EU GAME PLAN ON TURKEY AND NORTH CYPRUS

C O N F I D E N T I A L SECTION 01 OF 05 BRUSSELS 000537

SIPDIS

NOFORN

DEPT FOR EUR DAS KENNEDY, EUR/SE AND EUR/ERA

E.O. 12958: DECL: 01/27/2015
TAGS: PREL CY TU EAID EUN USEU BRUSSELS
SUBJECT: EU GAME PLAN ON TURKEY AND NORTH CYPRUS


Classified By: USEU/POL Harry O'Hara, reasons 1.4 b/d.


1. (C) Summary: A number of European Commission officials
expressed concern to visiting EUR DAS Ambassador Kennedy on
January 27 about the inability of the member states to free
up
the trade and financial assistance package to north Cyprus
that the Council had approved in July 2004. They also worry
Cyprus could create additional difficulties as the EU and
Turkey move towards starting accession talks in October

2005. Commission officials also preview how they hope to
work with Turkey in coming months to keep momentum going
without raising domestic internal public EU fears about
Turkey. End Summary.


2. (SBU) Ambassador Kennedy met with a wide of European
Commission, Council, Presidency officials during her
January 26-27 meetings in Brussels. They included EC
director-general Fabrizio Barbaso in DG-Enlargement; Cabinet
advisor on Turkey and Cyprus Jean-Christophe Filori; EC
Director Pierre Mirel for Turkey and Cyprus; EC
head-of-unit for Cyprus, Leopold Maurer; EU head of unit
for Turkey, Martin Harvey; Council Secretariat Director
General
Robert Cooper and Council Secretariat expert on Turkey,
Gabriele
Scaramucci; Council Policy Unit head Christoph Heusgen and
his deputy Kees Van Riij; Luxembourg President Rep (and
Ambassador to Spain and Turkey) Senningen and Luxembourg
MFA expert Jean Delvaux; Turkish Ambassador to the EU
Demiralp and North Cyprus "Prime Minister" Talat. She was
accompanied by USEU/POL O'Hara. (Conversation reported in
USEU today January 28 and summary emailed to EUR/SE and
Embassy Nicosia)

Commission Blocked on North Cyprus


3. (C) Commission officials in DG-Enlargement (responsible
for Turkey and North Cyprus) are deeply worried by the
inability of the Luxembourg Presidency and the
member-states to convince Cyprus to play a more
constructive role. They believe that an "unsolved Cyprus
problem" affects North Cyprus and also how the EU handles
Turkish accession between now and October 3. Both the
Commission and the Turkish Ambassador to the EU told
Ambassador Kennedy that this is "too long a time" for
EU "inaction."


4. (C) On North Cyprus, Cyprus is blocking modification of
green-line regulations to allow more trade (current value:
150,000 euros/month with most traded item being toilet
paper); July 2004 Commission proposal to permit greater
north/south trade and the release of 259 million Euros in a
financial aid package for North Cyprus. In addition, the
Commission is unhappy with Cypriot harassment of EU
officials working in Cyprus.

Green-line progress


5. (C) Commission officials told us, however, that they are
getting signals that Cyprus might permit a modification of
green-line regulations to allow processed goods to be
traded (currently blocked) and also to increase the value
of goods for personal use to be carried across the border
from 30 euros to 175 euros per person. Since the
liberalization of the green line, the EC estimates that
close to 500,000 Euros has been traded - much less than had
been expected. On the more positive side, the EC has
observed an increase in the number of people from North
Cyprus working in Cyprus. Ambassador Kennedy suggested
that the Commission could do a study of green line trade as
a way to increase attention to the need by the
member-states to do more on to increase it. EC
DG-Enlargement Director General Barbaso asked the Cyprus
unit to pull something together to capture this. Barbaso
also said that while he had been disappointed that the
member states hadn't approved green line changes, he
believed that getting progress on the green line could be
an important confidence building measure that might help
convince member states to move on the trade/aid package.
(Update: On February 4, the EC and Cyprus signed a prelimnary
agreement designed to increase trade over the green line. The
agreement will to need to be formally approved by the member
states.)

Trade/Assistance Package: next steps


6. (C) Even though the Commission complained that the
Luxembourg Presidency had not followed through on a
promise to put the stalled trade and aid package on the
January 31 General Affairs and External Relations Council
meeting, they acknowledged it would most likely have
remained blocked by Cyprus. They also acknowledged that
TRNC "PM" Talat had been pushing them on trade and not to
decouple trade and the aid package. The Commission has
agreed that until after elections in North Cyprus that they
would not decouple. But, as Commissioner Rehn cabinet
advisor on Turkey and Cyprus told us, the Commission wants
to work with the member states to get the financial
assistance package rather than nothing. What the Commission
hopes is to convince the Luxembourg Presidency to put on
the COREPER agenda financial assistance for North Cyprus in
what is being called here "decoupling in time but not in
substance." The Commission hopes that the member-states
will not accept a Cypriot condition that the location of
the headquarters from programs in the package for North
Cyprus be in the South.

