between member states has nevertheless led to a massive growth in the quality and quantity of contacts between Cyprus and its partners. Perhaps the most significant example of this changing nature of Cyprus’ relationship with other EU states can be seen in terms of its relationship with France. Traditionally, France has taken relatively little interest in Cyprus. As a former British colonial holding, and a member of the Commonwealth, the island was seen to fall within the United Kingdom’s sphere of interests. Moreover, throughout the accession process, Paris has been one of the more sceptical European capitals regarding Cypriot membership, believing that it could create unnecessary tensions in the Eastern Mediterranean. However, after Cypriot accession the relationship between Nicosia

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and Paris began to develop. In large part this was driven by the Cypriot Government, which saw what it believed to be an opportunity to break the perceived British influence over the island’s affairs by aligning with another major power in the EU. At the same time, as an increasingly vocal opponent of Turkish membership, France was seen as a natural ally in the short-medium term – even though, ultimately, French and Cypriot positions on Turkish membership of the EU were in conflict. Cyprus needed to have the possibility of accession as a carrot to induce Ankara to modify its policies. However, this reliance on France quickly proved to have its limitations. Nicosia soon found out that trying to play France off against Britain is not as easy as many might suppose. Believing that it had Paris on its side, in the summer of 2005 Nicosia took a very tough line on Turkey’s failure to meet its commitments to open its ports to Cypriot vessels and was once again threatening to veto the start of formal accession negotiations. In this, it believed it had France’s backing. And to a point, it had. However, following an agreement between London and Paris, the French position abruptly changed. In a high profile interview to the local media, the French ambassador told the Cypriot Government that it had to toe the line and not create any new problems.30 This message, delivered in such a direct manner, came as a shock to many who had believed that Paris was on its side. It was also a good lesson in how the relationships between the EU’s major powers really worked. Nicosia had been naïve to believe it could manipulate Franco-British relations in this manner.31 However, Nicosia was undaunted by this initial failure and continued to court Paris. The elevation of George Lillikas, the Minister of Commerce, Tourism and Industry, to the post of Foreign Minister, in 2006, marked a new attempt to win French support. Educated at the Sorbonne, Lillikas was known to harbour strong Francophile tendencies. In one of the most improbable decisions Cyprus has ever taken, Nicosia became an associate member of the International Organisation of Francophonie (OIF), the body representing countries that were either former French colonies or where there were large numbers of French speakers.32 Cyprus was

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neither. Indeed, the number of Cypriots who speak French is minimal – even though it was argued that French was the second foreign language, after English, taught in Cypriot schools. If anything, it is a part of the Anglophone world. However, the application was readily accepted and the island joined the organisation. At roughly the same time, it was even announced that Cyprus and France had signed a defence agreement – although Paris was quick to point out that it was in line with agreements it had reached with other countries in the context of ESDP and was not aimed at any third countries.33 Another country that Cyprus built up a seemingly close relationship with after accession was Austria. Once again, the link was Turkey. Vienna had emerged as the most vocal opponent of Turkish membership and, once again, Cyprus saw an opportunity to cultivate an ally. This in turn saw what one might regard as the clearest example of the way in which Cyprus was willing to engage in the type of quid pro quo politics that sometimes occurs within the European Union. Nicosia was one of just seven countries – most of which were either neighbours of Croatia or strongly Catholic – willing to side with Austria on the question of relaxing the demands that Croatia comply fully with the International Criminal Tribunal for the Former Yugoslavia (ICTY) in The Hague before formal membership talks could begin.34 This was particularly shameful incident inasmuch as Cyprus had spent thirty years demanding that the international community uphold human rights, and calling for Turkey to be held account for its massive human rights violations in Cyprus, and yet was willing to see efforts to tackle war crimes elsewhere undermined. In this case, it was not as if taking such a stand would have put it in conflict with the rest of its partners. Apart from Austria and the small cohort of states that Vienna had rallied to its cause, the rest of the EU had come out firmly in favour of maintaining the requirement for full cooperation before membership talks could start. Indeed, this was an example of a case where Greece and Cyprus were on opposite sides, with the former aligning with the majority of member states. However, on this issue, Cyprus chose to place political expediency over its own moral principles.35

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In addition to developing strong ties with certain members, there have been notable periods of tension with certain members – often during the period of the presidencies. For example, along with the British Government, the Dutch Government was a strong critic of the way in which the Greek Cypriot leadership had handled the 2004 referendum and subsequently lobbied hard for ending the isolation of the Turkish Cypriots. This led to tensions between Nicosia and The Hague. This came to a head during the Dutch presidency of the Union in the second half of 2004, when the question of opening membership talks with Turkey was a key item on the European Union agenda, and the Dutch government was accused of taking a pro-Turkish stance. Similarly, there were several showdowns between Carl Bildt, the outspoken Swedish foreign minister, and members of the Cypriot Government. Most notably, Bildt came under fire for suggesting, while giving testimony to the European Parliament during Sweden’s presidency of the EU, in July 2009, that the 1974 Turkish invasion of the island had to be understood in the context of the Greek military coup and tacitly pointed the finger of blame at the Greek Cypriots for the failure of the 2004 UN effort to reunite the island.36 Interestingly, however, Germany, arguably the most powerful member of the Union, has generally taken little direct interest in Cyprus – despite, or perhaps because of, its implications for the Union’s relationship with Turkey. Indeed, it was not until July 2010, over six years after Cyprus had joined the EU, that it received its first ever visit by a German foreign minister.37 This was followed, in January 2011, by a visit by Angela Merkel, the German chancellor. This resulted in considerable controversy after she lavished praised on Dimitirs Christofias for his efforts to solve the Cyprus issue and accused the ‘Turkish side’ of not doing enough to reciprocate.38 Naturally, the Greek Cypriots were delighted by her comments. Equally, Ankara was furious. Turkish leaders expressed extreme disappointment at the position of the German leader,39 who appears not to have understood the full implications of her statement on efforts to try to resolve the problem.40 However, in general terms, and perhaps especially after this incident, it would appear that Berlin has little desire to become closely involved in the Cyprus issue in the

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longer-term; preferring to leave the matter to other EU members with greater experience of dealing with the issue.

Relations with the Middle East and South East Europe In addition to the changing the ways in which Cyprus interacts with the states of European Union, accession and membership have also brought about a major change in the ways in which Nicosia interacts in a regional context. Nowhere has this been more evident than in terms of its relations with the Middle East.41 Although its position is Europe is now uncontested, for a very long time Cyprus was regarded as being as much, if not more, a part of the Middle East as a part of Europe. This perception arose for a number of reasons, not least of all because of geography. Cyprus lies far closer to Lebanon, Syria, Jordan and Israel than it does to Greece, its nearest EU neighbour. However, this perception was also encouraged by the excellent ties Cyprus developed, mainly through the NAM, with many Arab states as it tried to prevent the recognition of the TRNC. As the accession process evolved it was clear that, while the island would move closer to Europe, the island’s links to the Middle East could be valuable. The Cypriot Government increasingly saw the potential to play a more significant role in the region – particularly as a useful adjunct actor in ongoing international peace efforts, if not as a fully-fledged peace broker – as a way of increasing its standing, both in the region and amongst its future EU partners. Perhaps the most significant example of this growing belief in its ability to play a constructive role in regional events came in 2002, when twelve Palestinians who had occupied the Church of the Nativity in Bethlehem were offered temporary sanctuary in Cyprus as part of an EU brokered deal that allowed them safe passage out of the West Bank.42 This incident generated considerably media attention worldwide and further contributed to a sense in Nicosia that Cyprus could have a part to play in future efforts to defuse tensions and secure peace in the region. Since it joined the European Union in May 2004, this desire to be seen as a bridge between Europe and the Middle East has grown. Foreign Ministry officials are keen to point out that the island has an important role to play in this capacity. This

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was also highlighted by the Israel-Lebanese conflict, in August 2006, when Cyprus became an important transit point for people fleeing the fighting.43 Just as the relationship with the Middle East has been changed by accession and membership, so has the relationship with the South East Europe. Interestingly, prior to accession Cyprus had very little sense of belonging to the region. Obviously it had excellent ties with Greece, and had forged a strong relationship with Yugoslavia, and then Serbia. However, it was clear that Nicosia never considered Cyprus as part of South East Europe in any distinct regional sense. As a result very little was done to cultivate relations with the countries of the region in order to form some sort of regional bloc within the EU. Indeed, following accession, Nicosia seemed more interested in using EU membership as a way of putting pressure on the next two regional members – Bulgaria and Romania – over their stance on the Cyprus problem than as a chance to build up a close co-operative relationship with Sofia and Bucharest.44 Of course, this has now changed. As in many other areas, the experience of membership has served to change the views and attitudes of Cypriot foreign policy makers towards its partners in the European Union, and emphasised the need to forge strong networks that cut across a range of policy issues, and are not just formed in order to press home the National Issue. To this end, there does appear to be a growing realisation that Cyprus cannot simply be an island in Europe. It needs to build up partnerships and it does seem clear that moves are being made to play a part in South East Europe. However, although it may be widely perceived to be a part of South East Europe in a general sense, it is clear that Cyprus is still not integrated into the region in any real political or economic sense. It is still not a participant in many regional initiatives.45

Russia and the United States Of course, any discussion on Cypriot external relations would not be complete without a discussion on the way in which accession has affected the island’s relationship with Russia and the United States, both of which have played a very significant role in the modern

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history of Cyprus. In the case of the former, since 2004 Cyprus has emerged as one of Moscow’s strongest supporters and allies in the EU. In part, this is a reflection of longstanding links between the two countries. Over the past four decades, Russia has played a key role in defending Greek Cypriot interests. This was seen most recently when, in the run up to the April 2004 referendum, Moscow vetoed a Security Council resolution that would have put in place safeguards guaranteeing the security provisions contained in the Annan Plan.46 Although denied by both sides, it is clear that the Russian Government took this step following a request from Nicosia. Thereafter, Russia was able to ensure that any attempt to reduce the UN peacekeeping force in Cyprus, as was being suggested, was prevented. It has also been a major supplier of arms to the Cypriot Government. In this sense, Russia has long been seen by Greek Cypriots as an important and reliable partner. More recently, the election of President Christofias, who was educated in Russia, as were many senior members of AKEL, has also seen a strengthening of ties.47 There is also the religious connection between the two countries as predominantly Christian Orthodox states. In return, Cyprus has become an ardent voice for Russia in the European Union and has sought, in its way, to try to build bridges between the Union and the Russian Federation. For example, Markos Kyprianou, serving as EU Health Commissioner, sought to mediate a particularly acrimonious dispute between Russia and Poland over meat exports that threatened to derail a new EU cooperation agreement with Russia.48 Also, at the time of the war between Russia and Georgia, Cyprus resisted the pressures emanating from many EU member states to blame Moscow for the conflict and thus impose harsh penalties – a position that ran into conflict with its concerns over the creation of secessionist states.49 In any case, the example of Cyprus in many ways highlights the degree to which the received wisdom that Russia opposes EU membership for states that it believes are friendly is in fact incorrect. In fact, it is far more useful for Russia to have champions like Cyprus within the EU. Last, but certainly not least, membership appears to have had an effect on the relationship between Cyprus and the United States. Along with Britain, the US is widely held by many, if not most,

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Greek Cypriots to have played an extremely negative role in the island’s affairs. For example, it is held to have been behind the Greek coup on the island that led to the Turkish invasion.50 Since 1974, it has been seen as Turkey’s key supporter and has thus limited the pressure put on Ankara to reach a settlement. More recently, most Greek Cypriots regard the Annan Plan as nothing more than an Anglo-American concoction. Of course, as is with the case of Britain, there are strong counterarguments to such negative views. For example, Washington supported the resolution declaring the TRNC illegal. However, a deep vein of anti-American sentiment nevertheless exists on the island. To this extent, EU membership was widely seen as providing a way of neutralising this influence. By joining the European Union, Cyprus would then be shielded from direct pressure from the United States. It would be protected.51 In many ways this has happened. There is a distinct sense among observers that the US does not seem to exert the same sort of influence over the island as it once may have. Certainly, in the immediate aftermath of accession, Cypriot leaders seemed to believe that Washington’s influence had withered away. They were thus more willing to stand up to perceived US meddling in their internal affairs. For instance, a strongly worded report on the state of human rights in Cyprus led to a sharp rebuke from across the political spectrum, with leaders insisting that Washington, ‘butt out of the affairs of a sovereign EU member state and to stop acting like an arbitrary global policeman’.52 Likewise, on the key question of the Cyprus problem, there was a general perception that the European Union had emerged as the key international actor – not only by virtue of Cyprus’ membership of the Union, but because of Turkey’s with to join. Such views have now been moderated. There is still a lot that the US can do that can have a direct effect on Cyprus. Indeed, with deep questions about Turkey’s chances of actually joining the EU, US influence over Ankara still remains a significant factor in the settlement process – a fact that is recognised by the Cypriot Government.53 Also, if a settlement is reached, the United States will have an important role to play in underwriting the settlement. Likewise, it appears to be recognised now that Cyprus and the US need to cooperate on a wide range of issues and that Cyprus – as

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much as any other member state or even the EU as a whole – cannot simply ignore the US, let alone push against it. While the European Union has certainly led to a number of changes to the way in which Cyprus views its place in the world, some things nevertheless remain relatively unchanged.

Conclusion Just as accession and membership of the European Union has had a major effect on Cypriot society and on domestic politics and economics, so it has also changed the way in which Cyprus interacts with the outside world. From being a small, albeit autonomous, entity in international affairs, even if it did attract disproportionate attention by virtue of the island’s division, Cyprus suddenly found itself having to participate in decision making as part of a bloc that wields considerable influence on the global stage. As well as requiring a harmonisation of its foreign policy – even though the Cyprus issue obviously remained the key area of foreign policy concern at a state level – Cyprus also needed to engage in unprecedented levels of coordination and contact with other member states. New relationships were thus forged and old ties, such as those with Greece and Britain, changed to reflect the island’s new status. At the same time, accession had far wider consequences in terms of the island’s contacts with the wider world. Membership of the EU saw Cyprus abandon its long-standing adherence to Non-Alignment, a foreign policy principle that it had helped to establish and which had guided its policy since independence. Likewise, it brought a fundamental change to the way in which Cyprus interacts with key regions, such as the Middle East, and with major international powers, such as Russia and the United States.

Endnotes 1. ‘Enlargement: How Does a Country Join the EU?’, European Commission. 2. ‘Chapter 27: Common Foreign and Security Policy’, EU Harmonisation Co-ordinator, Republic of Cyprus, 3. ‘Cyprus issue sinks EU-Islamic meeting’, Cyprus Mail, 2 October 2004.

