Identifier
Created
Classification
Origin
06NICOSIA121
2006-01-31 12:00:00
CONFIDENTIAL
Embassy Nicosia
Cable title:  

NORTH AND SOUTH: CYPRUS DESK OFFICER MELLINGER'S

Tags:  PREL PGOV PHUM CY 
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ZNY CCCCC ZZH
R 311200Z JAN 06
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC 5467
INFO RUEHAK/AMEMBASSY ANKARA 4520
RUEHTH/AMEMBASSY ATHENS 3475
RUEHLO/AMEMBASSY LONDON 1118
RUCNDT/USMISSION USUN NEW YORK 0449
RUEHBS/USEU BRUSSELS
C O N F I D E N T I A L NICOSIA 000121 

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/17/2016
TAGS: PREL PGOV PHUM CY
SUBJECT: NORTH AND SOUTH: CYPRUS DESK OFFICER MELLINGER'S
JANUARY 11-13 VISIT TO CYPRUS


Classified By: Ambassador Ronald L. Schlicher; Reasons
1.4 (b) and (d)

C O N F I D E N T I A L NICOSIA 000121

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/17/2016
TAGS: PREL PGOV PHUM CY
SUBJECT: NORTH AND SOUTH: CYPRUS DESK OFFICER MELLINGER'S
JANUARY 11-13 VISIT TO CYPRUS


Classified By: Ambassador Ronald L. Schlicher; Reasons
1.4 (b) and (d)


1. (C) Summary. Cyprus Desk Officer Elise Mellinger
visited Nicosia January 11-13 and met with political leaders,
businessmen, and academics on both sides of the Green Line to
discuss the Cyprus issue, possible confidence building
measures including the Ledra Street crossing, efforts to
promote on-island trade and progress in combating Trafficking
in Persons (TIP). Both her Greek Cypriot and Turkish Cypriot
interlocutors were skeptical about the immediate prospects
for restarting negotiations, particularly since the prospect
of Parliamentary elections in May on the Greek Cypriot side
were sucking up most of the political oxygen in the south.
The Greek Cypriots with whom Mellinger met were looking to
cast the finger of blame for the current political stalemate
at Turkey and the Turkish Cypriot side. Mellinger's Turkish
Cypriot interlocutors, meanwhile, stressed familiar themes of
frustration over Greek Cypriot "intransigence." Turkish
Cypriots were looking to third parties to lay the ground for
productive talks by "pressuring" the Greek Cypriots,
including through further steps to ease Turkish Cypriot
isolation. Deputy UNFICYP head Susan Allee suggested that
the leadership on both sides had hardened their positions.
On TIP, Mellinger saw little evidence that either side was
making good on earlier commitments to take firm action to
combat trafficking and punish traffickers. End summary.

Greek Cypriots Pointing the Finger of Blame...
-------------- -


2. (C) Ambassador Erato Marcoullis, Director of the Cyprus
Question and EU Affairs Division at the MFA, offered
Mellinger an exposition on the island's demographic
composition and its significance for the Cyprus issue. Prior
to 1974, she commented, the Turkish Cypriot community had
been scattered evenly across the island. Bizonality,
therefore, represented a historic concession on the part of
Greek Cypriots, one that needed to be factored into the
balance of a satisfactory plan. In finalizing Annan IV, the
UNSYG used his arbitration authority to satisfy all Turkish

and Turkish Cypriot concerns, while -- according to
Marcoullis -- "no Greek Cypriot concerns were accounted for."
For any future negotiations, she stressed "the need for
agreement, rather than imposition by the UNSYG." This is why
the Greek Cypriots required acceptance of certain procedural
conditions in advance of further talks: 1) a reasonable and
flexible time schedule that was neither restricted nor
open-ended, 2) no arbitration, and 3) only a solution agreed
upon by both leaders can be put to referenda. When we
pressed for a clearer sense of what a "reasonable and
constructive time schedule" might look like in practice,
Marcoullis hedged. The "time frame should be open ended, but
not asphyxiating," she offered somewhat ambiguously, adding
that "such things would be decided when the time comes."
Marcoullis maintained that Ankara was the main obstacle to a
resolution of the Cyprus issue. She stated that "Turkey must
get out of the equation" of the negotiations. She assured us
that "the Greek Cypriots want Turkey to have a smooth path to
accession," but "unless Turkey sends signals to the UN
regarding its willingness to give ground, Ankara faces no
future in the EU." On the off chance that we missed the
point, Marcoullis concluded, "Cyprus will make it very
difficult for Turkey's future in the EU."