UN, not EU, for Cyprus


7. (C) Commission officials told us that the EU also wants
the UN reengaged in Cyprus but does not want another
failure. The Commission believes that EU member states, the
US and other countries need to keep pressing on
Papadapoulos to say what wants rather than what he doesn't
want. The Commission told us that it continues to oppose a
Cypriot trial balloon to have the EU replace the UN.

Running out of money in North Cyprus?


8. (C) The Commission head of unit for Cyprus told us that
he is worried that the Commission's current programs in
North Cyprus could run out of money by the end of 2005 and
then when they do get new money they will have a shortened
timeframe to approve projects in the North (deadline end of
CY 2006) and spend money (by the end of CY 2009).
Currently the EC is concentrating on agri-business,
teaching how to adapt to various EU acquis requirements,
improving the process of issuing certificates of origin,
and facilitating greater trade across the green line. One
positive new development is that now that Turkey is
officially a candidate country, the EC can work with
Turkish companies located in the North.

Turkish Accession and Cyprus "unreined"


9. (C) On Turkey, the Commission believes that with no one
in the EU willing to get Cyprus to "act more like
Europeans" or to control them, it is better to avoid giving
Cyprus opportunities to create additional difficulties for
Turkish accession. Currently the Commission is fending off
an effort by Cyprus to interpret the December 17 Council
conclusion that Turkey will sign a customs protocol as a
requirement that Turkey open its ports to Cypriot ships.
Already the Commission has decided to move its accession
partnership agreement with Turkey from March/April 2005 to
November 2005, well after the October 3 date for the
beginning of accession talks. Commission sources tell us
that the accession partnership document (which essentially
is a roadmap provided by the Commission to a candidate
country that provides them with short/mid-term priority
things to do) has to be approved by all member-states. The
Commission does not want to provide Cyprus with this
opportunity.


10. (C/NF) Also indicative of the Commission's unhappiness
is that they called in the Cypriot Perm-Rep January 25 for
a meeting with DG-Enlargement chief of staff who told
Cyprus to stop being so negative. When they told this to
us, they asked that we not share this because they had not
told the Luxembourg Presidency of their action. In our
meeting with DG-enlargement officials, DG Director General
Barbaso felt compelled to remind his unit heads and
directors that despite their frustrations with the
Presidency, they need to go softly with the Luxembourgers.
We also felt that his remark was also a bit directed to us
and we were reminded on more than one occasion that small
countries are very sensitive to being pushed around by
bigger countries both in and out of the EU. Commission
officials also questioned the impartiality of Luxembourg Amb.
Fernand Karthausen who is accredited to Cyprus and Greece. He
is Luxembourg's EU point man on Cyprus by is regarded as
heavily pro-Greek Cypriot.

More Unease over Luxembourg Presidency


11. (C) Turkish Ambassador to the EU Demiralp expressed
his concern over the Luxembourg presidency. He said that he
was concerned by a "sentimental solidarity" between
Luxembourg and Cyprus, two small-states. He also noted that
he had not detected any "will" by Luxembourg to move ahead
on the trade/assistance package for Cyprus. Demiralp
wondered if the Luxembourg Presidency was prepared to spend
its capital to move ahead on political issues (like Turkey)
or would it try to focus on economic issues.

Luxembourg Presidency Dilemma


12. (C/NF) Jean-Paul Senninger, the Madrid-based
Luxembourg Ambassador to Spain and Turkey, told us
privately that the Luxembourg Government is in fact talking
with the Cypriot government to get them to act in a more
responsible "European" fashion. He stressed that Luxembourg'
s discussions were useful because it was a conversation
between small countries, neither of whom like to be bullied
by big states (or for that matter, the Commission),and
that Luxembourg had a lot of experience working the EU
system to its advantage. He noted that the Luxembourg
government will seek to use a visit by Papadopoulos during
the
second half of February to pass these messages. From our
perspective, it is not clear that other member states or
the Commission were aware of Luxembourg's efforts.

COSEE Highlights


13. (C) At the January 26 US/EU COSEE experts meeting,
Senninger was quite insistent that dialogue between the
Presidency country and Cyprus was intense. He noted that
the Presidency would be in Ankara February 27-28 for
meetings and that Turkish FM Gul and Luxembourg Minister
for European Affairs Nicolae Schmitt planned a separate
meeting. At times, we felt that his remarks were as much
directed towards the Commission officials and the UK rep in
the room as they were to us.

Progress on Turkey


14. (SBU) In their presentation at the COSEE meeting,
Commission officials previewed their intense activities in
Turkey in coming months. EU political monitoring missions
are planned for March and June with Association Council and
Committee meetings for March and April. Civic Society
exchange programs both in Turkey and in the member-states
are in full swing as the number of EU/Turkey educational
exchanges programs continues to increase. The Commission
believes that the quality of EU/Turkey dialogue on
sensitive human rights issues including torture is
excellent. There remain a number of difficult issues,
however, particularly on religious freedom. Senninger
noted the Luxembourg Presidency was very interested in
seeing Turkey make progress on religious freedom. He said
that these and other issues would be discussed at the
EU/Turkey troika meeting in Ankara on March 7. After
expressing his appreciation for US reporting on religious
freedom in Turkey, he wondered if perhaps this would be a
theme that the US and the EU could explore together in
further detail. (Rehn adviser Filori also highlighted to
us action on the religious area, particularly the law on
foundations.)