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4. ‘The Non-Aligned Movement and the Cyprus Question’, Ministry of Foreign Affairs, Republic of Cyprus. 5. These events are covered in James Ker-Lindsay, Britain and the Cyprus Crisis, 1963-1964 (Mannheim und Mohnsee: Bibliopolis, 2004). 6. ‘The the Non-Aligned Movement and the Cyprus Question’, Ministry of Foreign Affairs, Republic of Cyprus. 7. The only countries that were not members of NATO were Austria, Finland, Ireland and Sweden. For more on relations between NATO and the EU see ‘NATO’s relations with the European Union’, NATO website: < http://www.nato.int/issues/nato-eu/index.html > 8. For more see ‘The Partnership for Peace’, NATO website:

9. DISY pushes for Partnership for Peace entry’, Cyprus Mail, 28 January 2009; ‘Parliament calls on government to join PfP’, Cyprus Mail, 3 April 2009. 10. In explaining its opposition, Aristos Damianou, a member of AKEL’s Central Committee, stated, in the context of the new talks between the two communities, which were launched in 2008, ‘We would therefore be giving the wrong messages to the international community if at the same time we start negotiating entry into a military organisation. Second, we should also analyse international political developments, our capabilities as a small state and what role we could play in such an organisation. This body functions as a gateway to NATO, where Turkey plays a significant role. Thirdly, we should not forget the role which NATO played in Cyprus, in the events of 1974,’ ‘DISY pushes for Partnership for Peace entry’, Cyprus Mail, 28 January 2009. 11. For a discussion of this see David Hannay, Cyprus: The Search for a Solution (London: I.B.Tauris, 2005), pp116-18. 12. Angelos Sepos, The Europeanization of Cyprus: Polity, Policies and Issues (Basingstoke, Palgrave Macmillam, 2008), p.123. 13. For example, the author can recall an example when he was living in Greece of a British diplomat being called in to the Greek Foreign Ministry to provide a briefing to his Greek colleagues on an a certain African country that was attracting considerable attention. The Ministry had very little knowledge about the country or the specific issues at stake and was willing to take Britain’s lead on the matter given that the United Kingdom had experience of the country and was leading efforts to forge an EU position. 14. ‘Current and future relations between Spain, EU and Cuba’, EU Observer, 3 April 2007. 15. ‘Nicosia will never rubberstamp Kosovo unilateral declaration of independence’, Cyprus Mail, 15 December 2007; ‘Cyprus will never recognise Kosovo’, Cyprus Mail, 8 April 2008; ‘Christofias in official

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visit to Serbia’, Cyprus Mail, 24 February 2009. 16. ‘EU countries give final go-ahead to send EULEX to Kosovo’, New Kosova Report, 23 February 2008. 17. In part this can be explained by the decision taken by Greece. In the aftermath of the failed referendum to unite the island in 2004, which severely damaged Cyprus’s standing in the EU, it appears as though Athens actively sought to distance itself from Nicosia. Having secured the island’s membership of the Union, many Greeks now believed that it was up to Cyprus to pursue its own path. At the same time, it is clear that Nicosia took a rather different view to Greece on certain key issues and sought to use its membership to achieve its own goals. 18. For an analysis of this see James Ker-Lindsay, ‘The Policies of Greece and Cyprus towards Turkey’s EU Accession’, Turkish Studies, Volume 8, Number 1, March 2007, pp.71-83. 19. George Vassiliou, who as president from 1988 until 1993 initiated the process that eventually led to the island’s membership of the EU, and who was also the Chief Negotiator during the accession process, recounts the story of how he approached Margaret Thatcher, the then prime minister of Britain, when he first wanted to apply for membership. At the time, there was deep concern about the idea of admitting the divided island to the European Union. She therefore asked him to initiate another attempt to reunite the island. If this failed then Britain would support the island’s candidacy. When the process collapsed, again due to Turkish Cypriot intransigence, the British Government kept to its word and supported the island’s application for membership. George Vassiliou, address given at ‘Britain and Cyprus: Colonialism and its Impact’, Intercollege (University of Nicosia), November 2002. 20. As one diplomat from an EU member state noted in conversation with the author, while offering significant political support, Greece actually provided relatively little technical assistance during the accession process. 21. For a fuller treatment of this subject see James Ker-Lindsay, ‘A Difficult Transition to a New Relationship: Britain and Cyprus in the European Union’, Journal of Contemporary European Studies, Volume 15, Number 2, August 2007, pp.185-200. 22. Relations were also affected, albeit to a lesser extent, by two further specific incidents. The first of these was a major international conference held in Cyprus on the Cyprus issue, in February 2005, by Wilton Park, an academically independent agency of the Foreign Office. This attracted considerable criticism from the local media, which described it as a ‘secret meeting’ to plot the return of the Annan Plan. The Cypriot Government did little to dispel this view, even

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25. 26. 27.

28.

AN ISLAND IN EUROPE though it had known about the meeting well in advance and had been asked on numerous occasions to participate. ‘Government ‘worried’ about Cyprus problem conference’, Cyprus Mail, 9 February 2009. Shortly afterwards, the House of Commons released a major report, the first for almost twenty years, on Cyprus. While the report in fact endorsed certain Greek Cypriot positions, it was nevertheless strongly criticised by the Cypriot Government as one sided. ‘Cyprus’, Second Report, Foreign Affairs Select Committee, House of Commons, 22 February 2005. ‘‘Britain is our nemesis’’, Cyprus Mail, 8 February 2005. ‘Turkey UK Strategic Partnership 2007/08’, 27 October 2007. ‘CyprusBritish relations reach new low’, Cyprus Mail, 25 October 2007. A British official told the author that the inclusion of the term ‘TRNC’ appears to have been added by officials at Downing Street at Turkey’s request, but was not passed by the Foreign and Commonwealth Office (FCO). Had this happened, they would have taken action. Another example of two steps forward and one step back was the visit to the island by John Prescott, the British deputy prime minister, in the autumn of 2005. Popular amongst Greek Cypriots, he managed to ease tensions somewhat, especially when he made reference to the ‘Turkish invasion’ of the island. However, this improvement of relations was offset by a major row over a visit to the island by Jack Straw, the British foreign secretary, in early 2006. At the last moment, the Greek Cypriots sought to impose conditions on where visiting officials could meet with the Turkish Cypriot leader. These new conditions were rejected, and led to the cancellation of the meeting between Straw and Papadopoulos. ‘Straw chooses Talat over Tassos’, Cyprus Mail, 19 January 2006. ‘Cyprus Signs Memorandum of Understanding with Britain’, Cyprus News Agency, 9 June 2008. Memorandum of understanding between the Republic of Cyprus and the United Kingdom, 5 June 2008. According the website of the Ministry of Foreign Affairs, in August 2009, Cyprus had established missions in 20 members (also accredited to): Austria (Slovakia), Belgium (Luxembourg), Bulgaria, Czech Republic, Denmark, Finland (Estonia), France, Germany, Greece, Hungary, Ireland, Italy (Malta), Netherlands, Poland (Lithuania), Portugal, Romania, Slovenia, Spain, Sweden (Latvia) and the United Kingdom. According to the website of the Ministry of Foreign Affairs, in August 2009, the following EU members had resident missions in Cyprus: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Poland,

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30. 31.

32. 33.

34.

35.

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Portugal, Romania, Slovak Republic, Spain, Sweden and the United Kingdom. Of course, close relations existed with many smaller member states long before accession. For instance, although Cyprus does not have an Embassy in Slovakia, the Slovak Embassy in Nicosia has long been at the forefront of efforts to promote reconciliation between the two communities. For the past fifteen years, it has hosted regular meetings between Greek and Turkish Cypriot party leaders. ‘France: it’s the best that can be achieved’, Cyprus Mail, 15 September 2005. Costas Iordanidis, ‘EU gap over Turkey’, Kathimerini (English language edition), 16 September 2005. As one official from the French Embassy explained to a journalist on the island, who then recounted the story to the author, there was no way that France would provoke an incident with Britain, especially after it had just signed a deal to supply a number of aircraft carriers. It was obvious that, political courtesy aside, Cyprus held little economic value to France. British officials were also dismissive of Cypriot attempts to play politics with the two countries. ‘Cyprus joined the International Organization of Francophonie as an Associate Member - 29/09/2006’, Ministry of Foreign Affairs, Republic of Cyprus, 29 September 2006. ‘France defends Cyprus defence deal against Turkish claims’, Cyprus Mail, 10 October 2006. Interestingly, the signing of the agreement also highlighted the complexity of the Franco-British relationship that many in Cyprus failed to understand. As the report noted: ‘The French ambassador also dismissed as “ridiculous” claims that France was trying to secure itself a base in Cyprus. “If we want to ask the British for some support, then we can do that,” he said. “We don’t need a base in Cyprus.”’ The incident centred on the requirement that General Ante Gotivina be handed over for trial at the ICTY. General Gotovina, regarded as a hero in Croatia, was in command of Operation Storm, which brought to an end the attempted secession of Krajina, a Serb dominated area in Croatia. In doing so, many hundreds were killed and over 200,000 ethnic Serbs were forced to flee their homes. ‘The Prosecutor of the Tribunal against Anta Gotovina’, Case No. IT-01-45-I, International Criminal Tribunal for the Former Yugoslavia, 21 May 2001. The incident was never reported in the Cypriot press. Indeed, when officials from the foreign ministry were confronted about the incident by the author they appeared to be rather taken aback – and not a little embarrassed – that anyone had found out. They did not realise that it had in fact been reported in the international media. ‘EU Postpones Croatia Talks’, Reuters, 16 March 2005. If nothing else, it was a clear

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42. 43. 44.

45.

46. 47. 48. 49.

AN ISLAND IN EUROPE lesson about the degree to which the deliberations and voting in the Council do tend to become widely known. ‘Bildt accused of ‘deleting’ the invasion’, Cyprus Mail, 25 July 2009. ‘European policy in a spirit of equal partnership’, Federal Foreign Office, Federal Republic of Germany, 23 July 2010. ‘Merkel gives full support to president’, Cyprus Mail, 12 January 2011. ‘Turkish leaders hit back at Merkel’s Cyprus remarks’, Today’s Zaman, 13 January 2011. Diplomat form an EU member state, comments to the author, February 2011. For an analysis of the relationship between Cyprus and the Middle East see James Ker-Lindsay, ‘Europe’s Eastern Outpost: The Republic of Cyprus and the Middle East’, The Round Table: The Commonwealth Journal of International Affairs, Volume 97, Number 397, August 2008, pp.535545. ‘Church siege ending after 39 days’, Guardian, 10 May 2002. ‘Fleeing war in Lebanon, thousands arrive in Cyprus’, Christian Science Monitor, 25 July 2006. As one Romanian diplomat told the author, soon after the referendum when the Romanian ambassador was called into the Foreign Ministry. There he was warned that now that Cyprus was a member of the European Union, a body which Romania wished to join, Bucharest must be careful about how it approaches the Cyprus issue in future. The threat was unambiguous and unpleasant. For example, Cyprus is not a member of the South East European Cooperation Process (SEECP), which brings together every other regional state, including Moldova, or the South East European Initiative (SECI), which includes all of South East Europe and most EU members as observers. Likewise, it was not included in the sixth Summit of South East European Heads of States, held in Athens in June 2008. The countries represented included Albania, BosniaHerzegovina, Croatia, Bulgaria, Greece, Montenegro, Romania, Serbia and Turkey. ‘Russia Vetoes Resolution Encouraging Approval of UN Cyprus Unification Plan’, VOA News, 22 April 2004. ‘Christofias heads to Russia for top-level meetings’, Cyprus Mail, 18 November 2008. ‘EU, Russia fail to agree end to Polish meat ban’, Reuters, 22 April 2007. ‘Christofias walking a tightrope over Georgia at EU summit’, Cyprus Mail, 2 September 2008. The report also noted that, ‘At the sidelines of the Brussels meeting, on Georgia’s request, Christofias had a private meeting with the Georgian Prime Minister Vladimir Gurgenidze. The President reiterated the government’s firm position in favour of states’

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51.

52. 53.

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sovereignty and territorial integrity, as defined by the UN Charter and the principles of the Helsinki Final Act, and for the peaceful settlement of international disputes through negotiations. According to Cyprus News Agency, Christofias told the Georgian Prime Minister that Russia’s neighbouring countries should avoid challenging the Russian Federation. He also pointed out that the Republic of Cyprus will maintain the friendly relations with both Georgia and the Russian Federation.’ As the question of culpability, it is now widely recognised, and is likely to be stressed in an EU report on the question, that the Georgian president, Mikhail Saakashvili, started the conflict. ‘Saakashvili's sideshow’, The Guardian, 3 August 2009. This idea has been comprehensively debunked by a number of studies, which have tended to attribute US actions in 1974 to the ‘cock-up’ theory of international politics, rather than to the conspiracy school. See Jan Asmussen, Cyprus at War: Diplomacy and Conflict During the 1974 Crisis (London: I.B.Tauris, 2008); Andreas Constandinos, America, Britain and the Cyprus Crisis of 1974: Calculated Conspiracy or Foreign Policy Failure? (Bloomington: Author House, 2009). Interestingly, the perception that Cyprus was isolated against US pressure may in fact explain why relations between Britain and Cyprus deteriorated so much after accession. Just as Cypriot decision-makers believed that they had eradicated US influence over Cypriot affairs, they discovered that within the European Union, the United Kingdom wielded significant influence. While the US may not be able to shape EU policy on Turkey, or the Turkish Cypriot, Britain certainly could. This was a rather rude and unwelcome shock for many Greek Cypriots. ‘Government tells US to butt out’, Cyprus Mail, 3 March 2005. ‘Christofias asks Obama to up pressure on Turkey’, Cyprus Mail, 9 April 2009.

6 THE EU AND THE TURKISH CYPRIOTS Derya Beyatlı

The image of the European Union within the Turkish Cypriot community has always been constructed around assumptions and misconceptions. Although perceptions of the European Union have greatly changed over time, from ‘they want to rule us and take our identity away’ to ‘they promised and failed to keep their promises’, they are rarely based on a true understanding of the EU, its structure and the competences of its bodies. Turkish Cypriots hold a very high opinion of the capabilities of the Union, thinking that the EU is capable of doing anything and everything should they wish and get disappointed when things do not work out the way they want simply because it is not feasible. On the other hand, the European Union does not fully understand and appreciate the peculiarity of the situation Turkish Cypriots found themselves in after 1 May 2004. Living in an area not recognised by the world, while nevertheless being citizens of a Member State1 (hence European citizens), put Turkish Cypriots in a very awkward situation. This is mostly underestimated and misjudged by the European institutions and the Member States. In addition, the European Union, including most of its Member States, also miscalculated what the Republic of Cyprus could and would do after accession. As a result, the interaction of the Turkish Cypriots and the European Union has been based on misunderstandings, miscalculations and misperceptions leading to the current disappointments experienced by the Turkish Cypriots. The European Union was also disappointed with the April 2010 election

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results, which seemingly indicated that the Turkish Cypriots drifted away from the European dream. However, nothing is as it seems in this underdeveloped yet hardly poor piece of land.

Relations with the EU under Denktas regime Prior to 2002, relations between the Turkish Cypriot community and the EU were literally non-existent. Although a few representative offices existed in Member States such as the United Kingdom and Belgium, these offices were mostly dealing with consular issues rather than having any diplomatic relations with Member States or with the European institutions. The isolation that came with being an unrecognised state was the usual reason cited for this situation. However, the TRNC authorities and the president of the time, Rauf R. Denktas, never considered building relations with the European Union or the international community in general. As he saw things, his country was under unjust embargoes and those imposing these embargoes on Turkish Cypriots were enemies not to be trusted. He considered the only friendly country to be motherland Turkey and maybe a few Arab states. The Republic of Cyprus – founded in 1960 as a partnership state of Turkish Cypriots and Greek Cypriots – applied for an association agreement with the European Community in 1962 by joint decision of both communities. However, following the troubles of 1963, the Turkish Cypriot side left the administration, while the government of the Republic of Cyprus continued to be recognised as the legitimate government of the island and, therefore, retained the advantages of international legitimacy and access. As a result, the association agreement, signed on 19 December 1972,2 was enacted without Turkish Cypriot consent. This led to the Turkish Cypriot side putting forward an objection to this application, claiming that it was against international law based on Article 50 of the RoC constitution3. Greek Cypriots then gradually began to emphasise the prospect of membership for the whole of Cyprus, hoping that this could provide a sufficient framework for resolving the Cyprus problem.4 What was a purely economic move in 1962 became rather political in 1990 when the government of the Republic of Cyprus (exclusively in

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Greek Cypriot hands now) applied for membership of the European Union. When full membership negotiations started on 30 March 1998, Turkey and the Turkish Cypriot side reacted very strongly, regarding it to be a new tool to reach Enosis (unifying the whole island with Greece). Ismail Cem, Foreign Affairs Minister of Turkey, warned the EU that, ‘treating the Greek Cypriot administration as the representative of Turkish Cypriots may lead to very dangerous tensions in eastern Mediterranean.’5 Mr Denktas repeatedly refused to take part in the accession negotiations under the umbrella of the Republic of Cyprus, claiming that his status and role were not clear. With the backing of Turkey, Denktas declared that ‘there should not be accession negotiations until the Cyprus Problem is solved’ and refused to even meet any EU representatives.6 The Turkish Cypriot administration maintained this position throughout Denktas’ rule and not only refused official contacts with European and foreign diplomats but did not allow individual contacts of the Turkish Cypriot community with foreigners either. The regime of the time wanted to control and monopolise all sorts of contacts with foreigners. With this mentality the Foreign Affairs Minister, Tahsin Ertugruloglu expelled 16 Spanish journalists and academics who came to island to meet non-governmental organisations (NGOs), trade unions and opposition parties with the bizarre justification that, ‘they did not ask for permission from the government to meet with these groups.’ This decision was condemned by Jean-Christophe Filori,7 from the European Commission, who noted that it contravened the principle of freedom of movement.8 The mentality at the time was in fact negative when it came to all sorts of freedoms and rights. Turkish Cypriots were not allowed to cross to the southern part of Cyprus until 2003 and foreign diplomats were rarely allowed to cross to the north. A few individuals who would travel to Pyla, a village inhabited by Turkish Cypriots and Greek Cypriots in the UN-monitored buffer zone, to meet with foreigners (or Greek Cypriots) would be questioned and insulted on their way back, not to mention the official surveillance on these persons. Being pro-European, pro-solution in the northern part of

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Cyprus was perceived to be against the state and those committing that sin – the so-called ‘traitors’ – had a very difficult time.

