DOING MORE WITH TURKISH CYPRIOTS ON ISSUES OF

C O N F I D E N T I A L SECTION 01 OF 06 NICOSIA 001813

SIPDIS

E.O. 12958: DECL: 11/11/2015
TAGS: PGOV PREL EAID ECON KCRM EFIN PTER KHLS CVIS
KNNP, TBIO, PHUM, EAIR, CY
SUBJECT: DOING MORE WITH TURKISH CYPRIOTS ON ISSUES OF
VITAL US INTEREST

REF: A. STATE 201996

B. 04 STATE 113612

Classified By: CDA Jane Zimmerman, for reasons 1.4 (b) and (d).


1. (C) SUMMARY. The United States policy of supporting
economic development in the Turkish Cypriot community has an
important role to play in support of a resolution of the
Cyprus problem -- however, closer cooperation with the
Turkish Cypriots can also help advance other issues of
broader national interest. The porous Green Line dividing
Cyprus represents a backdoor into the EU -- and the rest of
the West -- for illegal immigration, infectious disease,
trafficked persons and drugs, theft of intellectual property,
and possibly terrorists and WMD material. For political
reasons, the GOC is unwilling to cooperate with Turkish
Cypriot authorities in the fight against such global threats,
while the Turkish Cypriots are unable to take meaningful
action on their own because of the poorly trained,
underequipped, and underfunded institutions of their
unrecognized "state." The largely secular community in the
north offers an opportunity to reinforce support for moderate
Muslims. In her October 28 (ref a) meeting with Turkish
Cypriot leader Talat, the Secretary highlighted the U.S.
interest in helping build institutions and capacity in the
Turkish Cypriot community. In this cable, Post proposes
several specific measures in response to the Secretary's
call, which in our view will: 1) boost the ability of the
Turkish Cypriots to support U.S. efforts to fight against key
global threats that have an impact on U.S. security
interests, 2) help prepare the Turkish Cypriots to be full
partners in a United Cyprus, and 3) complement our already
excellent cooperation with the Republic of Cyprus in these
areas. END SUMMARY.

ADVANCING A CYPRUS SOLUTION, ADDRESSING GLOBAL THREATS
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2. (C) Since the 2004 Deputies Committee decision authorizing
assistance to the Turkish Cypriots (ref b),the U.S. has
pursued a policy of supporting the economic development of
the Turkish Cypriot community -- to help reward and reinforce
the strong Turkish Cypriot support for the UN-sponsored
Cyprus settlement plan, and in line with the UNSYG's call to
ease the international isolation of the north. U.S. efforts
so far have included the $30.5 million Cyprus Partnership for
Economic Growth (CyPEG) program (designed to facilitate a
Cyprus settlement by reducing economic disparities between
the two communities),an end to ratios that disadvantaged
Turkish Cypriot students in U.S.-funded scholarships, and a
more sustained political dialogue including meetings between
Secretaries Rice and Powell and community leader Mehmet Ali

SIPDIS
Talat. Cooperation with the Turkish Cypriots has remained
limited, however, by sensitivities over dealing directly with
a "government" the United States does not recognize.


3. (C) There are nonetheless issues of vital interest to the
United States in which closer cooperation with Turkish
Cypriot authorities is critical. The porous Green Line,
which divides the island of Cyprus, represents the de facto
eastern frontier of the European Union. The Republic of
Cyprus is unable to exercise control over the northern third
of the island, and unwilling for political reasons to
cooperate with the Turkish Cypriots who do. As a result, the
north constitutes a back door into the West for illegal
immigrants, drugs, criminals and terrorists -- while Turkish
Cypriot institutions are woefully under-prepared to deal with
transnational issues such as terrorist finance, WMD
proliferation, intellectual property protection, and
infectious disease.