Getting the Negotiating Framework Agreement with Turkey


15. (C) The Commission wants to present this agreement "
later rather than sooner" because it too will require
approval by all 25 members. The Commission also wants to
keep high-profile Turkey discussions out of the limelight
until after the French Constitutional referendum (early
June). The current plan is to present this agreement to the
first July GAERC in the UK Presidency and allow
member-states time to discuss it before approving it before
October 3. The Negotiation Framework Agreement establishes
the rules of the game for the accession process and covers
levels of representation, number of meetings but also
provides guidance on controversial topics such as
safeguards and derogations. The Commission anticipates that
discussion of this agreement will be difficult not only
because of Cyprus but of other member state concerns on
labor mobility, regional and agricultural subsidies.
(Comment:
We were struck that the Commission seemed so concerned with
their internal procedures that they almost neglected to
talk with us about the fact that Turkey also has to sign
the agreement.) Getting Turkish agreement is not going to
be automatic; in fact, Turkey has already sent a note
verbale to the Commission saying that it will sign not/not
an agreement with permanent derogations. The Commission
hopes to preempt some problems by using its negotiating
framework agreement with Croatia, which is scheduled to be
approved next month, as its model for Turkey (so as to
avoid debates about double standards for Turkey).

The Commission game plan: post-October 3


16. (C) While the Commission hopes to avoid another
bruising December 17 last-minute "psycho-drama" over Turkey
(but no one is taking bets on this),they are aware that
after the UK presidency (which they expect to be helpful on
Turkey) comes Austria. Commission conventional wisdom is
that the Austrian Presidency will not block progress on
Turkey but will not be prepared to take any bold steps.
Therefore, the Commission hopes that they can open more
than one chapter of accession talks by the end of 2005 and
will try to open as many as they can. To make this happen,
they will start with easy ones (e.g. standardization of
statistics) that are not controversial (since closing a
chapter requires all member states to agree). The
Commission plans to simultaneously start up the screening
process (a 6-8 month process) where the Commission reviews
a candidate's laws and regulations to identify areas where
national law has to modified to agree with Community law.
There had been some concern in the Commission that some
member-states might instruct the Commission to do screening
before opening up chapters for negotiation but these
concerns seem to have abated for now (thus delaying
accession talks until well into 2006). After Austria, the
Finns will have the Presidency at the end of 2006 and the
Commission is optimistic that the Finnish Presidency will
be proactive and helpful on Turkish accession.

The famous "additional protocol:" the Ankara Agreement


17. (C/NF) The Commission recently submitted the
additional protocol to Turkey per the discussion at the
December 17 European Council. What the Commission wants is
for Turkey to agree to it by initialing
the agreement. Turkish Ambassador Demiralp told us that
there is no legal equivalent to this under Turkish
law; namely Turkey "signs" rather than "initials"
agreements. (For that matter, the Commission is also
struggling with the December 17 Council requirement that
the protocol be signed - for the Commission, protocols are
not/not normally signed.) While Demiralp does not know how
his government will respond to the EC, he was aware of the
EU's bureaucratic needs - namely that the Commission needs
Turkey's approval so that the document can be approved by
the Council (consensus decision),then go to the European
Parliament for its assent (a process that could take up to
3 months) and then back to Turkey for its signature before
October 3. The Commission informally provided us a copy of
the "additional protocol" (faxed to EUR/ERA Volker/Bono)
and asked we not reveal that we have it as a number of
member states don't have it either.


18. (C) The Commission hopes to get something from Turkey
by the end of February indicating "agreement" on the
protocol so that they can start this process. The EC
believes that this has to be done before Cyprus will
approve the negotiating framework agreement for Turkey. In
addition, the Commission is nervous about an argument being
made in Brussels by Cyprus that a Turkish "signature" is
not enough; rather what the EC should demand is "
provisional implementation" of the protocol. The legal
services of DG-enlargement interpret this as meaning "
concrete deeds" before October 3. One example apparently
cited by the Cypriots would be the use of Turkish ports by
Cypriot ships.

Turkey will sign but...


19. (C) Demiralp assured us that Turkey will follow
through on its promise to sign the protocol but the
government will not submit it to the Turkish Parliament.
Implementation of the protocol will take place but in the
context of the negotiations and not as a precondition.
Turkey is considering an additional declaration at the time
of its signing that repeats that signing this does not mean
"recognition." Commission officials are aware that
Turkey is considering this "extra" declaration but hopes
that somehow Turkey might avoid doing this. What the
Commission fears is that Cyprus will seize on this as
another occasion to create mischief.

NATO/EU


20. (C) When asked by Ambassador Kennedy for an update on
Turkish blocking of Cyprus and Malta from NATO/EU meetings,
Demiralp replied that Ankara is working on this issue and
will get back to us in due course. He agreed that this was
important and took on board our point that NAC/PSC dialogue
was deteriorating.


21. (U) Ambassador Kennedy cleared this cable.

Schnabel
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