Winds of Change The devaluation of the Turkish Lira in 2001 and the consequent bank crisis, in which 9 banks went bankrupt, resulted in an even deeper economic crisis in the northern part of Cyprus. Fed-up with the political pressures and the economic difficulties they were facing, Turkish Cypriots, probably for the first time in their history, started to push for change. Despite strong opposition from Turkey, and vocal protests from Denktas, the Republic of Cyprus was progressing fast in the negotiations with the European Union and was due to become a member state in 2004. Things had to change in the northern part of the island if the Turkish Cypriots were to benefit from the EU membership as well. Change was started by a group of businesspeople who organised themselves in the Businessmen Association and took over the Turkish Cypriot Chamber of Commerce (TCCoC) in April 2001. In June 2001, the Chamber announced its vision, pointing to a settlement and EU membership as the magical formula to solve all the problems the Turkish Cypriots were experiencing. It also assumed the responsibility to inform its members and the general public about the European Union.9 The TCCoC, having been founded in 1958, was the only internationally recognised institution in the northern part of Cyprus. Ali Erel, its president between April 2001 and October 2005, and his executive board, thoroughly exploited this favourable position. Immediately, they started building contacts with European institutions and foreign missions in Cyprus. Europeans finally found a partner in the northern part of Cyprus with whom they could have contacts and cooperate without provoking much resistance in the southern part of Cyprus.10 In line with its objective of informing its members and the public on the European Union the Chamber of Commerce founded the European Information Centre in March 2002. The European Commission responded extremely positively to these efforts and the centre was inaugurated by Enlargement Commissioner Verheugen himself. This was the first step in

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normalising relations between the Turkish Cypriots and the European Union. Many others were to follow. The municipal elections in June 2002 also signified change. During the election campaign, the CTP used the slogan ‘Open the door to Europe’. It was successful in three of the main cities – Nicosia, Famagusta and Kyrenia – increasing CTP’s share of the vote to 29.2 per cent from the 13 per cent in the previous elections. On 9 August 2002, under the leadership of TCCoC, 86 organisations, including trade unions and businesspeople organisations, representing 80,000 Turkish Cypriots, announced their common vision to be ‘Settlement and EU membership’.11 When the United Nations submitted a comprehensive settlement plan (the Annan Plan) to the parties on 11 November, Turkish Cypriot civil society was already well organised under the leadership of the Turkish Cypriot Chamber of Commerce, the trade unions and the leftist political parties and in no time came out in strong support of the plan. The common vision of the civil society then became the motto of subsequent demonstrations, each of which attracted ever larger numbers of Turkish Cypriots who wanted to express their support for ‘Settlement and EU Membership’. The negotiations with the 10 EU candidate countries’, including the Republic of Cyprus, were to be concluded in the Copenhagen European council, on 12 December 2002, and Turkey’s new government’s EU aspirations were to receive a response from the European Union. The two Cypriot leaders, Denktas and Clerides, were also invited to Copenhagen to sign an initial agreement on the basic principles of the plan. This was a unique opportunity for the settlement of the Cyprus Problem and the accession of a reunited Cyprus. It would also give Turkey a good push in getting a date for accession. This meant double pressure on both sides.12 However, despite all internal and external pressure, Ertugruloglu,13 who represented Turkish Cypriots, refused to sign the agreement. The council therefore concluded that, ‘Cyprus will be admitted as a new Member State to the European Union. Nevertheless, the European Council confirms its strong preference for accession to the European Union by a united Cyprus.’ At the same time, the council also declared that the terms of a settlement in line with EU principles

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would be accommodated in the accession treaty to be signed in April 2003, should a settlement be reached by then. The presidency of the council invited the commission (in consultation with the government of Cyprus), to consider ways of promoting economic development of the northern part of Cyprus and bringing it closer to the Union.14

Growing ties between the Turkish Cypriots and the EU Following the recommendation of the Council, the European Commission announced a Special Aid Package of €12 million for the northern part of Cyprus, on 3 June 2003. For the first time the EU was announcing an aid package in which the Turkish Cypriot community was the sole beneficiary15. However, Denktas, who was still determined to prevent the development of relations between the EU and the Turkish Cypriots, dismissed the aid as an attempt to bring Turkish Cypriots in the north under the Greek Cypriot administration in the south.16 Both Turkish Cypriots and the international community criticised this move. Lord Hannay, Britain’s special envoy to Cyprus, accused Denktas of being stuck way back in history: ‘I don’t think there is any sensible argument against allowing the EU to help the north of Cyprus to get closer to the EU. What is wrong in that?” he asked, adding that even Turkey was trying to get closer to the EU.’17 Turkish Cypriot-EU relations started changing their form radically during this period. Representatives of the European Commission, members of the European Parliament and delegations from Member States started visiting the northern part of Cyprus18 to meet with the representatives of NGOs, trade unions, universities and political parties. All these groups would tell the Europeans the same thing, that they held very different views from Denktas and that they wanted EU membership. The European answer was simple, yet very clear. If this is what they wanted then they should accept the Annan Plan and join the EU in order to enjoy more democracy, prosperity and peace – the Big European Dream. Northern part of Cyprus witnessed revolutionary days during this phase. Now apparently able to see the light at the end of the tunnel, Turkish Cypriots took to the streets every day, rebelling, striking,

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demonstrating,19 and signing petitions20 asking for the Annan Plan to be accepted immediately. When the TC parliament refused to put the Annan plan, which had by this point been revised twice, to a referendum, Turkish Cypriots turned to the parliamentary elections of 14 December 2003. If the representatives were refusing to bring them EU membership, then they would change the representatives. The lively and colourful election campaigns for the December elections were uniformly centred on parties’ positions towards the Annan Plan and EU membership. Indeed, it became a struggle between pro-Europeans and euro-sceptics. One side stressed what a great thing EU membership would be for Turkish Cypriots; exaggerating the benefits and promising a magical wand to fix all the current problems. Meanwhile, others were busy amplifying the negative sides of EU membership and capitalising on patriotic feelings. EU membership was either presented as the kiss of life for the Sleeping Beauty or as Snow White’s poisoned apple. Neither position was based on facts. Nevertheless, neither Turkish Cypriots nor Europeans cared to correct the images created at this time. This was a big mistake that would soon have damaging effects on EUTurkish Cypriots relations in the future. However, everyone was so inebriated with the promise of change that they did not realise the eventual consequences that would emerge from these false expectations. Many Turkish Cypriots considered these elections as a referendum for EU membership, and so did the European Commission. When progressive forces, calling themselves ‘supporters of settlement’,21 declared some sort of a victory with 25 seats (of 50 seats) in the parliament for the first time ever in history, Verheugen stated in a speech at the European Parliament that, ‘the majority of Turkish Cypriots support the EU membership of an island reunited by the United Nations Plan. Genuine Turkish Cypriots declared their wish in Sunday’s elections...it’s apposite and logical to respect the majority’s will.’22 While the Republic of Cyprus was preparing to sign the accession treaty, along with nine other enlargement countries, Turkish Cypriot attitudes towards Turkey were changing. They had now shifted from the long-standing, ‘thanks to motherland’23 mentality to ‘Ankara, we

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want neither your money, nor your economic package, nor your officers. We, the Turkish Cypriots have the knowledge, skill, potential and competence, to rule ourselves. We don’t want to be slaves.’24 At the same time, Turkish politics was also changing. The Erdogan government realised that being perceived as being in favour of a Cyprus settlement would pave the way for Turkey to receive a date for the start of EU accession negotiations. As a result, the Turkish government’s support slowly moved from Denktas to Mehmet Ali Talat, the leader of CTP, who in turn managed to turn the Turkish Cypriot uprising into concrete votes. However, the Greek Cypriot community, which was watching these developments with a degree of bewilderment, failed to reciprocate the excitement of the Turkish Cypriots at the prospect of reuniting their island and building a common future. The fifth and the final version of the Annan Plan was submitted to the two leaders by the UN in Burgenstock on 31 March 2004, and was put to the two communities in simultaneous referenda on 24 April 2004 (one week before Republic of Cyprus’ official EU accession). 65 per cent of Turkish Cypriots voted in favour of the Annan Plan while 76 per cent of Greek Cypriots rejected it. This was a great disappointment for not only the Turkish Cypriots (and Greek Cypriot reunification activists), but also for the European Union. The European Commissioner himself stated years later that this was one of the greatest political disappointments of his life.25 The European Commission issued a press release the very same day deeply regretting that the Greek Cypriot community did not approve the comprehensive settlement of the Cyprus problem and stating that a unique opportunity had been missed. At the same time it warmly congratulated the Turkish Cypriots for their ‘Yes’ vote and declared that the EU was ready to consider ways of further promoting economic development of the northern part of Cyprus.26 Two days later, the Council of the EU announced the following: ‘The Council is determined to put an end to the isolation of the Turkish Cypriot community and to facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community and recommends that the 259 million euro already earmarked for the northern part of Cyprus in the event of a

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settlement now be used for this purpose’. In order to send a signal of encouragement to the Turkish Cypriot community that its future rested in a united Cyprus within the European Union,27 and to try to get the measure approved before Republic of Cyprus joined the Union) the Council approved the Green Line Regulation on 29 April 2004 - just two days before the Accession of Cyprus.28 At the same time, the Turkish Cypriots also received promises of assistance from member states, including help with establishing direct flights.

Turkish Cypriots as European citizens The sympathy shown to Turkish Cypriots did not stop when the Republic of Cyprus joined the EU, on 1 May 2004, as a divided island. The acquis communautaire, the EU’s body of laws, was suspended in the northern part of the island in line with Protocol 10 of the Accession Treaty signed in Athens on 16 April 2003.29 However, the European Commission also noted that the, ‘suspension of the acquis does not affect the personal rights of Turkish Cypriots, even though they may live in the northern part of Cyprus, the areas not under government control, being citizens of a Member State, the Republic of Cyprus, they can exercise their European citizenship rights.’30 In some cases, this is applied in practice and works well. For example Turkish Cypriots can now study or live in Member States as European citizens benefiting from the rights given to all European Citizens. This has increased considerably the number of students studying in Europe.31 However, in many other cases, this awkward situation continues to violate the rights of the Turkish Cypriots. For example, as Turkish is not recognised as an official language of the EU, and all EU employees need to be able to speak two languages, Turkish Cypriots in fact need to speak one extra language compared to their European counterparts if they wish to be employed by the European Union.32 Also, they cannot send representatives to the European Parliament (or to any international forum for that matter).33 They face restrictions on freedom of movement of their goods.34 This is on top of restrictions that exist with regard to wider European integration. For example, they are excluded from the

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European Bologna Process.35 Moreover, they cannot participate in international sporting contests. Turkish Cypriot football clubs cannot even have a soccer game with a European team.36 Following the yes vote of the referendum, the European Commission declared that, ‘as the Turkish Cypriot community expressed overwhelming support for the UN Plan to reunify Cyprus it would have been unfair, to say the least, to leave it out in the cold.’ The Commission therefore proposed a package of aid and trade measures in order to, ‘put an end to the isolation of the Turkish Cypriot community and to facilitate the reunification of Cyprus’. This package included implementation rules for the Green Line Regulation, which had already adopted by the Council in April 2004, the Direct Trade Regulation and the Financial Aid Regulation, all of which would facilitate trade from the northern part of the island and strengthen its economic integration through financial assistance of €259 million.37

The problem of direct trade According to Verheugen, ‘if adopted by the Council, [the package] will foster the economic development of the northern part of the island. It will also build new bridges between the two communities and thus keep alive hopes of the reunification of Cyprus.’ The crucial element of this phrase was, ‘If adopted by the council’. The problem was that, by this point, the Council included the Republic of Cyprus, which considered ‘isolation’ a myth and insisted that those in the international community who wished to contribute constructively to the economic and political welfare of Turkish Cypriots should work closely with the Government of Cyprus for the reunification of the country. The direct trade regulation specifically was problematic as the Cypriot government believed that it was illegal and regarded it as de-facto recognition of TRNC, thus threatening its sovereignty38. Even though the economic benefits of direct trade would not be massive,39 the Turkish and Turkish Cypriot side nevertheless embraced the regulation as it would bring direct flights to Europe. The direct trade regulation therefore became a politically delicate issue and created an impasse in Turkish Cypriot-EU relations.

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In a letter to Olli Rehn, the new commissioner responsible for enlargement, in May 2005, the Turkish Cypriot Chamber of Commerce proposed a compromise solution: free trade. This proposal put forward the idea of free circulation of goods all over the island, together with the rest of the Customs Union Area. Convinced that the Direct Trade proposal would never be accepted by the Council as it stood, the Chamber suggested the de-coupling of two regulations and the immediate adoption of the Financial Aid Regulation. Free trade would then be achieved via extending the Green Line regulation to include imported goods.40 The Chamber then tried to persuade the member states and the Commission to adopt their proposal, even opening a representative office in Brussels to lobby the Commission, the Parliament and the Council more effectively. This was a very important step since for the first time Turkish Cypriots would have a permanent voice in Brussels.41 Representatives of the Turkish Cypriot civil society together with Turkish Cypriot officials flew to Brussels to attend the inauguration of the representation office on 19 September 2005. The Commission, the Parliament and the Council showed their support by sending high ranking officials to the event.42 However, while the free trade proposal was supported by a number of member states, it was never brought to discussion in the Council; which instead kept discussing whether the direct trade proposal would mean recognition or not, without getting into its substance at all. Meanwhile, the Turkish Cypriot authorities had placed so much political importance on direct trade that they rejected any idea of decoupling the issues out of hand. They refused to listen to the president of the Chamber of Commerce, who was by now insisting that the financial aid regulation should be adopted immediately rather than waiting for the Council to approve both regulations.43 Hence, the two regulations stayed on the table for almost two years until the Turkish Cypriots and (Turkey) finally agreed to decouple the two proposals and accept the Financial Aid Regulation.44 Relations between the Turkish Cypriots and the EU institutions started deteriorating at this stage as both sides realised that ending the isolation of the Turkish Cypriots would not be as easy as they might have first imagined. Certainly, the European institutions had

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not expected the Republic of Cyprus, a Member State, to continually block any steps towards the Turkish Cypriots on the grounds that it could amount to recognition of the TRNC. Neither did they anticipate that the Turkish Cypriot side would try to score its own political points over the question of non-recognition; especially as Talat had admitted that he had been devastated – and had cried – when the TRNC was declared in 1983.45 On the other hand, the Turkish Cypriot side felt left outside in the cold. Nothing was moving in the direction they had originally expected. Indeed, despite statements made by a number of European leaders that it might have been possible to organise direct flights to Ercan airport, the only international plane that ever landed there was one from Azerbaijan. However, despite the original hope that direct flights could be started, it later became clear that this would not be possible under the terms of the Chicago Convention, which governs international civil aviation. This was apparently confirmed by a British Supreme Court ruling on the matter following a lawsuit brought by Cyprus Turkish Airlines against the British Ministry of Transport.46

Institutional links with the European Union Despite the problems that arose over direct trade and direct flights, and ongoing Greek Cypriot concerns over recognition, efforts were nevertheless made to try to strengthen the institutional links between the EU and the Turkish Cypriots. The first of these was the European Parliament High Level Contact Group. The Conference of Presidents of the European Parliament, made up of the leaders of the political groupings in the European Parliament,(EP), set-up the High level Contact Group on 29 September 2005 in order to, ‘respond to the pressing need to strengthen relations with the Turkish Cypriot community and to contribute in a manner which is constructive and respectful of all sensibilities to defining a modus operandi for Parliament vis-à-vis the Turkish Cypriot community, until such time as the question of reunification of Cyprus has been resolved.’47 The group is made up of one representative from each political group and one non-attached member. Over the course of five years, it has visited the northern part of Cyprus ten times (each time for a

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day or two) and met with some members of the civil society and with a number of ‘elected representatives of the Turkish Cypriot community’. This did not go beyond talking to people and writing reports to the conference of presidents and fell short of contributing to ending the isolation of the Turkish Cypriot community. Cem Ozdemir a member of the group (representing Greens/EFA), in his letter dated 26 October 2007 to the President of EP, voiced the Turkish Cypriots’ disappointment with the inaction of the EP. As he noted, ‘the High-level Contact Group has already travelled to Cyprus four times to meet with roughly the same people and say roughly the same things without any consequences following the conversations.’48 Unfortunately, the next six meetings changed nothing. The other major institutional development was the creation of the European Union Programme Support Office. The Financial Aid Regulation,49 adopted on 26 February 2006, laid down the conditions, areas and procedures for the implementation of the 259 Million Euros to be spent over five years. These funds were to be used to promote social and economic development; support the civil society; prepare for the implementation of the acquis communautaire; and bring Turkish Cypriots closer to the Union. In order to oversee this, the Commission opened an office in the northern part of Cyprus. This office’s function is purely one of oversight regarding implementation. It has no political jurisdiction. The Turkish Cypriot community did not regard it that way, though. They wanted to see the office become involved with political issues. Meanwhile, the Greek Cypriot side sought to ensure that nothing done by the office would in any way imply recognition of any public authority in the areas outside of the effective control of the Government of the Republic of Cyprus. They therefore watch over the office to make sure that the rights of natural and legal persons, including the rights to possessions and property, would be respected as it was indicated in the regulation.