4. (C) In his October 28 meeting with the Secretary, Turkish
Cypriot leader Mehmet Ali Talat expressed not only a desire
to work toward a settlement of the Cyprus problem, but also a
willingness - without asking for recognition of the "TRNC" -
to work with the United States more closely on more global
issues that are of concern both to the U.S. and the two
communities on Cyprus. The Secretary, in turn, said the USG
would look into additional ways to build institutions and
capacity in the Turkish Cypriot community. In light of this
directive from the Secretary, this paper sets forth
additional, specific capacity-building initiatives for the
Turkish Cypriots that would serve broader U.S. interests.

PROTECTING EQUITIES: FRAMING NEW USG INITIATIVES
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5. (C) Several of the steps outlined below are certain to
draw serious criticism from the Government of Cyprus, whose
hypersensitivity over dealings with the Turkish Cypriots
prompts vehement GOC opposition to any initiatives they feel
might represent a precursor to recognition of the "TRNC." We
would have to proceed carefully to ensure that new USG
initiatives do not do more harm than good by causing the GOC
to restrict its own cooperation with us on vital issues such
as border security, drug interdiction, terrorist finance, and
infectious disease.

6. (C) Our overarching message in proposing the initiatives
listed below is that they address problems that pose a threat
to the United States, the EU, as well as both communities on
Cyprus, and are therefore in the interest of the GOC to
support. Eventually, any capacity-building investment in the
Turkish Cypriot community will pay off for the Greek Cypriots
- either today, by addressing current transnational problems
that do not stop at the Green Line, or in the future, when
Turkish Cypriots take their place as partners in a United
Cyprus. This is a message we will need to reinforce
continually with the Cyprus government, as well as with media
and other audiences; it is important to make the case to both
communities that our measures are practical, not political.


7. (C) On a more mundane level, the GOC,s desire to qualify
for the Visa Waiver Program may give us some leverage here,
since VWP participation requires effective security
cooperation. GOC moves to retaliate against or limit U.S.
efforts in this area would raise significant problems for
Cyprus's VWP participation. At the same time, the United
States should avoid controversy wherever practicable by
continuing to funnel training and other support though
Turkish Cypriot NGO cut-outs (such as the Turkish Cypriot
Banks Association or Chambers of Commerce and Industry) or
through outside contractors (as we are doing with CyPEG) to
avoid conferring unnecessary symbolic legitimacy on "TRNC"
institutions. The State Department -- by programming
assistance through INL, for example -- could also provide a
degree of political insulation for agencies such as DEA or
FBI, protecting their valuable day-to-day relationship with
the GOC from political fallout. We should also seek
opportunities to partner creatively with others working to
build capacity in the north (especially the UK),thereby
diluting criticism leveled against us and getting more bang
for the buck.

BITE THE BULLET, BUT KEEP BALANCED WITH THE SOUTH
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8. (C) In some instances, however, direct and unilateral
contact with Turkish Cypriot authorities will be unavoidable,
especially when dealing with issues of law enforcement,
border security, and public health. In such cases, we should
be prepared to accept public criticism as the cost of
protecting vital U.S. interests -- and frankly, vital EU and
Greek Cypriot interests as well.


9. (C) Over the long term, however, the best way to ensure
our programs in the north do not cripple our cooperation with
the GOC will be to press ahead with balanced, creative
initiatives in the south as well. Cyprus was the first EU
state to sign a PSI Shipboarding Agreement with the U.S.,
cooperated closely with FinCEN in the fight against money
laundering, and has been an eager recipient of EXBS training
and material assistance. The U.S. must keep the Greek
Cypriots on side by offering more resources and financing
more training, including money laundering/terrorist finance
and IPR enforcement, to ensure that our cooperation with the
GOC continues. Our final goal should be for both sides to
have the willingness and the capability to cooperate
effectively with us -- and eventually each other -- on issues
of global concern.

SPECIFIC PROBLEMS, SPECIFIC INITIATIVES
--------------


10. (C) Terrorism Finance/Money Laundering.

