EU/CYPRUS: DEVELOPING THE EU'S POST-REFERENDA

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 001870

SIPDIS

E.O. 12958: DECL: 04/28/2014
TAGS: PREL EAID CY TU EUN USEU BRUSSELS
SUBJECT: EU/CYPRUS: DEVELOPING THE EU'S POST-REFERENDA
APPROACH

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) April 28 COREPER discussion on defining the Green
Line for the European Union focused on the extent to which
the Green Line is a barrier and to what extent it will be a
border. Roughly speaking, our contacts report that the Greek
Cypriots would like a barrier without the political
characteristics of a border; the Commission and other Council
members have been more open to the mix of barrier and border,
with those in favor of rewarding Turkish Cypriots advocating
a minimal barrier to the passage of people, goods, &
services. Under EU procedures, the Commission would have the
authority to develop implementing procedures for the Green
Line; with COREPER still in session April 28 at the time of
this writing, Greece is threatening to veto any COREPER
decision not giving the Council oversight of the final
dispositions of the Green Line (and thus a Greek Cypriot
voice to define the political parameters).


2. (C) The debate on disbursement modalities for the EU's
package for northern Cyprus has yet to be engaged. The
Council has endorsed the Commission's disbursement of a 259
million euro assistance purse in the north. On the other
hand, because the previous package was predicated on a Cyprus
settlement, the Commission has now been tasked with coming up
with a new financial instrument to define the disbursement.
This new financial instrument will need to be approved by the
Council at 25 and the European Parliament. The Commission
prefers an approach including a Commission office in northern
Cyprus, and disbursement with a maximum degree of autonomy
from the Republic of Cyprus. But discussions on the
Commission's approach in the Council are expected to be
difficult, given Republic of Cyprus involvement. Separately,
RELEX Commissioner Patten told us April 27 that the money
will certainly be spent, although the modalities remain to be
decided. Patten also predicted that Turkey would get a
positive Commission "avis" to open accession talks in
December. End summary.

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The new Green Line:
Border and Barrier?
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3. (C) A senior Commission official on April 28 reviewed the
Cyprus Green Line discussion in the COREPER (The EU's highest
sitting Brussels body: the Committee of Permanent
Representatives). The COREPER is still meeting at the time
of this writing. Our interlocutor told us that the focus of
COREPER's discussion is defining the terms upon which EU
rules would be promulgated and implemented in relation to the
Green Line. The assumption before the failure of the
referendum was that this discussion would focus on validating
the Annan Plan's approach to the Green Line; since April 24,
the debate has shifted to the extent to which the Republic of
Cyprus gets in-put into the Commission's drafting of the
rules governing the Green Line.


4. (C) The COREPER discussion is now focused on the
parameters of the Green Line as a demarcation of the EU's
frontier with an area in which the acquis communitaire (EU
law & regulation) do not apply. The crux of the matter for
the EU is the status of the Green Line. The UK has proposed
changes to the Green Line rules that would make the
demarcation more permeable and its dispositions more
favorable to the Turks. The Greek Cypriot position is that
the Green Line must not be a border (for this would imply
recognition of "TRNC" sovereignty) but must remain a barrier.
For those seeking to reward the Turkish Cypriots for their
support of reunification, the Green Line must take on some
characteristics of a border while losing its aspect of a
barrier to the free flow of people, goods, and services.
This is a tricky mix.


5. (C) Our contact reported that Enlargement Commissioner
Verheugen is happy with the UK proposed changes to the Green
Line rules, but believes that the EU could go further in the
direction of the Turkish Cypriots. We understand that this
is unlikely, and that the preferred position of the
Commission is now to leave current rules in place or else
limit discussion to the immediate question of free passage of
persons, thus "splitting" the legislation.


6. (C) Typically, the Commission would then be tasked with
drafting the implementing rules for the passage of goods and
services without the interference of the member states. In
this case, however, we have been told that Greece at COREPER
is holding out for a Republic of Cyprus voice approving
whatever the Commission drafts. The Commission opposes this,
but the decision on this issue rests with COREPER ambassadors
working on the basis of consensus (which until May 1st
includes Greece but excludes Cyprus).