Trust issues The European Commission had to respect international law as well as its own rules and regulations to make sure that ‘European

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taxpayer’ money was used soundly. They therefore spent one year building the contractual procedures by which to deliver the aid. During this time the support and trust in the EU amongst Turkish Cypriots had dropped considerably. The Eurobarometer (EB) 67,50 which was carried out in Spring 2007, indicated a 13 per cent decrease as compared to EB 62, carried out in Autumn 2004. The first tangible results from the Support Office were grant contracts signed with students and teachers in summer 2007.51 More contracts with students, farmers and schools came the following year, as well as a few infrastructure works that had been frequently mentioned in the press. These developments also coincided with the change of the Greek Cypriot Leader,52 which in turn helped to foster the belief that an overall settlement to the Cyprus problem might be reached between Christofias and Talat.53 As a consequence, trust in the European Union went back to its original level of 49 per cent. This was very close to the EU average (50 per cent) reported by the EB 69 in Spring 2008. However, the trust in the European Union started decreasing again, along with the hopes of a settlement, when Talat’s originally stated end of year deadline for an agreement passed without a settlement.54 After the CTP lost the elections in April 2009, an outcome it blamed on the EU, overall trust in the Union fell even further. Another important factor contributing to the decline of the level of trust to 35 per cent in Spring 2009 was the verdict given by the European Court of Justice in the Orams case.55 In its landmark ruling, the court suggested that a decision taken by a Greek Cypriot court against a British couple who had bought a property that belonged to a Greek Cypriot, be taken into consideration by other member states. This further increased the levels of mistrust amongst Turkish Cypriots towards the European Union and its institutions. Another area of concern was the perception that the European Union could not keep its promises. There are many reasons for this feeling. To start with, Turkish Cypriots expectations from the Union were very high. They expected the European Union to solve all their long-lasting problems and improve their economy and democracy. They did not realise that EU membership was a tool they could use to improve their system themselves. As Cigdem Aksu, a consultant on European Union affairs, noted:

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An unrealistic public opinion was created by some political parties on the European Union. Some believed that the EU would be a part of the settlement [of the Cyprus problem] others regarded it as an organisation that would bring wealth and prosperity. With the implementation of the Financial Aid Regulation, they now understand that the EU is actually comprised of rules and procedures at the same time and prosperity does not come from the EU but a certain level is needed to be acquired in order to become a member of the EU. 56 Although Turkish Cypriots became European citizens as of 1 May and they gained prestige as a result of their yes vote in the referendum, nothing changed vis-à-vis the international law. The Republic of Cyprus, now an EU member state, watched carefully and used every tool at hand, including suing the European Commission,57 to make sure that international law was respected. Hence, both the EU and its member states realised that lifting the isolation of Turkish Cypriots would not be as easy as they had originally thought. They had to come up with creative solutions to by-pass the problems. Sometimes they managed to do so most of the time they could or would not.

Conclusion In the context of the European Union, the northern part of Cyprus is a unique case. Many rules and procedures of external aid, as well as lessons learned in other places, were not directly applicable, or did not constitute the best method for the Turkish Cypriot community. The European institutions as well as experts commissioned by the EU institutions, failed to take this into consideration and assumed that what worked somewhere else would also work in the northern part of Cyprus. However, a unique situation needed unique formulas. ‘Incoming EU experts or European Bureaucrats did not develop programmes specifically needed for Turkish Cypriots. Although they held many meetings with relevant stakeholders, the views expressed in these meeting were not taken into consideration when the programmes were being designed. Additionally, the difficulties in

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getting anything approved by Brussels, coupled with the the lack of cooperation with public institutions, served to create many problems. This affected the public opinion in a negative way’ commented a Turkish Cypriot official in charge of economic development.58 Another disappointment was the reluctance of the European Union to get involved with the Cyprus Problem and take the side of the Turkish Cypriots following their positive response to the Annan Plan. But this was always unlikely. As Georg Ziegler, from the European Commission, noted: Despite what you hear in some corners, the EU is not in a position to act as a neutral broker of a future comprehensive settlement. The leader of the Greek Cypriot community in the negotiations on a comprehensive settlement under UN auspices is at the same time the Head of State and Government of the Republic of Cyprus as a Member State of the European Union. By this fact alone the EU is inherently biased, whether one likes it or not. Therefore the EU's role is mainly to support the UN in reaching a settlement and to make sure that the settlement is reconcilable with EU membership.59 This reality has had a negative impact on the Turkish Cypriots. Some believe that the European Union’s stance is in fact intended to try to reduce the Turkish Cypriots to a minority under Greek Cypriot administration. A businessperson commented, ‘even if they give us 559 Million Euros instead of 259, I will not forgive them.’60 However, despite their disappointments and grievances, the majority of Turkish Cypriots still perceive EU membership and the application of the acquis communautaire as something positive61. A civil society representative summed it up as follows: ’Although I don’t hold a positive view of the European Union any more, I still support a settlement and EU membership.’62 Moreover, the latest election results, which saw Dervis Eroglu elected as Turkish Cypriot leader in April 2010, should not be interpreted as a manifestation of mistrust in the European Union. They are more an indication of disapproval of Talat’s and CTP’s policies than a reflection of their position towards a settlement and

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the European Union. Although Turkish Cypriots are disenchanted by the European Union, and the international community in general, and despite the ever loud voices of eurosceptics, the majority still sees the European Union membership as vital to their future.

Endnotes 1. Protocol 10 of the Accession Treaty, 2003. 2. OJ L133 of 21.05.1973, p. 2. 3. This article gives the right to veto to the President and the Vice President of the Republic, on any law or decision of the House of Representatives or any part thereof concerning foreign affairs, except the participation of the Republic in international organisations and pacts of alliance in which the Kingdom of Greece and the Republic of Turkey both participate. The other argument used was that the constitution forbade the membership of Cyprus in international organisations in which Greece and Turkey were not members. 4. Yiangou, G.S., The Accession of Cyprus to the EU: Challenges and Opportunities for the New European Regional Order, Journal on ethnopolitics and minority issues in Europe, 2002. 5. The Daily Telegraph, 31 March 1998. 6. Die Welt, 31 March 1998. 7. Spokesperson of Gunter Verheugen, EU Commissioner responsible for Enlargement, 1999-2004. 8. Habervitrini, 12 October 2002. 9. Our vision; 26 June 2001; Turkish Cypriot Chamber of Commerce Publication. 10. Phileleftheros, quoted in Yeni Demokrat, 7 October 2001. The TCCoC was an organisation recognised by the Republic of Cyprus, therefore there was no legitimacy/recognition of the ‘illegal state’ issues. 11. More organisations signed the declaration later on, raising the number to 101. These organisations then formed the Common Vision platform and organised demonstrations in support of the Annan Plan and EU membership. 12. Chrysostomos, P., The Cyprus Referendum (London: I.B.Tauris, 2009). 13. Denktas had health problems preventing him from attending the council and sent Ertugruloglu, the Foreign Affairs Minister, instead. 14. European Union, Presidency Conclusions, 29 January 2003. 15. Financing proposal establishing a financial assistance programme to encourage the economic development of the Turkish Cypriot community, EC documents, 2006. 16. Xinhua, 5 June 2003.

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17. Cyprus Mail, 7 June 2003. 18. The checkpoints were opened on 23 April 2003 by the Turkish Cypriot administration, allowing persons cross without requiring prior permission from the Turkish Cypriot authorities. 19. Four massive demonstrations were organised by the common vision platform gathering tens of thousands Turkish Cypriots. 20. Some ten thousand signatures were collected to be sent to the UN Secretary General informing him that the Turkish Cypriot community accepted the Annan Plan. 21. CTP, BDH and CABP were the three political parties basing their election campaign on EU membership. 22. Kibris, 18 December 2003. 23. Thanking the motherland Turkey for saving them in 1974 and looking after them since then. This is a ritual performed in all official meetings with Turkey and on all national holidays. Changing the officials did not/could not change this tradition. 24. First published by Cyprus Turkish Teachers Trade Union as an announcement in newspapers on 30 January 2001 it became a slogan used in demonstrations later on. 25. Euractiv, 23 April 2009. 26. European Commission’s press release of 24 April 2004. 27. Minutes of the 2576th Council meeting held in Luxembourg; 26 April 2004; Council of the EU. 28. Council Regulation No 866/2004: OJL 161 of 30 April 2004. 29. Page 4803 of the Accession Treaty. 30. Website of Enlargement Directorate-General of the European Commission:

31. Returns are Cautious not Definite; Star Kibris Newspaper; 17 June 2007. 32. Beyatli, D; 2006. Article entitled ‘Shared European Values: Democracy, Freedom and Social Justice?’ appeared in Turkish Cypriots, the excluded EU citizens publication of TC Human Rights Foundation; November 2006. 33. Two out of six places in the European Parliament are allocated to Turkish Cypriots. However, Council Decision of 10 June 2004 (2004/511/EC) does not allow the Turkish Cypriots elect their representatives prior to a settlement of the Cyprus Problem. Similarly they are not present in any international platform. 34. All shipments to and from Europe go through Turkey, increasing the costs hugely. 35. Guven, H, North Cyprus: Obstacles on the Way to Bologna and Erasmus,

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Unpublished Paper, 2007. 36. A UK soccer team, Luton Town, came to the northern part of Cyprus for a friendly game with the TC team Cetinkaya in July 2007, but ended up practising among themselves when FIFA did not let Luton Town play with a ‘non-existent’ team. The weirdest soccer game; Milliyet, 13 July 2007. 37. Commission press release; 7 July 2004. 38. A presentation posted on the website of Public Information Office of the Republic of Cyprus entitled ‘The alleged isolation of Turkish Cypriots; myth and reality’. 39. Direct trade regulation proposed preferential treatment for goods originating in the northern part of Cyprus, which is very limited. 40. ‘Free trade connection should be made’, Kibris, 20 May 2005. 41. The TRNC embassy in Brussels was not active in pursuing Turkish Cypriot interests at all. 42. ‘We have to be in Brussels’, Kibris, 20 September 2005. 43. Ali Erel and his team lost the executive board elections on 29 October 2005 as a result of governmental interventions. 44. With the changes made by the Lisbon treaty in the decision making procedures the Direct Trade regulation is now send to the European Parliament (co-decision procedure) for further discussion. However, past experience tells us that it is difficult to pass a regulation when RoC holds the view that ‘This is a regulation which is legally and politically unacceptable and undermines the prospect of reaching a solution in Cyprus.’ Markos Kyprianou, the Minister of Foreign Affairs of the Republic of Cyprus, quoted in European Voice, 20 May 2010. 45. Radikal, 2 October 2009. CTP was known to be for reunification of the island and against the Turkish government’s influence in Turkish Cypriot politics. However, things changed when they came into power and under Turkish influence they started confusing ending the isolation with upgrading the political status of ‘TRNC’. 46. Star Kibris, 29 July 2009. 47. European Parliament, High-Level Contact Group for Relations with the Turkish Cypriot Community in the Northern Part of the Island.

48. The whole letter was published by AB Haber, 30 October 2007. 49. Council Regulation (EC) No 389/2006. 50. Eurobarometer is a series of public opinion surveys performed twice a year on certain issues relating to the European Union across the member states. EB 62 is the first Eurobarometer report on the Turkish Cypriot community. 51. About 400 students and teachers went abroad to study in Europe with the EU Scholarships Programme. For more information on this

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programme see: 52. In February 2008 Dimitris Christofias was elected as the president of Republic of Cyprus, replacing Tassos Papadopoulos who was a hardliner. 53. For years CTP and AKEL (two communist parties) have cooperated. They agreed to strive towards a unified federal state as early as 1977. 54. In June 2009 Talat declared that the talks were going very well and he was expecting a settlement before the end of the year. Kibris Postasi, 12 June 2009. 55. Case C-420/07 Meletis Apostolides versus David Charles Orams and Linda Elizabeth Orams. 56. Interview with the author, 22 June 2010. 57. In February-March 2008 the Republic of Cyprus submitted eight cases against the Commission before the Court of First Instance, arguing that the text of the procurement notices used in the programme implementation could imply recognition of a public authority other than the government of the Republic of Cyprus and requested the annulment of all procedures based on these notices. 58. Interview with the author, 18 June 2010. 59. Georg Ziegler, Deputy Head of the Taskforce Turkish Cypriot community in the Directorate-General Enlargement, conference presentation entitled ‘The EU-dimension of a future comprehensive settlement of the Cyprus problem’, Famagusta, Cyprus, 7 May 2007. 60. Interview with the author, 21 June 2010. 61. According to EB71, 57 per cent of Turkish Cypriots think that EU membership would have benefits for Turkish Cypriots. 62. Interview with the author, 21 June 2010.

7 THE CYPRUS ISSUE AFTER ACCESSION Hubert Faustmann

The role of the European Union in the Cyprus problem is littered with false hopes, miscalculations and misperceptions. This applies both to the period prior to the accession of the Greek Cypriot dominated Republic of Cyprus in 2004 as well as in the period since. The beginning of membership negotiations was already based on a number of miscalculations. The fact that the island was divided and involved in a political conflict with Turkey made Cyprus an unlikely candidate for membership. Even when membership negotiations were launched in 1998, most EU members, outside observers and, above all, Turkey and the Turkish Cypriot leadership did not consider it possible that Cyprus would be allowed to enter the European Union as long as its problem remained unresolved. Doing so would import the dispute into the EU and bring the Union into confrontation with Turkey. However, the Greek Cypriot leadership convinced the EU members that the process of accession would work as a catalyst for finding a solution. Still, few supported the idea that Cyprus could ultimately join without a solution. Ironically, the EU perspective lost its catalytic effect on the Greek Cypriots after Greek pressure forced the EU into accepting Cypriot membership without the pre-condition of a prior solution. (It had threatened to hold up the accession of the other nine candidate states if Cyprus was barred from membership.) Once membership – even as a divided island – was guaranteed at the Copenhagen summit in 2002, a strategy of holding out for a better solution after accession became more popular within certain quarters of the Greek Cypriot

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community. Meanwhile, the EU prospect for a divided Republic of Cyprus had in fact become a powerful catalyst for dramatic changes within the Turkish Cypriot community, which increasingly rejected the positions of its hard-line leader, Rauf Dentkash. It was also a catalyst for Turkey’s Justice and Development Party (AKP) government, which now abandoned the non-solution policy of its predecessors in order to salvage the country’s own EU accession prospects. The impact of the 2002 decision was, for far too long, misunderstood by EU officials and the UN arbitrators, who believed that the Greek Cypriot leadership would support any solution presented. Despite strong indicators to the contrary, they wrongly believed that the Greek Cypriots would vote in favour of a deal in an eventual referendum, even after a well known hardliner, Tassos Papadopoulos, took over from Glafkos Clerides in 2003. Ultimately, the prospect of EU membership in fact became an additional incentive for the Greek Cypriot leadership and many Greek Cypriots to reject the Annan Plan when it was put to a vote in April 2004, only days before the Republic of Cyprus joined the EU. In sharp contrast, the European Commission had unanimously approved the Plan and the European Parliament supported it by an overwhelming majority.1 Unsurprisingly, the Cyprus problem has shaped the relationship between the Republic of Cyprus and the EU ever since. Indeed, Cyprus quickly became known as the ‘single issue member state’.2 The only questions that seemed to be of any real interest to the Cypriot government in the first years after accession were how to ensure that the European Union did not end the isolation of the Turkish Cypriots and how to use any moves to bring Turkey closer to the European Union in such a way as to strengthen the Greek Cypriots’ hand in any future negotiations. In other words, Nicosia appeared to be mainly concerned with how to ensure that the island’s membership of the EU would bring about a settlement much more favourable than the one provided by the Annan Plan. Moreover, for large segments of the Greek Cypriot community EU membership meant that now only a ‘European Solution’, based on the strict application of the body’s principles, was acceptable.