Turkish Cypriot authorities lack the legal and institutional
framework to meet minimum international standards with regard
to combating money laundering and terrorist finance. The
north's 23 casinos, 18 offshore banks, and several hundred
currency exchange points are largely unregulated, and several
worrying cases have been reported. According to UK sources,
significant amounts of illicit proceeds from
Afghanistan-Turkey-UK drug smuggling operations are being
laundered through north Cyprus. The Treasury Department has
announced its intent to designate one Turkish Cypriot
offshore bank as a "Financial Institution of Primary Money
Laundering Concern." One on-shore bank was until recently
reportedly controlled by a German organized crime figure,
while another has allegedly been receiving proceeds from
internet fraud schemes carried out in the U.S. Meanwhile,
there is unconfirmed press speculation that Al Qaida could be
using the Turkish Cypriot financial system.

The USG has undertaken several steps so far to address these
problems, including:

-- Using CyPEG resources to train the Banks Association (an
NGO) on Know Your Customer rules and basic anti-ML/TF
procedures.
-- Sending a visiting FinCEN official to the north for an
informal seminar with Turkish Cypriot regulators (December,
2004). FinCEN has also provided informal advice on major
shortcomings in current money laundering legislation.

-- Providing the Turkish Cypriot "Central Bank" with all U.S.
designation of individuals/entities as terrorists under E.O.
13224, which the Central Bank distributes to both on-shore
and offshore banks.

-- Working, through IRS London, with the UK Treasury to
provide informal advice/assistance in support of "Ministry of
Economy" efforts to draft a new anti-money law, including the
establishment of a Financial Intelligence Unit.

-- Raising the importance of money laundering/terrorist
financing with officials and bankers in the north.

Nonetheless, we can do much more, including:

-- Cooperate more closely to complement UK efforts in the
area of Terrorist Finance. (The UK has a 50,000-pound
sterling program to help the Turkish Cypriot authorities
improve their financial control measures, and is providing
advice on the drafting of a new casinos law.)

-- Provide additional training (both in Cyprus and the U.S.)
on terrorism finance to the "Central Bank" and "Ministry of
Finance," which oversees the offshore banks.

-- Assist Turkish Cypriots in developing a package of
amendments to other legislation that will complement and
reinforce the draft money laundering and casino law.

-- Work with the judiciary, regulators, and law enforcement
to improve their ability to investigate, prosecute and
adjudicate money laundering/terrorist financing cases, which
currently languish because investigators are unfamiliar with
financial issues or due to a lack of international
cooperation.

-- Share U.S. law enforcement information pertaining to
suspected activities involving entities in north Cyprus with
Turkish Cypriot "officials."


11. (C) Border Security and Counterproliferation Cooperation.

The question of political recognition has severely restricted
the ability of the U.S., EU, and others to provide help to -
or engage in direct cooperation with - Turkish Cypriot
police, customs and border authorities. As a result, almost
no steps have been taken to address the proliferation and
border security concerns, which the north's poorly trained,
poorly equipped authorities are unable to handle alone.
Embassy Nicosia's EXBS program recommends the following
training, for which EXBS funding is already largely available:

-- Contraband Enforcement Team Training (CET) for select
groups of Turkish Cypriot customs officers, with a goal of
establishing a standing Contraband Enforcement Team.

-- Basic WMD Inspectors Workshop, provided by DHS, CBP for
Turkish Cypriot customs officers in basic inspection
techniques, use of specialized equipment, and familiarization
with export control enforcement.

-- Basic Integrated Export Control and Border Security
Training (BIECBS) conducted by DHS, CBP for all Turkish
Cypriot agencies involved in export control and border
security, which would demonstrate methods, techniques, and
practices necessary for a cohesive export control and border
security system. This system would eventually coordinate the
efforts of all agencies involved in export control and border
security. At the outset, however, such training would
provide Turkish Cypriot "officials" guidance on establishing
units responsible for enforcement, intelligence, targeting,
investigations, and prosecutions in the area of
nonproliferation.

-- WMD Basic Course, provided by DOD/DTRA, ICP, to give
Turkish Cypriots an overview of the WMD threat and
enforcement techniques.

-- WMD Criminal Investigations Course, provided by DOD/DTRA,
ICP to introduce police and customs to techniques for
investigating WMD and nonproliferation violations.

