Last chance to create a unified economy
By Kerin Hope
Published: October 29 2008 02:00 | Last updated: October 29 2008 02:00
Hopes were high on April 3 that the opening of a new city centre crossing-point to link the Greek and Turkish Cypriot halves of Nicosia, the island's capital, would speed a reconciliation.
The symbolism was clear. The re-unification of Ledra Street, once the commercial thoroughfare, stood for faster growth of trade across the Green Line, the United Nations-monitored "de facto" border, and, in due course, a political deal to stitch Cyprus back together as a prosperous federal state.
One reason for optimism was that, for the first time since the island was violently divided in 1974, the leaders of both communities are willing to negotiate a settlement.
Demetris Christofias, leader of the Greek Cypriot communist party, won last February's presidential election on a platform of re-unifying Cyprus as a bi-zonal, bi-communal federation with a loose central government.
It was the first time that the communists - the largest political group with the strongest grassroots support for a solution - had put forward their own candidate.
For his part, Mehmet Ali Talat, president of the self-proclaimed Turkish Republic of North Cyprus (TRNC), which is recognised only by Turkey, has consistently backed a peace settlement since his leftwing Republican Turkish Party came to power in 2003.
Yet after the first wave of enthusiasm, the crowds of Greek and Turkish Cypriots passing through the Ledra Street checkpoint to drink coffee and eat ice-cream in each other's favourite haunts have dwindled to a trickle, consisting mostly of foreign tourists.
Similarly, the UN-backed negotiations between Mr Christofias and Mr Talat, launched last September after six months of careful preparation, have been making slower progress than expected.
Alexander Downer, former Australian foreign minister and the UN special adviser to the talks, earlier this month warned the process could be drawn-out: "This is an enormous issue . . . and it's going to be a difficult negotiation. But the political will is very good."
The talks started with what was expected to be the easy part: finalising an agreement on power-sharing before moving on to trickier issues of security, including a timetable for the departure of the 30,000-strong Turkish garrison in north Cyprus, and the return of territory and property.
Each community would run its own affairs, including raising taxes, while a lean central government under a rotating presidency and with a joint central bank, would handle foreign relations and European Union affairs.
But the two leaders found themselves re-negotiating some points from the start. Under UN auspices, procedures have since been restructured to accelerate decision-making.
Markos Kyprianou, the Cyprus foreign minister, says: "The UN are important as a facilitator to make sure people stay at the table to discuss the issues."
Mr Talat still says the outlines of a deal could be agreed by December. A more realistic deadline, perhaps, would be June 2009, in time for Turkish Cypriots to vote for the first time at the European parliamentary elections, according to people close to the talks.
But the two communities would still have to approve a settlement through separate referendums.
With a parliamentary election in the north coming up early in 2010, followed by a presidential vote later in the year, Mr Talat is under pressure to deliver.
His party's approval ratings have shrunk as the Turkish Cypriot economy slides further into recession, amid disappointment in the north over the perceived reluctance of Greek Cypriots to re-build relationships.
Mr Talat is also constrained by the Ankara government which links the Cyprus issue with its own aspirations for EU membership, and by the Turkish military, a powerful influence in the north. When it comes to opening a new Green Line crossing-point, for example, military authorities must be persuaded to agree.
In the south, Mr Christofias has to fend off a nationalist faction in the centrist Democratic Party, the junior partner in his coalition.
The Greek Cypriots' overwhelming rejection at a referendum in 2004 of the previous UN-sponsored peace plan also reduces the communists' room for manoeuvre, as Mr Christofias cannot be seen to make one-sided concessions.
"It's not yet clear to everyone that this could be the last chance to achieve re-unification under a federal structure. So there is a tremendous burden on the two leaders to build the consensus to make it happen," says Philippos Savvides, an Athens-based analyst.
However, trade across the Green Line under an EU regulation intended to give Turkish Cypriot companies access to markets in the south and elsewhere, is accelerating - an indication that business people on both sides are becoming more willing to co-operate.
Sales by Turkish Cypriot businesses in the south jumped 65 per cent in the first half of this year to €3.1m. Greek Cypriot trade with the north increased by 150 per cent in the first eight months to €1.1m.
Yet as the leaders' weekly meetings settle into a routine, expectations are becoming more moderate. "At the moment, it's hard to give the talks more than a 50-50 chance of success," says Loukas Charalambous, a Nicosia-based analyst.
In a deteriorating economic environment, the costs of re-unification will loom larger to Greek Cypriots. As the bigger and wealthier community they would be expected to contribute a larger share of a federal budget.
On the other hand, a deal would enable Greek Cypriots to regain access to land and property worth billions of euros in the Turkish Cypriot-controlled north or receive compensation.
But after more than 34 years without a settlement, time is against the federalists, according to a study by Charis Psaltis, a professor of social psychology at the University of Cyprus.
He says: "Our results showed that younger Greek Cypriots are reluctant to consider living with the Turkish Cypriots and are less likely to accept the idea of a federal solution."
If the negotiations fail to bring results over the next year, the outcome could be a partition of the island into separate Greek Cypriot and Turkish Cypriot states.
Both communities would lose a one-off opportunity to create a significantly larger island-wide economy based on tourism, higher education and financial services.
http://www.ft.com/cms/s/0/f8729f8a-a559 ... 07658.html