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Ending the Isolation of the Turkish Cypriots Even before it joined the European Union, on 1 May 2004, the Greek Cypriot government was faced with its first major challenge: preventing efforts to end the isolation of the Turkish Cypriots as had been pledged in the European Council conclusions of 26 April 2004. In many ways, the prominence this issue acquired was both unplanned and unforeseen. For many years, Turkish Cypriots had been both politically and economically isolated. This largely stemmed from the 1983 Security Council Resolution 541, which was adopted in response to the unilateral declaration of independence by the Turkish Cypriot authorities. It not only called on member states to refrain from recognising the ‘Turkish Republic of Northern Cyprus’, but had also urged them not to offer any help and assistance to the new ‘state’. As a result, ships were unable to get insurance to operate out of Turkish Cypriot ports and aircrafts were not authorised to fly from Turkish Cypriot airports. The only country that was prepared to accept vessels and aircraft from northern Cyprus was Turkey, which now became the point of contact with the outside world. Turkish Cypriot isolation was further compounded by a ruling of the European Court of Justice, in 1994, which effectively prevented the direct export of goods from northern Cyprus into EU member states. For as long as Rauf Denktash remained in power and continued to obstruct a settlement, this situation was widely accepted as necessary by the international community. However, the decision of the Turkish Cypriots to oppose Denktash and elect a moderate, prosettlement government led by Mehmet Ali Talat in December 2003 triggered a re-evaluation of the isolation of the community. This view grew as peace talks progressed and it became increasingly obvious that the Turkish Cypriots were genuinely committed to reaching a solution. In the run up to the April 2004 referendum, a widespread expectation emerged that if the settlement was rejected by the Greek Cypriots, as seemed likely, but was accepted by the Turkish Cypriots, then steps should be taken to ease their isolation. At the very least, there was a general expectation that direct trade between Turkish Cypriots and EU member states would be established and that steps

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would be taken to allow aircraft to fly directly between northern Cyprus and EU members. Two days after the Turkish Cypriot yes vote in the referenda, the European foreign ministers stated that they were, ‘determined to put an end to the isolation of the Turkish Cypriot community’, and mandated the Commission to make proposals to this end.3 On the same day, the EU Enlargement Comissioner, Günter Verheugen, stated, ‘now we have to end the isolation of the North. The Commission is ready to take various measures for that aim.’4 Similarly, Kofi Annan, the deeply disappointed UN SecretaryGeneral, noted in his official report to the UN Security Council that ‘the Turkish Cypriot vote has undone any rationale for pressuring and isolating them.’5 Of course, any moves to end the isolation would have a potentially dramatic effect on efforts to resolve the Cyprus issue. It would take away one of the main incentives for the Turkish Cypriots to reach a settlement and would be a major step towards the ‘Taiwanisation’ of the north, the most likely development in the absence of a solution to the Cyprus problem. Therefore, almost immediately after the referendum, the Greek Cypriot government focused its attention on ensuring that the tacit promises made to the Turkish Cypriots by the European Union remained undelivered. The first problem was that there was an one week period between the referendum and the island’s accession. Some expected that if the EU moved fast enough it might be able to squeeze through some changes before Cyprus joined and thus would be in a position to block measures. The Green Line regulation, which allows trade in a limited range of Turkish Cypriot goods and was in preparation for months beforehand, was adopted on 29 April 2004. However, it remains narrow in scope and was primarily introduced as a way of regulating a de facto EU external border. Other than that, it proved impossible to take and formalise such extensive decisions within a week.6 Any thought that the Greek Cypriots could be sidelined was based on an unrealistic assessment of EU procedures. All things considered, the Greek Cypriots proved to be far more adept at managing the legal complexities of the issue than anyone, including the Commission, had expected. Most had completely

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underestimated the Cypriot government. The prevailing view was that Cyprus would be steamrollered into accepting agreements ending the isolation of the Turkish Cypriots. In fact, nothing could have been further from the truth. At every turn, both the Commission and those member states most in favour of ending Turkish Cypriot isolation found that Greek Cypriots had managed to find a way to thwart their efforts. Greek Cypriot opposition to direct trade was based on their interpretation of protocol 10 of the EU Accession Treaty that requires unanimity on matters related to the suspension of the acquis in the northern part of Cyprus. The Greek Cypriot side argued that there was no isolation per se since the Green Line regulation was sufficient to facilitate the export of Turkish Cypriot produce without resort to direct trade between the north and the EU. Moreover, Turkish Cypriots were not discriminated against as they could interact with the external world as citizens of and through the Republic of Cyprus. Meanwhile, the opening of ports and airports in the north was not a matter for the EU to decide. It was prohibited by international law.7 In the end, the European Union was forced to present the weakest of proposals compared with what was originally on offer in July 2004, when the Commission had proposed the direct trade regulation, which would have allowed direct exports from ports and airports in the north direct to EU countries and the financial aid regulation. After prolonged wrangling and a decoupling of the two regulations, the Commission eventually implemented the financial aid regulation in February 2006, allowing for the allocation of 259 million euros for the economic development of the north. But the direct trade regulation was never implemented and the export of goods had to be conducted via the ports and airports of the south. The Turkish Cypriots were dismayed and disappointed. They insisted that the regulations for direct trade and economic aid should remain a package as originally intended by the EU Commission in the immediate aftermath of the referenda. Meanwhile, the aid allocated to the north did not materialise. Indeed, it was only after a decoupling of trade and aid regulations had taken place that an EU office to administer the aid package was set up in the north. Only in 2008 the money finally started flowing, once Greek Cypriot legal

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appeals against the Commission were dismissed.8 Much to the surprise of many Turkish Cypriots, who had misperceived European procedures and whose business community often failed to make use of the entrepreneurial opportunities, a significant part of it ended up in the pockets of successful European tenders. All this had a serious effect on relations between Cyprus and many of its EU partners. As far as the Cypriot government was concerned, the attempt to lift the isolation of the Turkish Cypriots was a move by certain elements in the EU to punish the Greek Cypriots for their rejection of the UN plan and an effort to undermine the authority of the Republic of Cyprus. Also, as they saw it, lifting the embargoes on trade would weaken future attempts to reach a settlement for reasons outlined above. With a more complete and independent relationship with the outside world, Turkish Cypriots would no longer be interested in settling at the negotiation table. Meanwhile, although there may well have been an element of vindictiveness in their policy, which also seemed designed to assert their authority over the Turkish Cypriots, Greek Cypriot objections to the EU’s plans were nevertheless built upon legitimate concerns regarding the implications of easing the isolation of the north.

Membership as Leverage I: Turkish Accession Talks In many ways, the whole debate about the end of Turkish Cypriot isolation was an unexpected and unwelcome diversion for the Greek Cypriots. Instead, the main issue that the Greek Cypriots had expected to focus on was the question of Turkish membership of the European Union and the ways in which this aspiration could be used to bring about a more favourable settlement than the Annan Plan. In the immediate aftermath of the referendum, there was a widespread view that the decision by the Papadopoulos administration to reject the Plan was a tactical move. After the island joined the European Union, another effort to reunite the island would quickly be initiated. This time, however, the fact that Cyprus would be a full member of the European Union, and thus able to block Turkey’s further integration unless it accepted at least some of the changes the Greek Cypriots wanted, would ensure that some of the more unpalatable

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elements of the plan might be removed. Once again, this brought Cyprus into conflict with many of its new EU partners. For most of the member states and the European Commission, the prevailing view was that Ankara’s stance in the latter stages of the negotiations, as well as its unequivocal support for the Annan Plan (once its conditions had been met in Bürgenstock), meant that it had fulfilled its obligations as regards the Cyprus issue. If Greek Cypriots rejected an acceptable plan, then Turkey could not be blamed. It had done what had been expected and should be rewarded accordingly. However, it soon became clear that for all the differences between the sides a settlement still needed to be found. While Turkey may have played a positive role in the search for a solution on this occasion, it was not absolved of any responsibility to find a solution to the division of the island. Moreover, bolstered by its new status as a full member of the European Union, Cyprus was indeed now in a position to block the start of membership talks with Turkey. But despite expectations that Nicosia would seek to restart negotiations and use the question of accession talks as leverage, the Cypriot government showed no intention of reengaging in peace talks. By October 2004, it seemed clear that there was not going to be another attempt to negotiate a settlement and conduct a second referendum prior to the end of the year. Instead, it now appeared as if the Cypriot government had developed a long-term strategy based on the perception that the closer Turkey came to membership the more willing it would be to make concessions on Cyprus. As well as trying to remove the Annan Plan as the basis for future negotiations, Nicosia presented its EU partners with what amounted to a wish list of demands that Turkey would have to satisfy if Cyprus were to agree to allow the start of membership negotiations. The demands included the recognition of the Republic of Cyprus, the signing of the Customs Union Agreement, the opening of Turkish ports and airports for Cypriot vessels and aircrafts, the lifting of its vetoes on Cyprus’ participation in various international organisations (Partnership for Peace, NATO, OECD, International Energy Agency), the removal of all remaining obstacles regarding Cyprus’ participation in the Common Security and Defence Policy of the EU, the end of mainland Turkish immigration and the return of settlers to

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Turkey, the withdrawal of Turkish troops from the island and an end of the increased exploitation of Greek Cypriot properties in the north.9 It was an extremely ill conceived move on the part of the Cypriot government, putting it at odds with almost every one of its new partners. Firstly, Cyprus was quite clearly going against the will of the rest of the European Union, including Greece, all of which accepted that Turkey had effectively met its obligations to start talks. Secondly, this behaviour could precipitate a major crisis between the European Union and Turkey. Ankara would feel aggrieved if, after all it had done, it was now denied talks by a European Union that had failed to stand up to Cyprus. Indeed, such an eventuality would certainly lead many in Turkey to argue that the only reason the EU had accepted Cyprus at all would be because it knew that the island would block Turkey’s further integration with the European Union. Lastly, the move went against all the accepted norms of EU behaviour. By presenting such an extensive list of demands that its partners would have to accept in return for not using its veto, the Cypriot government proved that it had little or no understanding of the very basics of politics within the EU. On the whole, decisions in the EU were made on the basis of consensus. Where deep division existed, member states would work to find common ground and reach a joint position. This often required delicate behind the scenes negotiations and bargaining. It was simply unacceptable for any member state, no matter how large, simply to publicly present its partners with a list of demands. For many observers, therefore, the behaviour of the Cypriot government was not only seen as bad manners, but it was also a clear example of why it had been a mistake to accept the island in the first place. Others took a more generous view, arguing that the move was based on naivety about the workings of the European Union. Most agreed that there was no way that the list of demands would be accepted. In the end, the Cypriot government would end up looking weak in the eyes of its own people. And so it happened. The Greek Cypriot government soon received a hard lesson in the reality of the working of the EU. The demands were rejected by the other member states, which collectively made clear that they would not accept a diktat from

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Nicosia. In the run up to the December European Council, Nicosia was progressively forced to water down its demands. However, at the same time, Papadopoulos could not simply abandon his demands altogether, especially as there was now a strong public opinion that favoured the use of the veto unless Turkey agreed to some concessions to the Republic of Cyprus. In the end, Papadopoulos went to Brussels with only one demand left: the formal recognition of the Republic of Cyprus. But even this was watered down. The final decision reached was that Turkey would be allowed to start membership talks in October 2005 on condition that it ratified the extension of the customs union to all ten of the member states that had joined seven months earlier, including the Republic of Cyprus. For Cyprus, this was certainly better than nothing. Indeed, it could even be presented as a victory of sorts. Extending the customs union would amount to tacit recognition of the Republic of Cyprus and implied the opening of its ports and airports to Greek Cypriot vessels and planes. Indeed, while the decision could not be read to mean that the EU had given in to the Cypriots, it was nevertheless a first indication of the newly acquired political strength Cyprus had gained since joining the EU. If Turkey wanted to join the bloc it would have to recognise all its members, including Cyprus (even if the Turkish Government insisted that the extension of the customs union would not amount to recognition),10 and implement the customs union universally.11 Papadopoulos duly presented the outcome as a victory for Cyprus. While he had not managed to get the EU agree to a shopping list of demands, he had nevertheless resisted the pressure to simply allow Turkey to start talks as a reward for endorsing the Annan Plan. Moreover, Ankara’s commitment to implement the customs union could be interpreted as a sign of indirect recognition of the Republic of Cyprus. The Turkish government also knew this. Therefore, despite its commitment to signing the agreement, Turkey had no intention of recognising the Republic of Cyprus, either openly or implicitly.12 Arguing that the agreement would not be able to pass through the Turkish Parliament, over the next few months it became apparent that there was little chance that the customs union would be signed, let alone ratified and implemented in time to meet the October 2005

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deadline for the start of talks. But following pressure from EU members, in June 2005, Turkey signed the Ankara Protocol extending its customs union to the ten new member states. However, just days later, on 29 June, the situation escalated when Ankara issued a unilateral declaration claiming that its signature did not indicate the formal recognition of the Republic of Cyprus. This triggered another crisis. The Cyprus Government once again threatened to use its veto pointing out that the deal reached in December 2004 had explicitly recognised that Turkey needed to sign the agreement before accession talks started. This view was also supported by France, which also insisted that Turkey had a legal obligation to honour the agreement. However, few other countries, including Greece, seemed willing to pick a fight with Ankara at this stage. After discussions between the French and British governments, Paris backed off. The Greek Cypriots were again isolated. In the end, the EU simply issued a counter-declaration stressing that the Turkish document had no effect on Turkey’s legal obligation to implement the Ankara Protocol. However, no binding time framework was given for when this should take place and, on 5 October 2005, Turkey officially began its formal membership talks with the opening of six chapters. The Turkish government justified its continued refusal to open its ports and airports to Cyprus with the failure of the EU to honour its commitment to end the isolation of the Turkish Cypriots. By now, Nicosia had twice accepted pressure from its EU partners to relent. It was clear that there could not be many more opportunities to force the Cypriots to back down. Although formal membership talks had started, the intergovernmental nature of the process required the formal acceptance of all member states to open and close every chapter in the negotiations. As was pointed out by Papadopoulos, with 35 chapters in the acquis communautaire, Cyprus had 70 chances to veto Turkey’s progress towards accession on top of the need for a Greek Cypriot approval of Turkish membership once negotiations were completed. It was against this backdrop that Olli Rehn, the EU Enlargement Commissioner, referred to the impending ‘train crash’ in Turkish EU relations if Ankara did not implement the customs union.13 With this in mind, in June 2006, the Cypriot government again threatened to use its veto,

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this time to block the opening of the Science and Research chapter. A series of negotiations was held in order to avert a crisis. Once again, Cyprus gave way in return for another commitment from its EU partners that Turkey would have to implement the customs union. This time, however, there was a real sense that Ankara needed to take action. It had been over two years since the referendum and much of the initial hostility towards Cyprus amongst the members of the EU had by this point dissipated. Few felt the need to try to continue to punish Nicosia. At the same time, there was a rising sense that Turkey’s behaviour was simply unacceptable. This was not just about Cyprus. There was an important legal principle at stake. Ankara needed to implement the customs union as much to show that it was willing to abide by the rules of the club as anything else. In addition to this, there was an increasing scepticism across the EU about the prospect of Turkish membership. The rejection of the European constitution in referenda in France and the Netherlands, in May 2005, had in part been blamed on the fear of European voters about further enlargement to take in Turkey.14 Moreover, countries such as France, the Netherlands and Austria, which were now seen as most opposed to Turkish membership, were becoming ever more vocal. Meanwhile, new efforts to restart talks in Cyprus, in July 2006, had brought no real progress; largely as a result of the stalling strategy adopted by Papadopoulos who clearly held out in the hope that Turkey’s accession path could be used to achieve a much better deal and that in this respect time was on his side. In the run up to the EU summit in December 2006, the Papadopoulos administration threatened to use its veto again. Cyprus was adamant that the EU commit Turkey to a specific time frame within which Ankara should implement the Ankara Protocol. Next to the standard demands of recognition of the Republic of Cyprus as well as the opening of ports and airports, Nicosia returned to some of its demands from November 2004 insisting that Turkey stop blocking the island’s cooperation with and application to international organisations, otherwise Nicosia would not agree to the opening of the first chapters of Turkey’s accession negotiations.15 It came to a showdown at the summit since Turkey insisted on its non-

