GETTING TO YES IN THE CYPRUS REFERENDA: ACTION

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 001501

SIPDIS

E.O. 12958: DECL: 04/07/2014
TAGS: PREL PGOV EAID CY EUN USEU BRUSSELS
SUBJECT: GETTING TO YES IN THE CYPRUS REFERENDA: ACTION
PLAN FOR THE EUROPEAN UNION

REF: (A) NICOSIA 0586 (B) ATHENS 1196

Classified By: USEU External Affairs Officer Andrew Erickson
for reasons 1.5 (b) and (d).

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Summary:
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1. (C) With Cyprus guaranteed entry into the EU no matter
what the outcome of the referenda, EU officials feel bereft
of carrots to encourage a positive Greek Cypriot response.
Promoting a "yes" vote in Cyprus will depend on our use of
the Cyprus Pre-donors' Conference on April 15 to prove that
there are real economic benefits for the south in the Annan
Plan, and also to encourage clear political signals from
European governments that the EU endorses the UN's Plan as
the opportunity of a generation and the "European way." USEU
recommends the following efforts in the run-up to and
immediately after the Pre-Donors' Conference:

-- Senior EU leadership, in particular Hirep Solana, but also
Enlargement Commissioner Verheugen and Relex Commissioner
Patten, should be pressed to engage Greek and Cypriot
leadership both publicly and privately on the need to support
the Annan Plan.

-- Encourage a strong indication of European support for a
successful referendum at the April 16 Gymnich.

-- Work with the European Parliament to send a signal via a
non-binding resolution encouraging a "yes" vote to the Annan
Plan.

At the conference itself, we should:

-- Seek specific commitments to identify European Commission
funding for the property commission -- the clearest signal to
Greek Cypriots that they too will benefit from peace.

-- Advocate with the EU concerted, visible efforts to discuss
and ideally to develop intra-zonal investment packages that
will benefit all islanders.

-- Consider ear-marking pledges to elements of the Annan Plan
that specifically address compensation for Greek Cypriots and
that can be used to make a political argument in the south
for a "yes" vote to the Annan Plan.

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The EU's Cyprus Realities
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2. (C) EU interlocutors have repeatedly told us that
regardless of outcomes of the Annan Plan referenda, Cyprus
will enter the EU on May 1st. (Indeed, legally, there is no
other option, as the accession treaty has been ratified.)
The Annan Plan referenda in north and south will simply
determine whether the island enters the EU as a unified whole
or as the south alone. Turkish Cypriot voters in the North
know that their one chance to enter the Union soon will be a
"yes" vote -- and the Turkish government at home knows that
its future hopes for accession also hinge importantly on a
positive outcome. The battle then clearly is on the Greek
side of the island. Since the accession question for the
Greeks has been resolved, persuasion must take other forms.
The problem is that this reality defines and constrains EU
leverage on the Republic of Cyprus, as the Greek Cypriot
population knows that it will enter the EU irrespective of
the outcome of the poll. Informed northern Cypriot voters,
in contrast, by now are equally aware that their only chance
of entering the EU for the foreseeable future is predicated
on a "yes" vote in the referendum.


3. (C) Our challenge is to promote a "yes" vote in the south
given the realities cited. We also understand from the
Commission that many Greek Cypriots see the Annan Plan as
providing far more carrots to the Turks than to the Greeks.
A successful strategy to encourage a "yes" vote by the Greek
Cypriots must address this reality. While Hirep Solana,
Enlargement Commissioner Verheugen, and EU Parliament
President Pat Cox have repeatedly stated their desire to
facilitate a settlement publicly and privately, they -- and
their staffs -- admit privately to us that the political
leverage of accession is now gone. As officials of the
Union, they have also been reluctant to publicly encourage a
member state to adopt a specific course of action, especially
if Greek government support is tepid. Brussels-based
officials know that they hold no leverage but political
opprobrium against a rejectionist Cypriot republic. The EU's
relative failure to enforce discipline against the Austrian
government during the Haider crisis proved that Cyprus has
little to fear from the EU in this regard.