Similarly, the Turkish Cypriot authorities could make
immediate use of the following nonproliferation-related
equipment, for which DOE funding could be made available:
radiation portal monitors for the ports of Famagusta and
Kyrenia and for Ercan airport; basic Inspectional Tool Kits;
radiation pagers; Contraband Detection Kits; X-Ray Equipment
to examine ferry passenger luggage, a pallet X-Ray system for
Ercan Airport.

Finally, EXBS proposes the following assessments to gauge
better deficiencies in the north's border security and
recommend further areas for training and assistance:

-- Port Assessment, conducted by a short-term EXBS advisor (a
U.S. Customs Inspector),of Famagusta and Kyrenia. The TDY
advisor would spend 30 days evaluating the procedures
employed by Turkish Cypriot Customs at the two ports, and
assist "authorities" in establishing a Targeting and Risk
Management Unit.

-- Enforcement Assessment, conducted by a short-term EXBS
advisor (special agent),focusing on enforcement entities and
establishing a coordinated protocol for responding to WMD
seizures and conducting non-proliferation investigations.

-- Legal Assessment, to evaluate existing legal structure and
help develop a legal framework for export controls. A TDY
team, consisting of an Assistant US Attorney (AUSA) and a
Federal Judge, would conduct a five-day assessment to analyze
the current laws and prospective legislation, and to conduct
interviews with prosecutors and members of the judiciary,
along with those who work in conjunction with the legal
system. The assessment will provide the foundation for the
Turkish Cypriots to establish a legal framework for export
control law and regulations. The assessment would also bring
Turkish Cypriot prosecutors and judges together to foster
judicial system support for the creation of a legal framework.


12. (C) Cooperation Against Drug Trafficking.

In addition to causing counterproliferation concerns, the
north's weak law enforcement capacity also creates a
significant opening for drug trafficking. Post DEA, either
directly or with INL funding and assistance, recommends:

-- Sponsoring Turkish Cypriot participation in the 2-week
Basic Investigators Course.

-- Providing 1-week Asset Forfeiture and Money Laundering
Training to bankers, banking regulatory officials, police,
prosecutors, and other court officials.

-- Providing Operation Jetway training in the U.S. for 2-4
police officers (1 week) to enhance airport security and
anti-smuggling training.

-- Providing the $35,000 network computer requested by
Turkish Cypriot police to support a database that would help
track criminal organizations and support a new criminal
intelligence arm within the police force.


13. (C) Avian Influenza & Other Infectious Diseases.

The north's underdeveloped "state" infrastructure seriously
compromises its ability to monitor and combat transnational
health threats, especially infectious diseases such as avian
flu. This problem is aggravated by the peculiar politics of
Cyprus, in which the GOC refuses all cooperation, for
political reasons, with officials of the "TRNC." While
making clear that direct training for employees of the "TRNC"
does not constitute recognition, we should explore ways to:

-- Have NIH or CDC specialists train Turkish Cypriot doctors
and public health officials in techniques to monitor,
diagnose, and combat communicable diseases.

-- Support Turkish Cypriot contingency planning efforts and,
as required, serve as a channel of communication between
Turkish Cypriot authorities and other countries or
international health institutions.

-- Offer material assistance as required in the form of
medicine, supplies or equipment to help monitor, diagnose,
and combat the spread of avian flu.


14. (C) Trafficking in Persons.

The north continues to be a significant destination for
trafficked persons, and the "TRNC,s" thriving sex industry
in the form of "night clubs" and "cabarets" poses a
significant TIP problem. TIP is also a major concern in the
south. Turkish Cypriot "officials" have shown a willingness
to cooperate in the combat against TIP by addressing
deficiencies in their legal framework, conducting workplace
and health inspections, and offering better support and
educational services to women employed in clubs. The U.S.
should continue to encourage both Turkish Cypriots and Greek
Cypriots to make further progress along these lines,
providing advice and training through our bicommunal
development and support funds where needed.