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recognition of the Republic of Cyprus and stated that it would only implement the Customs Union if Cyprus and the EU lifted their embargo against the Turkish Cypriots. Papadoploulos insisted on the total suspension of accession negotiations with Turkey and was backed by some member states like Germany and the Netherlands, which supported only a privileged partnership for Turkey. Austria called for a ‘breathing pause’ in the negotiations while France favoured the suspension of 17 chapters. This time, the Greek Cypriot strategy resulted in its biggest success so far. The final compromise was to suspend 8 chapters of the acquis and to close none until Turkey met its obligations. Moreover, the Commission would report on Turkey’s compliance at the end of every year and review the situation at the end of 2009. A parallel development was that, for the first and so far only time, the EU attempted actively to mediate in the Cyprus dispute in the run up to the summit. The Finnish EU presidency had suggested a process by which Turkey would open some ports to Greek Cypriot shipping, Turkish Cypriots would be able to export goods directly to the EU through the port of Famagusta under EU supervision, and Greek Cypriots would be able to rebuild the abandoned resort of Varosha under UN administration. Whereas neither side rejected the plan outright, the Turkish and Turkish Cypriot sides were still adamant that direct flights to and from Europe through the airport in the ‘TRNC’ also be included as part of any deal, something regarded as absolutely unacceptable by the Greek Cypriot side since an airport could only be operated by a recognised state. Greek Cypriots, for their part, demanded the return of Varosha under Greek Cypriot administration as essential to an agreement. Although a bold and innovative move, the effort failed.16 Although Turkey opened five more chapters in 2007 without a Greek Cypriot veto, the stalemate nevertheless continued. Even the passing of the Lisbon Treaty, which was signed by Cyprus on 13 December 2007, had little effect on this area of EU businesses. It did not change Greek Cypriot veto rights on the opening or closure of chapters in Turkish accession negotiations nor did it remove Nicosia’s ultimate veto on Ankara’s membership. But it might affect Greek Cypriot obstructive powers in relation to direct trade between

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the EU and the north in the future since direct trade became now – at least in the view of the Commission – subject of co-decision making. If this view prevails, the Greek Cypriots could be outvoted. But the EU as a whole is unlikely to embark on a confrontation with the Republic of Cyprus despite efforts by the Commission and segments within the European Parliament to bring the issue back on the agenda in 2010. This could change though should Nicosia be seen responsible for a failure in the ongoing or future negotiations or in case of a second Greek Cypriot ‘no’ in a future referendum about the reunification of the island. In early 2008, at the last EU summit before the Greek Cypriot presidential elections, Brussels again assured that Cypriot Government that Turkey would remain under pressure to act by the end of 2009. The conclusions of the meeting not only included a demand for the implementation of the Ankara Protocol, the member states also adopted another Greek Cypriot request to call on Turkey to stop blocking Cyprus from joining international organisations.17 The EU pledge to review Turkey’s compliance with its commitment to implement the Ankara Protocol by the end of 2009 was broadly perceived as a deadline for Turkey to open its ports and airports to Cyprus by December 2009 or else face serious consequences. Consequently, the Greek Cypriot strategy following Christofias’ election in February 2008 was to try to steer the resumed bi-communal negotiations – ‘by Cypriots for Cypriots’ – in such a way that the final give and take period would coincide with the Turkish progress report by the European Commission and the subsequent EU summit in late 2009. And although the Cyprus talks had progressed far less than expected when 2009 came to a close, the Greek Cypriots firmly believed that the progress report and the ensuing summit would provide sufficient leverage to squeeze concessions on the Cyprus problem from Turkey. Thus, the usual rhetoric of a Cypriot veto or at least the need for a serious ‘punishment’ prevailed in the period prior to the progress report. However, the eventual findings of the report came as a shock to the Greek Cypriots. While clearly stating that Turkey had not fulfilled its obligations, no sanctions were recommended. The perceived support of Ankara for the settlement negotiations and the desire not to upset

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the negotiations played a role here as did the fact that a settlement of the Cyprus dispute seemed possible given that the bi-communal negotiations seemed to have entered a decisive phase. The EU stand made sense since a solution of the problem during 2010 would resolve the issue of recognition of the Republic of Cyprus by Turkey anyway. It was clear that the overwhelming majority of the EU member states had no wish to create further obstacles on Turkey’s EU accession process or to confront and alienate Ankara.18 This policy was embraced even by Cyprus’ traditionally closest ally, Greece. Its newly elected Prime Minister, Papandreou, agreed that while Turkey’s EU aspirations should be harnessed to find a solution to the Cyprus problem, he did not join in the public demands of Greek Cypriot politicians for Turkey to be punished during his visit to Cyprus in October 2009.19 The anger and frustration with the EU progress report was epitomised by President Christofias who compared the EU policy towards Turkey with the appeasement policy of Britain and France towards Nazi Germany, raising more than just eyebrows in Brussels: I don’t compare Turkey with Nazi Germany. But it is not reasonable to say don’t challenge Turkey because it will get angry. There are rules and unfortunately Turkey does not respect those rules…This reminds me of the situation before the Second World War, appeasing Hitler so he doesn’t become more aggressive.20 In the end, the EU progress report again led the Greek Cypriots to threaten to use its veto to block Turkey’s further progress towards accession. In response, Ankara argued that any sanctions would have a negative impact on the ongoing negotiations in Cyprus. Unsurprisingly, Greek Cypriot representatives once more found themselves isolated at the EU summit. But, this time, they did not budge. At the General Affairs and External Relations Council, on 8 December 2009, Markos Kyprianou, the Cypriot Foreign Minister, announced that Cyprus might block the opening of six more chapters unless Turkey met ‘certain conditions’ and also retained the option of freezing or blocking any other chapter depending on the

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circumstances.21 This led to a confrontation between Kyprianou and David Milliband, the British Foreign Secretary. In the end, it was agreed that the General Affairs Council report on EU enlargement would use stricter language, demanding progress on the implementation of Turkish obligations towards the EU ‘without further delay’.22 Christofias and Kypranou hailed this as a good outcome, even though Turkey did not change its policy in the months following the summit. As a result, on 21 December, Ankara was permitted to open the Environment chapter of its accession talks (which was not on the list of the six additional chapters whose opening Cyprus threatened to veto) without objections from Nicosia. Still, Britain felt the need to publicly reprimand Nicosia for its stand at the last EU summit one day later by publicly declaring that bilateral problems should not hold up the EU accession process and should be resolved by the parties concerned bearing in mind the overall interests of the bloc.23

Membership as Leverage II: A ‘European Solution’? The view of some in the Greek Cypriot political arena that a European solution is on the cards is unwise and shows their ignorance of the EU […] I’m afraid that, from the very beginning, many Greek Cypriots have regarded the European Union not as a balance of rights and responsibilities that people assume when they join, but as a one-way ticket to getting everything they want and haven’t been able to get out of the international community over the previous period. – Lord Hannay24 The harsh criticism from the British special envoy during the negotiations on the Annan Plan, and one of the Greek Cypriots’ favourite hate figures, refers to a recurrent theme espoused by parts of the Greek Cypriot elite and public: that the European Union can be mobilised as an ally to provide more favourable parameters for a solution of the Cyprus question. This is not merely a post-2004 phenomenon. The Greek Cypriots originally applied to join the

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European Union in order to strengthen their hand in the Cyprus problem. In 2004, the argument that EU membership would give the Greek Cypriots the chance to obtain a much better deal than the Annan Plan fuelled the ‘No’ campaign in the referendum. Since then, leading representatives of the Greek Cypriot side, usually from the more hard line segments of the political landscape, have demanded what they call a ‘European Solution’ to the Cyprus problem – that is, one founded on the full implementation of EU norms and values.25 In substance this ‘European Solution’ embodies three notions. Firstly, Greek Cypriot majority rule to realise the democratic principle of one citizen, one vote. Secondly, respect for human rights, ensuring the full return of Greek Cypriot properties and refugees and lastly the full implementation of the EU’s acquis communautaire without permanent derogations.26 In short, in its most extreme form, the ‘European Solution’ would amount to a Greek Cypriot-dominated unitary state with minority rights for the Turkish Cypriots. This idea of a ‘European Solution’, understood as camouflage for Greek Cypriot majority rule, is based on three misperceptions of the EU as well as political wishful thinking. The first relates to the way the European Union solves problems and reaches agreements in conflict situations. The EU, as a ‘consensus machine’, regularly finds ‘European Solutions’ based on the smallest common denominator, rather than pandering to maximalist demands. Such solutions are based on compromises achieved after hard bargaining. The pursuit of agreement influences the process and often provides for temporary, or even permanent, derogations and clauses allowing members to opt out of certain policies. (The non-introduction of the Euro in Great Britain, Denmark and Sweden is just one prominent example). The second misperception of the EU among Greek Cypriots relates to the role of the union in domestic and interstate conflicts. The EU has consistently avoided becoming overtly involved in the resolution of ethnic or religious conflicts within or between its own member-states. It encourages, supports and accommodates solutions, but does not shape them; it insists only on guarantees of human and minority rights for ethnic or religious minorities (which in any case are not disputed between Cyprus’s two main communities).

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As a result and unsurprisingly, the EU has in the post-2004 period largely avoided taking sides in Cyprus. As seen above, its involvement has not exceeded half-hearted pressure on Turkey to honour its signature and extend the Customs Union to the Republic of Cyprus by implementing the Ankara Protocol. Thus the EU has in this case refrained from championing its own core values, which include a requirement that a candidate country (Turkey) recognises all its member-states and implements a free market. Brussels has also insisted that Cyprus should be able to speak with one voice after a solution and embarked on a partially failed attempt to reward the Turkish Cypriots for their ‘yes’ vote by lifting economic restrictions on the north. The European Council uses a standard phrase to convey the nature of the solution to the Cyprus problem it envisages: ‘The EU is ready to accommodate a settlement in line with the principles on which the EU is founded.’27 But, this phrase, incorporated in the treaty governing Cyprus’s accession, is supposed to signal the EU’s overall flexibility (rather than its commitment to particular forms of action). Understandably, but wrongly, the proponents of a ‘European solution’ interpret this phrase differently. Thirdly, the false hope of a European Solution is a based on a misperception – or deliberate misreading – of European values. For instance, there is the view that majority rule is the only form of democracy, and that it forms the basis for the democratic state structures of EU member states and the functioning of the EU and its bodies themselves. This particularly refers to the full application of the one-man-one-vote principle as the basis for political representation and therefore power. The idea to equate democracy and thereby the EU as an association of states with the full implementation of one-man-one vote principles is clearly wrong. It is deliberately modified in many constitutional structures of the member states of the European Union but also the EU bodies themselves. Any division in electoral districts with an unequal number of voters already violates this principle. On a state level this applies in particular to its federal members like Germany but also to its ethnically or religiously divided societies run as consociational democracies like Northern Ireland. 28 As far as EU institutions are

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concerned, the weighting of votes in the European parliament or council of ministers gives disproportionate power to smaller states. Ker-Lindsay rightly points out that the six seats for Cyprus in the European Parliament would require 541 seats for Germany (instead of its current 99) if the vote of each EU citizen would carry the same weight. On issues requiring unanimity, Cyprus’ vote in the Council of Ministers representing 750,000 people carries the same weight as that of its German counterpart representing more than 80 million people. Cyprus, representing 0.2 per cent of the EU population, can even veto the will of 99.8 per cent of the EU population on those issues. This shows that the argument that it is undemocratic and contrary to EU norms to give 18 per cent of the population political equality with the remaining 82 per cent is inaccurate on an EU level, and at least problematic at the level of the member states. 29 But at the same time the proponents of Greek Cypriot majority rule have a point as far as liberal democratic practice is concerned. On an EU level, one can counter argue that the EU is not a state but a unique organisation comprised of interstate and supranational elements. Democratic decision making should therefore not be juxtaposed with internal state structures of its member states. On a state level, no other liberal democratic country has granted an 18 per cent numerical minority the kind of political rights Turkish Cypriots and Turkey demand (and were granted in 1960, in the 1977 and 1979 High Level Agreements and in the Annan Plan) in a power sharing arrangement between only two ethnic or religious groups. The liberal democratic argument against a strict implementation of majority rule in ethnically or religiously divided societies is the protection of the minority from the, ‘tyranny of the majority’. But this protection has so far not let to arrangements like the Annan Plan. A single numerically small minority enjoys within liberal democracies (so far) at best local autonomy and protection of minority rights but not political equality with another much larger majority. But, again, power political considerations and the facts created since independence will have their way over the implementation of principles. Greek Cypriots enjoy no support by anybody involved in the Cyprus dispute (with the possible exception of Greece) in any attempt to reduce the Turkish Cypriots to a protected minority. A

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reunified Cyprus is going to set a precedent as far as power sharing between two significantly numerically different groups is concerned since only some limited recognition that ‘82 is more than 18’ has been accepted by the international community, and even this will not affect the basic principle of political equality between both groups. As shown in the 2004 Annan Plan, the EU has no problem accepting and accommodating Cyprus as a sui generis case of a democracy within its ranks if this is what it takes to solve the problem. No significant actor within the EU (many Greek Cypriots excepted) will in public at least - question the democratic credentials of a consociational Cyprus. Thus, any attempt by Greek Cypriots to abandon the principle of the political equality of the Turkish Cypriots - either before or after a solution - will not be supported by the EU. There is also a human-rights dimension, whose core is the return of (or least compensation for) property lost in the Turkish invasion in 1974 and the right to settle anywhere on the island. This issue carries more weight since these questions are indeed principles most likely to be actively supported by the European Union. The rulings of the European Court of Human Rights (though not an EU body) repeatedly confirmed this as far as property is concerned until a landmark ruling in March 2010 (Demopoulos v. Turkey) shocked the Greek Cypriots by indicating that remedies other than restitution were acceptable. Historically, the return of or compensation for property lost in a war to the defeated party is the exception and an achievement of a highly but not purely norm based organisation like the EU for the years after 1945. For example, in autumn 2009 the EU guaranteed - in the context of the ratification of the Lisbon treaty - that the Czech Republic would not be vulnerable to legal challenge through EU courts by the descendants of Germans ethnically cleansed from Czechoslovakia after 1945.30 Political pragmatism and the need not to destabilise the European order created after 1945 have consistently, though not without exceptions, prevailed over principles and human rights. In this respect, Cypriots of both communities are likely to be better off than their co-Europeans who were expelled and lost their property in the 1930s and 40s, but nevertheless unlikely to (fully) succeed along the lines supported by the proponents of a ‘European Solution’. Moreover, the chances of

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Cypriots to return or at least be fully compensated as part of a solution are also better since these questions affect internally displaced individuals rather than refugees expelled to another country as has been the case in the context of the Second World War or the population exchange between Greece and Turkey in the 1920s. Moreover, compensation in the interests of the wider good instead of return or keeping of property is an accepted principle concerning property rights globally, though typically exercised on a much smaller scale and usually in the context of expropriation for public works, such as the construction of roads or public utilities. Those who argue for full return of property are therefore not automatically covered by EU norms and clearly not by historic experience; those who argue in favour of as much return as politically agreeable and some kind of compensation for the rest have been supported in the Annan Plan by the International Community including the EU – an often overlooked historical achievement. But, again, there will not be much pressure from the EU on principle. Instead, there will be support for any solution reached by the parties. Such an agreement will, in all probability, be safeguarded by mechanisms that make recourse to the European Court of Justice or the European Court of Human Rights if not impossible, then at least possible in only very exceptional circumstances. This was the case with the Annan Plan and the recent example concerning the Czech Republic. Even more problematic is the right of all refugees to return, within the normative framework of European citizens’ freedom of settlement and residence. The advocates of a ‘European solution’ argue that the implementation of the acquis communautaire in a federative Cyprus would require any basic restrictions to be removed.31 But the political logic of the 1977 and 1979 High Level Agreements provide for a bi-zonal, bi-communal federation. This points to limitations on the Greek Cypriots in terms of rights to reside in the Turkish Cypriot constituent state – at least from the perspective of the Turkish side. This interpretation has been backed by the European Union which had been willing in 2004 to accept effectively permanent limits on the number of Greek Cypriots residing in the north, though this is denied by the Comission.32 This clearly sits uncomfortably within the EU norms since it turns the

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Greek Cypriots into second class citizens within their own country and it might indeed be difficult to maintain as a permanent derogation. However, its accommodation within the EU remains a strong possibility. Again, Greek Cypriots are likely to be in for a nasty surprise. A precedent already exists, though again not as extensive as the ones envisaged in the Annan Plan and the ongoing negotiations. Within the framework of a special autonomous status, ethnic Swedes live as Finnish citizens on the Aland Islands and new residents require permission from the island’s authorities to settle there. Moreover, Malta and Denmark have secured permanent restrictions on non-permanent-resident EU nationals’ right to buy properties there. But they do not restrict their own citizens’ right – which would be required in the case of Cyprus.33 Moreover, the Greek Cypriot side itself is interested in a permanent derogation from the acquis in the ongoing negotiations by requesting limitations on the numbers of mainland Turks (and Greeks) which will be allowed to settle in Cyprus even after an accession of Turkey to the EU. It is not without irony that the most extensive permanent derogations from the acquis so far envisaged by the European Union have been demanded by the EU members states themselves within the framework of the ongoing membership negotiations of Turkey. The EU has pointed out to Turkey that in the areas of agriculture and freedom to establish residence permanent derogations for Turkish citizens might be requested by the EU member states. This could well serve as a precedent for Cyprus. The European Union has frequently demonstrated – not least with the Annan plan – that its principles are not absolute but can be ‘violated’ for the sake of pragmatic political accommodations and in the name of a greater good, such as the end of the division of the island and a solution to its problem. The insensitive way and obvious double standards by which foreign academics and politicians support those derogations – most would never even contemplate accepting similar provisions in their own country – understandably offend Greek Cypriots. But Greek Cypriots are nevertheless left with the unpleasant choice: either accept them as the price for unification and their lost struggles of the 20th century or live on a permanently divided island. What Greek Cypriots can hope for – though even this

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is by no means certain – are clauses which would allow at least a change in the derogations in a post-solution Cyprus where a modicum of trust has been established. The Turkish side is aware of the strain that its extensive political demands have put on European Union principles. The most visible sign is its insistence on enshrining the derogations into EU primary law as the safest way to block the EU courts from changing the elements of any future settlement. In real terms, this will place severe limitations on the rights of Greek Cypriots within their own country to enjoy the same rights as citizens of other EU member states in a future northern constituent state. But, this is exactly what is likely to happen in an eventual settlement, which will be considered by the EU as – in its own terms – a perfectly acceptable ‘European solution’.