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Cyprus as the spoiler
of Turkish accession
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4. (C) The larger question of Turkish accession is another
element to the Cyprus equation in Brussels. We have heard
that some EU member countries wary of offering an accession
negotiation date for Turkey are secretly hoping for failure
of the Annan Plan. (Informed Commission interlocutors cite
France, Austria, and the Netherlands as members of the group
of those opposed.) The entry of the Republic of Cyprus
without northern Cyprus into the EU would immensely
complicate Turkey's EU vocation, and provides these
Turko-skeptics an easy out. Even strong friends of Turkey in
the EU, such as Enlargement Commissioner Verheugen, have told
us that the political reality of the continued existence of
the "TRNC" -- and the illegal Turkish occupation of a part of
EU territory -- would be a potential deal-killer for Turkey
in December, no matter whether Turkey and Turkish Cypriots
supported the peace plan.

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Our last best shots:
Using the Pre-donors'
Conference and Gymnich
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5. (C) Given the current political reality in Brussels, our
last shots at favorably influencing a Cyprus deal under the
Annan Plan are primarily through the April 15 Pre-Donors'
Conference and the April 16 informal EU foreign ministers'
meeting. We will need to change Greek Cypriot perceptions
that the deal does not offer them enough and that waiting for
more is not a viable strategy. Thus, we need to work with
the EU to ensure that the message rings loud and clear out of
the conference that settlement will bring concrete benefits
to the south as well as the north, and that "Europe" favors a
yes vote. There are two key elements to this effort:
political and public diplomacy aimed at steering the Cypriot
population toward yes, and setting out a series of financial
incentives to convince waivering Greek Cypriots they will
benefit from unification. Obviously, a key element in this
will be the need to work with the European Commission and
other key potential donors at a strategy to be unveiled at
the Pre-Donors' Conference to underscore the EU and the
international community's commitment to addressing the
concerns of the south. Such an approach might include:

-- pushing the EU to ensure sufficiently high-level
representation at the conference, and a specific commitment
by the European Commission to fund or identify funding for
the property commission, which will be of particular benefit
to the south. The south needs tangible evidence of the
benefits of the Annan Plan.

-- concerted, visible EU efforts to develop intra-zonal
investment packages that will benefit all islanders. An
example of this might be a private-public partnership
addressing Greek desiderata for the development of the
tourist industry in ways that benefit both sides of the
former Green Line.

-- ear-marking pledges to elements of the Annan Plan that
specifically address compensation for Greek Cypriots,
especially the property commission. Given that property
issues are particularly important to the south, we need to
show just how important this issue is to us.


6. (C) The donors' conference will be followed immediately
by the informal EU Foreign Ministers' meeting in Dublin.
This would provide a good occasion for some back-room
straight-talk from their European colleagues with the Greek
and Cypriot FM's, and could also provide an opportunity for
the Irish EU Presidency to come out publicly with a call for
Cypriots to step up to the historic occasion provided by
these votes -- combined with a public pledge that the EU is
ready to support a peace deal. We recommend a letter from
the Secretary to the Irish FM, copied to his colleagues, and
perhaps followed up by an S phone call.


7. (C) We also endorse Athens' and Nicosia's views that
senior EU leadership, in particular Hirep Solana but also
Enlargement Commissioner Verheugen and External Relations
Commissioner Patten, should be strongly encouraged to engage
Cypriot leadership both publicly and privately on the need to
support the Annan Plan. The Secretary raised this April 2
with Solana, and he pledged to do all he could to help
convince the Greek Cypriots. It would be useful if the
Secretary followed up to see what Solana has been doing. A
well-placed press interview by Solana or another leading EU
figure could be a key indicator of how far the EU is prepared
to lean in favor of an agreement. In a similar manner, the
Irish Presidency should become engaged, and PM Ahern and FM
Cowen encouraged to raise with their Cypriot and Greek
counterparts the importance of seizing this historic
opportunity.


8. (C) We also believe that it would be useful to engage
European Parliament President Cox with an eye towards a
parliamentary resolution advocating support for the plan.
Ambassador Schnabel will seek an occasion in the coming days
to discuss the issue with Cox.

SAMMIS