3. (C) AKEL's head of international relations Andros
Kyprianou stressed his personal disappointment with AKEL's
souring relations with the north's ruling CTP party and the
Turkish Cypriot left's new-found preference for the
right-leaning Greek Cypriot DISY party. The blame for this
development, of course, he laid solely on Mehmet Ali Talat
and the CTP leadership. When asked if AKEL's rejection of
the referendum may have fundamentally affected the Turkish
Cypriot view of the party, Kyprianou stressed that the
Turkish Cypriot working-class remained largely supportive of
AKEL. The problem was with the leadership rather than the
rank-and-file. Despite this, the AKEL-CTP dialogue would
continue and Kyprianou had hopes that it would produce
positive results. The next meeting would address power
sharing and governance under a solution. If AKEL and CTP can
find common ground on changes to the Annan Plan, Kyprianou
believed that this could serve as the basis for renewed
negotiations in more formal, UN-sponsored channels.
Meanwhile, AKEL was focused on the upcoming parliamentary
elections and expected to hold its position as the largest
party by percentage of vote. The results of the November
party congress had been positive, but AKEL had some serious
challenges ahead. Kyprianou indicated he would be quite
satisfied with 32 percent of the vote.

...But That Shouldn't Get in the Way of Business
-------------- ---


4. (C) Recently elected Greek Cypriot Chamber of Commerce
(KEVE) President Manthos Mavromatis stressed the importance
of "making a new start" on intra-island trade as there was
now new Chamber of Commerce leadership on both sides of the
Green Line. KEVE's goal was to increase trade between the
north and the south without politicizing the mission. He
believed that creating "common economic interests for
stakeholders" with less protectionism on both sides of the
Green Line would be critical. Econoff suggested that
Mavromatis look into reviving discussions that took place in
late 2005 with the Supermarket Associations of the north and
south on the placement of Greek Cypriot and Turkish Cypriot
goods on each others' shelves. Mavromatis agreed that this
was a good idea and agreed to explore it further. Turning to
the Cypriot economy, Mavromatis highlighted the ROC's
exceptional economic performance in 2005, with a four percent
growth rate and low inflation, despite the high price of oil.
Given the overall economic climate, KEVE was fully
supportive of the ROC's goal of EMU membership by January

2008. Mavromatis admitted that structural weaknesses still
existed within the Cypriot economy, but believes that many of
these would be corrected over time as Nicosia broadened its
participates in the EU,s Lisbon process. The Cypriot
economy could also be improved by government spending on more
research and development projects. This would better utilize
Cyprus' highly skilled labor force and create more attractive
and diverse tourism products and services. The ultimate goal
would be to attract a greater number of high income tourists
through the development of casinos, golf courses, and
marinas.


UN Assessment: Both Sides Taking a Harder Line
-------------- -


5. (C) Deputy Head of UNFICYP Susan Allee was skeptical that
UN-led talks would resume in the near future. Leaders on both
sides were increasingly dug-in and uncompromising. The
controversial views on the Annan Plan that Presidential
Diplomatic Advisor Tasos Tzionis had offered in an interview
in November highlighted the hardening of the Greek Cypriot
position -- and might represent a rejection of the
long-standing goal of a bizonal, bicommunal, federal
solution. By the same token, the Turkish Cypriots were
becoming less flexible as their strategy of "trying to win
friends and influence people" had not produced the results
they were hoping for. From the Greek Cypriot perspective,
the Turkish Cypriot agitation for an "end to their isolation"
looked like a ploy to elevate the status of the "TRNC." New
UN Chief of Mission Moller, in his initial meetings on both
sides, would try to shift the focus of dialogue between the
two sides toward achievable confidence building measures.
The controversy over the opening of a new checkpoint at Ledra
Street was one issue on which the UN felt movement might be
possible, Allee said, although she recognized that an
agreement would be difficult. A compromise might involve
Turkish Cypriot removal of the pedestrian bridge accompanied
by a Greek Cypriot removal of a wall displaying anti-Turkish
propaganda. Allee confirmed our understanding that the
letters SRSG Moller carried for Papadopoulos and Talat
indicated UN U/S Gambari would not visit Cyprus before the
May elections. Moller, she noted, unlike his predecessor,
would carry the SRSG title and thus would travel regularly to
Athens and Ankara to advance the cause of a Cyprus
settlement.