Conclusion With respect to the Cyprus problem, reading the balance sheet of six years of Cypriot EU membership is a sobering experience for all sides concerned. For a start, the EU has not come to play a major part in efforts to find a solution. The Commission has been largely marginalised in the attempts to solve the dispute since the Turkish side openly states that it does not have confidence in the objectivity of a body to which the Greek Cypriots belong and therefore successfully objected to a significant EU involvement. Meanwhile, the Greek Cypriots – though more open to an active EU role and welcoming any pressure supporting their demands – also fear the end of isolation agenda still officially pursued by the Commission and important segments within the European Parliament.34 In October 2010, the efforts of both EU actors in this direction suffered a possibly decisive blow when the legal services of the European Council and the European Parliament came to the conclusion that the issue of direct trade still requires a unanimous vote and could therefore not be implemented without the approval of Nicosia. In spite of the legal advice to the contrary, the Commission still insists on its interpretation that direct trade could be passed on the basis of the Lisbon Treaty by majority vote.35

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In 2009 the Commission was at least allowed to provide valuable feedback on EU related matters to the negotiators on the island. For this purpose Leopold Maurer was appointed Special Envoy of the Commission within the negotiation team of the UN negotiation team of the UN for the Cyprus Talks in 2009. The EU also prepares for an eventual settlement. The President of the Commission, Barroso, has set up a Steering Group on Cyprus in 2009, whose main task is to follow the negotiations and brief the most important administrators within the EU about the ongoing negotiations. It is also preparing the necessary steps to allow for a speedy accommodation and implementation of any agreement in case of a solution on a EU level as well as to coordinate and organise the ongoing training of the Turkish Cypriots for the application of the acquis.36 At the same time, the Greek Cypriot strategy to ‘Europeanise’ the Cyprus dispute and use its membership and Turkish EU aspirations as leverage to achieve a more favourable solution than the Annan Plan has had only limited success so far. Greek Cypriot attempts to pressure Turkey into concessions have followed some recurrent patterns since 2004. Unrealistic Greek Cypriot demands, accompanied by threats of a veto, have regularly preceded EU summits. This has raised the stakes externally as well as domestically. But little has been achieved. Greek Cypriots may occasionally have found unreliable support from opponents of full Turkish membership in the EU but in doing so they have regularly clashed with Turkey’s supporters within the Union, such as Britain. Even when a Greek Cypriot demand was accepted and supported by other EU member states, Turkey consistently refused to comply. The European Union, determined not to paralyse or end the Turkish accession process or to put the AKP government under additional strain in its domestic power struggle, has refrained from effective sanctions, especially as these could have derailed the ongoing negotiations on the island. The fact that no Cypriot veto was forthcoming, and that the Greek Cypriot governments were forced to sell repeated humiliation as at least partial victories, has contributed to a widespread perception that the Greek Cypriots are a nuisance and a ‘single issue member state’ within the EU. This has often left Nicosia isolated.

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Nevertheless, Greek Cypriot successes have managed to put the EU on a collision course with Turkey at some point in the future if the current negotiations on the island fail. The first achievement was Turkey’s commitment to extend the customs union to Cyprus in 2004 and its signature to the Ankara Protocol in 2005. This was – next to an obvious obligation for any EU candidate that enters a customs union with the bloc and aspires to become a full member – also a consolation for the humiliation of Cyprus at its first summit after joining the EU. The biggest Greek Cypriot success is the suspension of eight chapters in the negotiations with Turkey though the time bomb this suspension has started might be difficult to diffuse in the future. The EU cannot ignore Turkey’s commitment to implement the Ankara Protocol forever, nor can Greek Cypriots continue to threaten to use their veto (now extended to the opening of another six chapters) without ever delivering. The Turkish government will be left with the choice of either opening its ports and airports to the Republic of Cyprus or facing an end or at least a suspension of its EU accession path at some stage in the future. The former would not fundamentally change the parameters of the Cyprus conflict nor bring about a settlement. After 1974, Turkish ports and airports had remained open to Greek Cypriot vessels and private planes until April 1987; although in Ankara’s view this practice did not amount to the recognition of the Republic of Cyprus. But an end or suspension of Turkey’s accession process would probably eliminate any chances of solving the problem in the foreseeable future. This conclusion points also to a fundamental problem of the Greek Cypriot strategy. The most likely allies in the Greek Cypriot policy to exert pressure on Turkey through the EU have completely opposite ultimate objectives. Countries like France, Austria, the Netherlands and possibly Germany want at best a privileged partnership between Turkey and the EU and might even use the Greek Cypriot policy to wreck Ankara’s membership prospects. The Greek Cypriots, on the other hand, have a vital interest in keeping Turkish membership hopes alive. It is clear to all sides of the dispute that Turkey will not be able to join the European Union without a solution to the Cyprus problem. But, it is equally clear that no Turkish government will be

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willing to pay the domestic cost a solution entails without obtaining membership, or at least gaining a very realistic prospect of accession in return. The EU has so far not played a significant active role in finding a solution. Its norms and principles have become an additional factor influencing the parameters of a settlement, but its willingness to accommodate any eventual settlement limits their impact. Despite this poor record, it remains important as the only real carrot that can bring about a solution of the Cyprus dispute. Should there ever be a settlement then the role of the EU will become vital as a stabilising and democratising factor for both a reunified Cyprus and a Europeanised Turkey.

Endnotes 1. Nicos A. Rolandis, Partition Ante Portas?, Cyprus Mail, 21 February 2010. 2. ‘Overturning Four Years of Bad Publicity’, Cyprus Mail, 19 February 2008. This is not to say that Cyprus played no active role in formulating EU policies in any other matters. In particular in the areas of immigration, fishing, shipping and agriculture the island pursued its interests very actively within the Union. 3. Commission Proposes Comprehensive Measures to End Isolation of Turkish Cypriot Community, 7 July 2004, IP/04/857. 4. ‘Embargo Stop. Testimony: A World of Broken Promises’, Embargoed! (Last accessed on 6 December 2009). 5. Report to the Security Council, (S/2004/437) from 28 May 2004. 6. Engin Karatas, Die Europäische Union und Zypern: Der EU Beitritt der Mittelmeerinsel unter besonderer Berücksichtigung der Politik Griechenlands und der Türkei (The European Union and Cyprus: The EU Accession of the Mediterranean Island with Special Reference to the Policies of Greece and Turkey) (Hamburg: Dr. Kovac, 2010), pp. 495-520. 7. Engin Karatas, Die Europäische Union und Zypern, pp. 495-520. 8. Ibid. 9. ‘Iacovou Lays out Terms for ‘Yes’ to Turkey’, Cyprus Mail, 5 November 2004 and ‘Cyprus Invites Turkey to Talk’, Cyprus Mail, 13 November 2004. 10. ‘Turkey and the Problem of the Recognition of Cyprus’, Policy Department, Directorate-General of External Affairs, European Parliament, 20 January 2005.

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11. ‘Gul: Turkey Has no Plans to Recognise the Republic’, Cyprus Mail, 19 November 2004. 12. Ibid. 13. ‘Rehn Urges Turkey to Step up Reforms’, SE Times, 18 May 2006. 14. ‘Q&A: French EU Referendum’, BBC News, 29 May 2005. 15. Angelos Sepos, The Europeanization of Cyprus: Polity, Policies and Issues (Basingstoke: Palgrave Macmillam, 2008), pp. 124-125. 16. Sepos, The Europeanization of Cyprus, pp.125-126; and Hubert Faustmann and Erol Kaymak, ‘Cyprus’, Political Data Yearbook 2006, European Journal of Political Research, Volume 46, Numbers 7-8, December 2007, p.921. 17. ‘EU Developments Take Centre Stage, Cyprus News, Number 221, 131 January 2008. 18. EU is Poised to Ignore Turkey’s Failure to Act, Cyprus Mail, 8 December 2009. 19. ‘Greece’s Message is Clear: to Reach a Solution’, Cyprus Mail, 21 October 2009. 20. ‘President of Cyprus likens EU-Turkey Relations to Nazi Appeasement’, The Guardian, 29 October 2009. 21. The six chapters are: Freedom of Movement for Workers; Energy; Judiciary and Fundamental Rights; Justice, Freedom and Security; Education and Culture and Joint Foreign and Security Policy. The energy chapter is of particular significance for the Greek Cypriot side which is currently exploring areas of the cost for oil and gas, a move strongly objected to by Turkey and the Turkish Cypriots who claim rights over any oil and gas findings of the coast of Cyprus. ‘Cyprus Threatens EU Veto’, Cyprus Mail, 9 December 2009. 22. ‘Cyprus Threatens EU Veto’, Cyprus Mail, 9 December 2009. 23. ‘EU Must Take Precedent’, Cyprus Mail, 23 December 2009. 24. ‘European Solution? Dream on’, Cyprus Mail, 4 November 2004. 25. Prodromos Prodromou, ‘Comment – The People of Cyprus Want a European Solution’, Sunday Mail, 24 April 2005. See for critical assessments: George Vassiliou, ‘The Cyprus Problem and the EU’, The Cyprus Review, Vol. 16 No.2, Fall 2004, pp. 97-99 and Stelios Stavridis, “Towards a ‘European Solution’ of the Cyprus Problem: False Promise or Real Opportunity?”, The Cyprus Review, Vol. 18 No. 1, Spring 2006, pp. 95-101. 26. James Ker-Lindsay, ‘The Deceiving Shadow of the EU? Cypriot Perceptions of 'The European Solution’, in Othon Anastasakis, Kalypso Aude Nicolaidis and Kerem Oktem (editors), In the Long Shadow of Europe: Greeks and Turks in the Era of Postnationalism (Leiden: Brill, 2009). 27. Official Site of the Embassy of the Republic of Cyprus in Washington,

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28.

29. 30. 31. 32.

33. 34. 35. 36.

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(Last accessed, 25 March 2011). The votes in Germany are allocated in a form of degressive proportionality. Therefore, the votes of citizens of the smaller federal states carry by far more weight than those in the most populous ones. The votes per state range from a minimum of 3 (the least populous, Bremen, has 660.000 inhabitants i.e. 220.000 per vote) to a maximum of 6 (the most populous being North Rhine-Westphalia, which has about 18 million inhabitants i.e. 3 million per vote). See for further examples: James Ker-Lindsay, ‘The Deceiving Shadow of the EU’. James Ker-Lindsay, ‘The Deceiving Shadow of the EU’. The Czech Republic was allowed to opt out from the charter on human rights attached to the Treaty. ‘EU Opens Way to Treaty to Increase Global Influence’, Cyprus Mail, 31 October 2009. Stavridis, ‘Towards a ‘European Solution’ of the Cyprus Problem’, p.97. A safeguard clause in the Annan Plan allowed the Turkish Cypriot constituent state to limit the establishment of residence by Greek Cypriots once one third of the population of its constituent state hails from the Greek Cypriot constituent state. The Comprehensive Settlement of the Cyprus Problem. Main Articles. Article 3. However, the Commission holds the view that this provision could only be used for temporary derogations. The phrasing of the provision, however, does not provide for a time limit and allows at least potentially and clearly in the interpretation of the Turkish side, permanent restrictions and therefore a permanent derogation. If this would have survived legal claims at the European Courts will remain an open question. Reply from Commission sources to the author. James Ker-Lindsay, ‘The Deceiving Shadow of the EU’. ‘Direct Trade Call Leads to More Internal Strife’, Cyprus Mail, 9 April 2010. ‘MEPs Walk out of Meeting over Turkish Remarks’, Cyprus Mail, 27 October 2010; ‘Christofias Asks Barroso to Withdraw Direct Trade Proposal’, Cyprus Mail, 22 October 2010. Interview of the author with Leopold Maurer, Special Envoy of the EU Commission for the Cyprus Talks since 2009, on 31 March 2010.

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Articles and Chapters Axt, Heinz Jürgen, ‘Cyprus and the EU, Avoiding Wishful Thinking and Designing German Foreign Policy’, in Susanne Baier-Allen (editor), Looking into the Future of Cyprus-EU Relations (Baden-Baden: Nomos, 1999) Besim, Mustafa and Fiona Mullen, ‘Cyprus in the Global Financial Crisis’, South European Society and Politics, Volume 14, Number 1, March 2009 Börzel, Tanja A. and Thomas Risse, ‘Conceptualizing the Domestic Impact of Europe’ in K. Featherstone, and C.M. Radaelli (editors), The Politics of Europeanization (Oxford: Oxford University Press, 2003) Christophorou, Christophoros, ‘Preface’, in Constantin Stefanou (editor)., Cyprus and the EU: The Road to Accession (Aldershot: Ashgate, 2005) Cremona, Marise and Nikos Skoutaris, ‘Speaking of the de…rogations’, Journal of Balkan and Near Eastern Studies, Volume 11, Number 4, 2009 Delcourt, C. ‘The acquis communautaire: Has the concept had its day?’, Common Market Law Review, Volume 38, Number 4, 2001 De Mestral, A., ‘The Current Status of the Citizens of the Turkish Republic

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Skoutaris, Nikos, ‘Differentiation in European Union Citizenship Law: The Cyprus Problem’ in Ott, Andrea and Kirstyn Inglis, (editors), The Constitution for Europe and Enlarging Union: Unity in Diversity? (Groningen: Europa Law Publishing, 2005) ———, ‘The application of the acquis communautaire in the areas not under the effective control of the Republic of Cyprus: The Green Line Regulation’, Common Market Law Review, Volume 45, Number 3, 2008 Stavridis, Stelios, ‘Towards a ‘European Solution’ of the Cyprus Problem: False Promise or Real Opportunity?’, The Cyprus Review, Volume 18 Number 1, Spring 2006 Uebe, Max, ‘Cyprus in the European Union’, German Yearbook of International Law, Volume 46, 2004 Vassiliou, George, ‘The Cyprus Problem and the EU’, The Cyprus Review, Volume 16 Number 2, Fall 2004 Yiangou, G.S., The Accession of Cyprus to the EU: Challenges and Opportunities for the New European Regional Order, Journal on ethnopolitics and minority issues in Europe, 2002

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Hatay, Mete, Fiona Mullen and Julia Kalimeri, Intra-island trade in Cyprus Obstacles, oppositions and psychological barriers (Oslo: PRIO, 2008) Ioannou, Christina and George Kentas, ‘Internalising EU pressures in Cyprus: The Cypriot Corporatist Tradition and Political Sophistication amidst EU Adaptation Forces’, Paper presented at the 5th ECPR General Conference, Potsdam, Germany, 10-12 September 2009 International Crisis Group, ‘Reunifying Cyprus: The Best Chance Yet’, Europe Report Number 194, 23 June 2008 Radaelli, Claudio M., ‘Wither Europeanisation? Concept Stretching and Substantive Change’, Workshop: ‘Europeanisation: Concept and Reality’, Bradford University, 5-6 May 2000 Schwed, Jean-Joseph, ‘The European Community and Cyprus’, Friends of Cyprus, Report Number 32, 1991 Syrichas, George, and Pany Karamanou, ‘Monetary Policy And Central Bank Communication: The Case of Cyprus’, Central Bank of Cyprus, 20 September 2004 Torkildsen, Morten, ‘Amended Expert Report of Morten Torkildsen to the International Criminal Tribunal for the Former Yugoslavia’, 7 June 2002 Unger, Brigitte and Joras Ferwerda, ‘Regulating Money Laundering and Tax Havens: The Role of Blacklisting’, 15 March 2008, Paper prepared for the European Consortium for Political Research (ECPR) conference; (Re)Regulation in the Wake of Neoliberalism, Consequences of Three Decades of Privatization and Market Liberalization, Panel: Naming and Shaming, held at Utrecht University, 5–7 June 2008 World Economic Forum, Global Competitiveness Reports, 2004–10