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Carrots for the North
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7. While the 259 million euro Commission package for Cyprus
has been blessed by the Council, the modalities for
disbursement remain open. Though even Papadopoulos is on the
record that it is appropriate that the money be spent in
Northern Cyprus, there is a major difference of approach
between Commission and Council (including Cyprus). The
Commission wants to be able to disburse independently of
Cyprus authority. Verheugen spoke to the European Parliament
on April 27, stating that the Commission would now have to
establish an office in Northern Cyprus, as the financial
package for assistance would be too great to manage through
the UN. Verheugen's Cyprus Adviser (strictly protect) told
us April 28 that Verheugen hasn't really formulated an
approach yet, but simply doesn't want Cypriot control over
his policy process in the "TRNC". In his remarks to
Parliament, Verheugen rejected allegations that an office in
northern Cyprus would imply recognition of the Northern
Cypriot government, comparing the Cypriot case with Taiwan,
where the Commission has effective cooperation without formal
recognition of Taiwan.


7. Verheguen's challenge is that Cypriot President
Papadopoulos wants a hand in deciding how the money will be
spent in the north, and according to Verheugen's Cyprus
adviser, once the Commission develops its new financial
instrument for use in northern Cyprus, both the Council (by
consensus at 25) and the European Parliament through its
standard budgetary approval process will have to endorse
whatever Verheugen proposes. This virtually guarantees that
Republic of Cyprus redlines will be asserted and protected in
the Council.

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Wary on Sovereignty
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8. Our Council and Commission interlocutors continue to
express extreme wariness about offering the "TRNC" any of the
accoutrements of sovereignty. "TRNC President" Denktash is
still in power, and one key Solana advisor told us April 24
that the worst case development for the EU would be a "TRNC"
candidacy for accession. The EU's legal experts rule out
such a possibility, however, since all EU members recognized
the indivisible borders of the united Cyprus through the
Accession Treaty, which governs the terms of their political
union with each other. Indeed, Enlargement Director Matthias
Ruete, speaking to EUR/PDAS Ries on April 26 said that the
accession treaty of union precluded recognition of the "TRNC"
by EU members.

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RELEX Commissioner Patten
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9. Speaking informally at a NGO social event April 27, RELEX
Commissioner Chris Patten told us the Commission is still
trying to figure out how to spend money in Northern Cyprus.
Patten expects the Commission to open an office to oversee EU
assistance. (Patten didn't even bother to mention Greek
Cypriot opposition to this prospect.) While there will be
legal hurdles to managing the process, Patten was confident
the Commission would find a way, he said.


10. Patten doubted the Greek Cypriots could openly oppose
any efforts to disburse money in the north, noting that they
were "on their heels" diplomatically after their blatant
efforts to stifle opposing views on the referendum. (Note:
Other Council and Commission interlocutors share this view.
End note.) Despite expected opposition from Greek and
Cypriot parliamentarians, Patten was confident the Commission
would easily gain Parliamentary approval for spending in
Northern Cyprus; he expressed no opinion about whether such
funding could be directed through "TRNC" entities, which we
have heard is the crux of the current debate inside the
Council.


11. Finally, on Turkey's accession bid, Patten told us the
Commission has no other option but to give a positive avis to
begin accession negotiations based on Turkey's technical
merits. Still, he said the political climate in Europe is
not receptive to Turkey's candidacy. He viewed the
opposition of conservative parties in Germany and Spain as
the most serious obstacles to Turkish admission. (Comment:
Patten's inclusion of the Spanish opposition among the
nay-sayers is a new one for us. EU insiders generally
include France, Germany, Austria, and the Netherlands as the
core group of Euro Turcophobes. Patten's inclusion of the
Spanish opposition is particularly odd given that its ability
to influence the decision on Turkey is extremely limited, so
far as we are aware. End comment.)
Schnabel