15. (C) Airport Safety and Security

The north's Ercan airport is considered illegal by the GOC,
and only Turkey and Azerbaijan permit international flights
to land there - over the protests of the Cyprus government.
The Turkish Cypriots believe that direct flights between
north Cyprus and the U.S./EU would boost the development of
their tourism-dependent economy, but have not yet filed a
formal request. Meanwhile, Ercan nonetheless handles
significant numbers of tourist passengers - especially from
Europe, but also from the Greek Cypriot community and even
the United States. As a practical matter, improving the
safety and security practices at Ercan will help increase the
safety and security of U.S. citizens and air travel in
general.

Turkish Cypriot authorities have taken significant steps,
with help from Turkey, to ensure Ercan airport meets ICAO
security standards. One of their most significant
outstanding problems is the lack of a formally documented set
of security procedures and practices, and the lack of a
formal "national" security plan including contingency
planning as required by ICAO. Turkish Cypriot authorities
also have little experience or formal training in the
detection of visa and other travel document fraud. Two TSA
agents conducted an informal survey of the airport in
November 2004, and Embassy consular officials have begun
periodic contact with Turkish Cypriot immigration authorities
there. Additional steps we could take include:

-- Extending EXBS training and assistance to Ercan Airport,
including the provision of radiation portal monitors and a
pallet X-ray system.

-- Having TSA/Rome conduct a follow-up visit to assess
progress on documenting procedures and drafting "national"
security plan.

-- Including Turkish Cypriot aviation "officials" in
TSA-sponsored courses on security planning in U.S. and

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abroad.

-- Authorizing a full and formal TSA and FAA surveys of Ercan
to ensure the USG has a complete picture of the security and
safety situation there in the event an application for direct
flights is received.

-- Initiating a sustained, regular relationship between
Turkish Cypriot immigration "officials" and Embassy consular
staff, who will provide training in document fraud detection
and other areas relating to border security.

-- Allocate DS/ATA funds to improve the counterterrorism
capacity of law enforcement personnel at the airports and
elsewhere in the north.


16. (C) Muslim Outreach.

The Turkish Cypriots are a highly secular, democratically
governed Muslim community. Apart from any considerations
relating to the Cyprus problem, it remains in the broader
U.S. interest to engage in a closer cultural and educational
relationship with the Turkish Cypriot community to encourage
this community to remain a western-leaning example to other
Muslims in the region. The large number of students from the
Middle East and South Asia -- attracted by high quality
universities as much as by the north's secular culture --
expands our potential to engage with other moderate Muslims.
Programs to increase this cultural and educational contact
should include, but not be limited to:

-- Seek an invitation for Mehmet Ali Talat to attend the
National Prayer Breakfast in Washington, not in any
"official" capacity but as the elected leader of the largest
Muslim community on Cyprus.

-- Foreign Language Teaching Assistant (FLTA) and other
Fulbright teacher exchange programs for Turkish Cypriot
teachers, to contribute to English language capacity in the
north.

-- English Language Fellows to improve the English language
capacity of secondary teachers, of journalists, of imams, and
public servants.

-- Providing Drug Prevention training to public schools in
the north, a program which has been requested by Turkish
Cypriot education "authorities."

17. (C) Intellectual Property Rights.
The Turkish Cypriot community lacks a basic understanding of
IPR, which has opened the door to a thriving trade in pirated
goods, music, and movies. Antiquated Turkish Cypriot laws
and spotty enforcement mean that artists and businesses from
the U.S. and elsewhere suffer from theft of their ideas and
products. The "TRNC Ministry of Economy" is willing to
accept U.S. help to prepare new legislation and training. It
is in the interest of U.S. business to help protect IPR in
the north by:

-- Financing the participation of a Turkish Cypriot official
in the USPTO IPR Training Academy.

-- Hiring a contractor to work with the "Ministry of Economy"
to prepare modern IPR legislation.

-- Providing training to Turkish Cypriot "officials" on the
enforcement and protection of IPR.
ZIMMERMAN