Speeches and Presentations Charalambous, Sotiroula, ‘Policies for Social Cohesion and Well-being for all – a Vision for the Future’, Speech given at the Council of Europe Conference of Ministers responsible for Social Cohesion, Moscow, 26-27 February 2009 Papadopoulos, Tassos, Declaration by the President of the Republic Mr Tassos Papadopoulos regarding the referendum of 24th April 2004, 7 April 2004 Prodi, Romano (President of the European Commission), Statement at the Cyprus House of Representatives, 25 October 2001 Vassiliou, George, address given at the conference, ‘Britain and Cyprus: Colonialism and its Impact’, Intercollege (University of Nicosia), November 2002 Ziegler, Georg, (Deputy Head of the Taskforce Turkish Cypriot community in the Directorate-General Enlargement), conference

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presentation entitled, ‘The EU-dimension of a future comprehensive settlement of the Cyprus problem’, Famagusta, Cyprus, 7 May 2007

Republic of Cyprus Central Bank of Cyprus, Monetary Policy Reports, August 2001-December 2007 ———, Annual Balance of Payments Statistics (Excel files), 2002–09 ———, Economic Bulletin, December 2009 ———, Monetary and Financial Statistics (Excel file), June 2010 ———, Annual Economic Indicators (Excel file), 17 June 2010 Department of Registrar of Companies and Official Receiver, Companies Section Statistics, 2010 Department of Statistics and Research, Historical Data on the Economic of Cyprus 1960–1991, 1994 Financial Action Task Force on Money Laundering (FATF), Annual Report 1999–2000, 22 June 2000 Harmonisation Co-ordinator of the Republic of Cyprus, ‘Chapter 27: Common Foreign and Security Policy’ Ministry of Commerce, The Association Agreement Between the Republic of Cyprus and the European Economic Community, Press and Information Office of the Republic of Cyprus, 1982 Ministry of Commerce, The European Community and the Agriculture of Cyprus, Press and Information Office of the Republic of Cyprus, 1991 Ministry of Commerce, Cyprus Industry and the European Community, Press and Information Office of the Republic of Cyprus, 1991 Ministry of Foreign Affairs, ‘The Non-Aligned Movement and the Cyprus Question’, Website Ministry of Foreign Affairs, ‘Cyprus joined the International Organization of Francophonie as an Associate Member - 29/09/2006’, 29 September 2006 Ο Περί Αλλοδαπών και Μεταναστεύσεως (Τροποποιητικός) Νόµος του 2004 [Aliens and Immigration (Amending) Act 2004] Statistical Service, Statistical Abstract 2000, Press and Information Office of the Republic of Cyprus, 2002 Statistical Service, Statistical Abstract 2008, Press and Information Office of the Republic of Cyprus, 2009 Statistical Service, Intra-Extra EU Trade Statistics By Commodity And Country

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European Union Documents European Central Bank, Financial Stability Review, December 2009 ———, Monetary and Financial Statistics, 2010 European Commission, Commission of the European Communities, Opinion on the application by the Republic of Cyprus for Membership, 30 June 1993 ———, ‘Comprehensive Monitoring Report on Cyprus's Preparations for Membership’, November 2003 ———, Commission Proposes Comprehensive Measures to End Isolation of Turkish Cypriot Community, 7 July 2004, IP/04/857 ———, ‘Europeans’ Attitudes towards the Issue of Sustainable Consumption and Production’, Flash Eurobarometer, April 2009 ———, ‘Tobacco’, Special Eurobarometer 332, May 2010 ———, Directorate for Economic and Financial Affairs, European Economic Forecast Spring 2010 ———, ‘Enlargement: How Does a Country Join the EU?’, DG Enlargement website European Court of Justice, Opinion of Advocate General Kokott, Case C420/07, Apostolides v. Orams, delivered on 18 December 2008 ———, Case C-420/07, Apostolides v. Orams, Judgment, 28 April 2009 European Parliament, Resolution on Cyprus's membership application to the European Union and the state of negotiations, 5 September 2001 ———, ‘Turkey and the Problem of the Recognition of Cyprus’, Policy Department, Directorate-General of External Affairs, European Parliament 20 January 2005 European Union, Presidency Conclusions, Helsinki European Council, 1011 December 1999 ———, Presidency Conclusions, 29 January 2003

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INDEX

Accession (2004) 13-14, 27-31,

65, 74, 84, 142 Accession negotiations 14-40, 65, 69, 136, 154 Accession treaty (2003) 15, 36-38 Protocol 10 42, 43-49, 54-55, 142, 158 Acquis communautaire 1, 15, 18-19, 36, 43-49, 69, 89, 91, 93, 98, 112, 142, 146, 158, 165, 169 Additional Protocol (1987) 17-18 AKEL 114, 125 AKP 36, 39, 155, 176 Aksu, Cigdem 147 Anastasiou case 52 Ankara Protocol (2005) 163-164, 166, 170, 177 Annan, Kofi 157 Annan Plan 4, 35, 37, 40, 52, 56, 76, 90, 92, 125, 138-141, 143, 149, 155, 159-160, 162, 169, 171-172, 174, 176 Apostolides, Meletis v. Orams (see Orams case) Application for membership 23; Association Agreement (1972) 17-18, 65-69, 135 Asylum applications 71 Austria 121, 161, 165, 177

Azerbaijan 145 Aziz vs. Cyprus 46 Balance of payments 81-82 Barroso, José Manuel 176 Bildt, Carl 122 Bicommunality 57, 173 Bi-zonality 57, 173 Bologna process 142 Britain 16-17, 25, 116-118, 167168, 176; Ministry of Transport, 145 British Council 117 British High Commission 117 Brown, Gordon 118 Budget balance, deficit, surplus 82-84 Buffer zone (see also Green Line) 136 Bulgaria 124 Burgenstock 37, 141, 160 BuySell Home Price Index 80 Capital, free movement of 73-74 Car registrations 81 Cem, Ismail 136 Central Bank of Cyprus 74-76, 78, 83 Charalambous, Sotiroula 102

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Chicago Convention 145 Chirac, Jacques 31 Christofias, Demetris 118, 125, 147, 166-168 Citizenship 44-48, 56, 58 Clerides, Glafkos 20, 33, 35, 138, 155 Commission for the Protection of Competition 70 Commissioner of Administration (see Ombudsman) Committee on Legal and Judicial Issues 94 Common Foreign and Security Policy (CFSP) 112-113 Common vision 138 Competition policy 70 Competitiveness 82-83 Constitution (Republic of Cyprus) 22, 135, 171 Construction sector 79-80 Cook, Robin 32 Co-ordination Office 112 Copenhagen, European Council summit 138 Council of Ministers 21, 27-28, 101, 157, 171 Court of First Instance 47 Croatia 121 CTP (Republican Turkish Party) 36, 138, 141, 147, 149 Cuba 114 Current-account deficit 81-82 Customs Union (1988) 17-18, 65, 68-69, 144, 177 Cypriot government 154-156, 158-161, 163, 166-168 Cyprus Telecommunications Authority (CyTA) 71 Cyprus Turkish Airlines 145 Czech Republic 172 Czechoslovakia 172

Denktas, Rauf 3-4, 13, 22-23, 32, 34-37, 135-136, 138-139, 141, 155-156 Debt, external 75 DIKO 114 Direct flights to northern Cyprus 142, 145, 156-157 Direct trade regulation 53, 143145 Direct trade with northern Cyprus 156, 158 Direction of trade 67, 69 Disability rights 100 DISY 95, 114 Draft Act of Adaptation 56 Ecevit, Bülent 35 EDEK 114 Enosis 23, 136 Environment 103-105 Ercan airport 145 Erdogan, Tayyip Recep 37, 141 Erel, Ali 137 Eroglu, Dervis 149 Ertugruloglu, Tahsin 136, 138 Estonia 14 Euro accession (2008) 65, 76 Eurobarometer 94, 103, 147 European Atomic Energy Agency (EURATOM) 17 European Central Bank (ECB) 76, 78 European Coal and Steel Community (ECSC) 17 European Commission 14, 26, 71, 82, 94, 136-139, 141, 144, 146, 148, 155, 157-160, 165166, 173, 175-176; Avis (1993) 26-28; Directorate-General for Economic and Financial Affairs 83 European Council 27, 29-30, 34, 36, 54, 138, 141, 144, 154, 156,

INDEX 161, 166-168, 175-176 European Court of Human Rights (ECHR) 46, 172 European Court of Justice (ECJ) 45, 48, 52, 147, 156 European Information Centre 137 European Network Against Racism (ENAR) 101 European Parliament 46-47, 139, 140, 142, 144-146, 155, 166, 170-171, 175; Conference of Presidents of the European Parliament 145; High Level Contact Group of the European Parliament 145-146 European Security and Defence Policy (ESDP) 29, 112-114, 121, 160 European Solution 155, 168-175 European Union (EU) catalytic effect on settlement efforts 14-15, 20, 33-39, 154155; enlargement (2004) 13, 28, 30-31, 33; European Community (EC) 66-67; European Economic Community (EEC) 16-18, 25, 68; mediation in Cyprus 165, 170; member states 134-135, 139, 154, 158, 160-161, 163164, 167, 171; primary law 175; Programme Support Office 146-147; progress report on Turkey (2009) 165-167; role in domestic and interstate conflicts 169; Steering Group on Cyprus 176 EU Rule of Law Mission in Kosovo (EULEX) 115 European Union-Cyprus Association Council 31 Eurostat 82

193 Eurozone 65, 77-78, 84 Excessive deficit procedure 82 Exchange Rate Mechanism (ERM II) 74, 79 Excise duties 72, 81 Filori, Jean-Christophe 136 Financial Action Task Force 72 Financial Aid Regulation 389/2006 43, 54-56, 143-144, 146, 148, 158 Financial crisis 78, 83 Finland 28, 31, 54, 165 Football 142 Foreign direct investment 73, 74 Foreign exchange reserves 81 France 3, 31, 119-120, 163-165, 167, 177 Francophonie 120 Free Trade Agreement (CyprusBritain) 16 Gender equality 97-100 Germany 122-123, 165, 167, 170172, 177 Georgia 58, 125 Greece 16, 18-21, 25, 27-34, 39, 115-116, 121, 154, 161, 163, 167, 171, 173 Greek banks 77-78 Greek Cypriot community 19-20, 40, 141, 154-156, 159-160; majority rule 169, 171; property in the north 161, 172 Green Line opening 36 Green Line Regulation 866/2004 48-54, 57, 142-144, 157-158 Green Party 95 Import quotas 66 Health issues 93-97 Hannay, Lord (David) 139

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High Level Agreements (1977/1979) 23, 171, 173 Homosexuality 100 House of Representatives 94 Household debt 83 Human Rights 169, 172 Immigration 100-102 Infant mortality 93 Interest rates 65, 75-79 International Criminal Tribunal for the Former Yugoslavia (ICTY) 121 International Energy Agency 160 International law 15, 21, 38 International Monetary Fund (IMF) 72 Iraq war (2003) 73 Israel-Lebanon war (2006) 124 Justice and Development Party (AKP) (see AKP) Kinkel, Klaus 31 Kokott, Juliane 48 Kosovo 58, 115 Kranidiotis, Yannos 33 Kyprianou, Markos 125, 167-168 Labour, free movement of 71 Labour market 84 Lillikas, George 120 Liquidity ratio 78 Lisbon Treaty 175 Luxembourg 54 Macmillan, Harold 16 Majority rule 170-171 Makarios 17 Malta 7-8, 113 Maurer, Leopold 176 Merkel, Angela 122 Micheletti principle 45

Middle East 123 Migration 1-2, 71 Milliband, David 168 Milosevic, Slobodan 71 Ministry of Commerce 67 Money laundering 72 Mortality rates 93 Movement, freedom of 49 National Committee for Women’s Rights 99 National Machinery for Women’s Rights 98-100 National Programme for the Adoption of the Acquis 70, 72 Netherlands 31, 122, 164-165, 177 Non-Aligned Movement (NAM) 17-18, 113, 123 Non-governmental organisations (NGOs) 96, 99, 101-104 North Atlantic Treaty Organisation (NATO) 18, 2829, 113-114, 160 Northern Ireland 170 Offshore Financial Centre 2, 19, 72 Ombudsman 101 Orams case 147 Organisation for Economic Cooperation and Development (OECD) 72-73, 160 Organisation of the Islamic Conference (OIC) 113 Ozdemir, Cem 146 Pangalos, Theodoros 30 Papadopoulos, Tassos 33, 36, 38, 118, 155, 159, 161-162, 164165 Papandreou, Andreas 19 Papandreou, Georgios 167

INDEX Partnership for Peace (PfP) 114, 160 Perdikis, Yiorgos 95 PIIGS (Portugal, Ireland, Italy, Greece, Spain) 83-85 Pollution 103-104 Population growth 71 Portugal 83-84 Privatisation 75, 85 Protocol 10 (see Accession treaty, Protocol 10) Pyla 136 Qualified majority voting 54 Racial equality 100-102 Real Effective Exchange Rate (REER) 82-83 Real estate sector 80-81 Recycling 104-105 Referenda on the Annan Plan (24 April 2004) 4, 14-15, 37, 56, 92, 141-142, 148, 155-157 Reforms, supply-side 84 Regulation 44/2001 48 Regulation 866/2004 (see Green Line Regulation) Regulation 389/2006 (see Financial Aid Regulation) Rehn, Olli 143, 163 Road accidents 93 Romania 124 Russia 124-125 Second World War 173 Serbia 124 Single issue member state 155, 176 Slovenia 8 Smoking 93-97 Social insurance 73 Société Générale 77 South East Europe 124

195 Sovereign Base Areas (SBAs) 12, 52 Special Aid Package for Turkish Cypriots 139 Strategy for the Employment of Foreign Workers 101 Supreme Court of the United Kingdom 145 Sweden 28, 122 Taiwanisation 157 Talat, Mehmet Ali 37, 58, 141, 145, 147, 149, 156 Tariffs, industrial 66 Taxation 72-73 Technical Assistance Information Exchange Instrument (TAIEX) 56 Tourism 81 Trade, free 143 Treaty of Guarantee 20-22 Turkey 3, 15, 18-19, 21, 23, 25, 29-32, 34-36, 39, 90, 113, 118, 138-140, 144, 154-156, 160161, 163-165, 167-168, 170171, 173, 176-178; Ankara Agreement (1963) (customs union with EU) 28, 31, 162165, 170; EU accession process 5, 16, 24, 34, 116, 159-160. 162, 164-165, 167-168, 176177; EU membership application (1987) 20; military invasion of Cyprus 3, 17, 23, 66, 117, 126, 172; Parliament 162; ports and airports (opening to RoC) 160, 162164, 177; privileged partnership 165, 177; recognition of the Republic of Cyprus 161-162, 164; troops in Cyprus 161 Turkish Cypriot airports and ports 156,158

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Turkish Cypriot Businessmen’s Association 137 Turkish Cypriot Chamber of Commerce (TCCoC) 52-53, 137-138, 143-144 Turkish Cypriot community 1925, 32, 34, 36-37, 39, 134-159, 171; banking crisis 137; isolation 143, 148, 155-159, 163, 165, 170, 175; leadership 154; presidential election (April 2010) 134, 149; municipal election (June 2002) 137; parliamentary election (December 2003) 139-140 Turkish Cypriot representation office in Brussels 144 Turkish lira 137 Turkish Republic of Northern Cyprus (TRNC) 15, 22-24, 30, 36, 135, 143-145, 156 Turkish settlers 45, 51-52, 160

United Nations 15, 19, 25-26, 138, 141, 149; Committee on Missing Persons 55; Force in Cyprus (UNFICYP) 6, 13; General Assembly 17; mediation in Cyprus 35, 155, 157, 176; peace plan (see Annan Plan); Secretary General 33; Security Council 157; Security Council Resolution 541 119, 156 United States 125-127

United Cyprus Republic 14, 56 United Kingdom (see Britain)

Yugoslavia 72, 124

Vassiliou, George 19, 33, 71 Verheugen, Guenther 137, 140, 143, 157 Wage indexation 84 Warsaw Pact 17-18 Western European Union (WEU) 28 World Economic Forum 82