Cyprus rides the crest of enlargement’s first wave

Date: 24/05/01

Cyprus closed three more chapters in its accession talks last week, to put it at the head of the enlargement pack. Dick Leonard examines the challenges that lay ahead for the divided island nation

Cyprus is storming ahead in its enlargement negotiations with the European Union. Last Thursday three more chapters (on transport, energy and services) were provisionally closed in the accession talks, which means that the island state has now effectively cleared 21 out of the 30 hurdles - three more than any other candidate nation.

Transport was undoubtedly the most difficult of the issues cleared up at the EU-Cyprus ministerial council. At its core was maritime safety, a key issue for Cyprus which, thanks to its role as a provider of 'flags of convenience', is the world's fifth-largest shipping nation. It has now committed itself to the most strenuous steps to enforce controls over all the vessels registered in its name, and to bring safety levels up to the highest Union standards.

France, still suffering from the effects of last year's disastrous oil spill off the Brittany coast, took an especially close interest in the talks on this subject. The accession of Cyprus will mean that the Union will have the world's largest fleet and should give it a dominant influence in future international conferences on maritime safety.

Already in March agreement had been reached on probably the most difficult chapter in the negotiations - that on free movement of capital. The presence on the island of more than 30,000 offshore companies, and the well-founded suspicion that some had been involved in money-laundering for the Russian Mafia and Slobodan Milosevic, had caused considerable concern.

The Cyprus government, however, has enacted strict new laws against money laundering, and has invited a team of experts from the European Commission and member states to advise on their implementation.

Of the outstanding chapters, serious problems are likely to arise only on taxation (Cyprus needs to raise its VAT rate from 10 to at least 15%) and competition policy (greater transparency is required over state aids).

This will leave only those issues - such as agriculture, regional policy and the budget - where the EU has yet to agree an overall negotiation strategy for all the applicant states. None of these chapters, which should be negotiated during 2002, should present any particular difficulty for the Mediterranean isle.

So there is no real doubt that Cyprus will be included in the first wave of new admissions. Indeed, if it is not, there will be no such wave, as Greece has announced it will veto the other applicants if the membership is blocked.

To prevent this from happening, renewed efforts are needed to re-activate the UN-sponsored talks on reunification of the divided island.

During five rounds of 'proximity talks' in New York and Geneva last year sufficient progress seemed to have been made for United Nations (UN) Secretary-General Kofi Annan to prepare detailed proposals under four headings - territory, property, a new constitution and security.

Last January, however, before Annan was able to present them, the Turkish Cypriot leader Rauf Denktas abruptly terminated the talks, saying that he was only prepared to continue if the Turkish Republic of Northern Cyprus (TRNC) was recognised as a sovereign state.

This demand was quite unrealistic. Twenty-seven years after the country's partition no government except for Turkey has granted recognition to the TRNC, and the UN has repeatedly declined to accept its sovereignty.

If, as Denktas claims, he wants a settlement which will be in the interests of his fellow Turkish Cypriots, he really has little to fear from direct talks with the

Greek side. The difference between them is largely a semantic one. The Greeks want a federation, having given up their original claim for a unitary state. Denktas proposes a confederation.

In practice, any federation which is agreed would be bound to be a very loose one, with few powers reserved for the centre and each community left in charge of its own affairs. It is believed that Annan was ready to recommend a settlement on the Belgian model, with a two-track devolution both on territorial and linguistic lines.

Alvaro De Soto, the UN's Cyprus mediator, is working hard behind the scenes, and is hoping to relaunch the UN initiative in September.

There is little that the EU can do, except perhaps to offer additional sweeteners to the Turkish Cypriots, such as a special aid programme for the ruined Turkish Cypriot economy, comparable to that agreed for Belfast in the context of the Northern Irish peace process.

The Turkish government, however, could exercise decisive leverage over Denktas, and the logic of its recent and welcome rapprochement with Greece and the EU is that it should now exert itself to help achieve a settlement.

Failing that, the EU will have little option but to go ahead and admit the Greek Cypriot Republic on its own, leaving the Turkish entity to its own devices, or until such time as the obdurate Denktas, now 77, is no longer in power. That may mean a long wait - he recently cheerfully reminded a journalist that one of his uncles had lived to 120.

Dick Leonard has been writing on the EU for more than 20 years. A former assistant editor of The Economist, he also writes on Belgian affairs for The Bulletin. He is a former British Labour MP and the author of numerous books.

Cyprus has closed three more chapters in its accession talks, to put it at the head of the enlargement pack. Columnist examines the challenges that lie ahead for the divided island nation.