Turkish Cypriots (Still) Frustrated
--------------


6. (C) Erol Kaymak, Chair of International Relations at the
north's Eastern Mediterranean University, described the
current mood of the Turkish Cypriot community as angry and
disappointed. He echoed the assessment we have heard
elsewhere that Turkish Cypriots felt the international
community had failed to deliver on its "promises" to reward
the Turkish Cypriots for the "seismic political revolution"
which led to their 2004 vote in favor of the Annan Plan.
Turkish Cypriots had expected more concrete steps to "ease
their isolation." At the same time, the Greek Cypriot
leadership had failed to respond in kind to Turkish Cypriot
gestures of good will -- making the pro-settlement
"government" of Mehmet Ali Talat increasingly unwilling to
offer further "concessions." Greek Cypriot claims that Talat
was merely a puppet of Ankara -- and therefore not worth
talking to -- were untrue and simply a pretext to avoid a
productive dialogue with him, Kaymak said. Talat,s
democratic legitimacy with his own people made him an
appropriate interlocutor. This, combined with his ability to
get hard things done in the north (such as the new property
restitution legislation so important to Turkey) made Talat
"indispensable" to Erdogan and even gave him modest influence
over Turkish policy.


7. (C) Erkut Sahali, private secretary to "TRNC PM" Ferdi
Soyer expressed similar pessimism about settlement prospects.
Absent some kind of compelling "pressure" from the U.S. and
UK, he suggested the odds of President Papadopoulos agreeing
to engage in productive settlement talks were very slim. In
separate meetings, the Vice Presidents of the Turkish Cypriot
Chamber of Commerce Gunay Cerkez and Hasan Ince, "MP" Mustafa
Arabacioglu from the center-right DP, and "MP" Hasan Tacoy
from the opposition UBP echoed these themes. Cerkez and Ince
felt that the EU, paralyzed from the inside by a
veto-wielding Greek Cypriot government would never be able to
play a neutral, constructive role in the settlement process.
Arabacioglu suggested that even a vague threat from the U.S.
that it might recognize the "TRNC" would be enough to force
the Greek Cypriots to the table. According to Sahali, the
current stalemate was unlikely to change with Papadopoulos in
office at least until the south,s 2008 presidential
elections.


8. (C) Sahali predicted that "fortunately" the Turkish
Cypriots, pro-settlement leadership would probably stay in
power for the foreseeable future. The current economic boom
meant voters were unlikely to mobilize against the ruling CTP
-- at least not in time for June municipal and parliamentary
by-elections. In his meeting, the UBP,s Tacoy tacitly
agreed, noting that his party's current leadership vacuum
spelled electoral trouble for the nationalist opposition.
Nonetheless, Sahali suggested that the current go-go economy
was "unsustainable," since it was based largely on a property
and construction bubble. This, if coupled with continued
stalemate on the settlement track, could spell trouble for
the north's pro-solution leadership over the long term.


Medium-Term Steps: Easing the Economic Isolation
-------------- ---


9. (C) As a result, Sahali, said Turkish Cypriot "government"
and businesses were trying to develop a more sustainable
economic base. Easing the economic isolation of the Turkish
Cypriots was good for the community and would have the
additional benefit of forestalling a backlash that could
return rejectionist, nationalist leaders to power. One key
element in the north's economic strategy, Sahali said, was to
encourage foreign investment to expand the vital tourism
sector. The goal was to attract more visitors from
traditional source countries like the UK and Germany, while
diversifying into the previously untapped "upscale and
professional" tourist market. This approach had been
successful so far, he said, with 130,000 non-Turkish visitors
coming to the north in 2005.


10. (C) Sahali noted obstacles to further economic
development, however. There was a pressing need to improve
the north's legislative and legal infrastructure, he said,
pointing to a recent scandal in which a foreign real estate
developer cheated his clients and skipped the country --
damaging the north's image as a safe place to invest. Cerkez
and Ince underlined further difficulties that hampered the
development of the north's trade and productive sector. The
EU,s direct trade measure had been shelved, transportation
links (especially air links) were complicated by the outside
world's "embargoes" on the north, and the Greek Cypriots had
not overcome the "political and psychological barriers" to
trading with the Turkish Cypriots.

Property and CBMs
--------------


11. (C) In addition to seeking economic ways to lessen their
isolation, the Turkish Cypriots were making other gestures of
"good will" to smooth the way for reunification, according to
Turkish Cypriot Mayor of Nicosia Kutlay Erk, and his ally in
the ruling party, CTP SYG Omer Kalyoncu. Recent moves to
open a crossing point at Ledra Street were a case in point,
Erk maintained, despite "overblown" Greek Cypriot reactions
to the "pedestrian overpass" he had constructed there. Erk
insisted that the bridge was intended to ease the opening of

the checkpoint by meeting the military's needs to resupply
troops in the area -- and that the Turkish Cypriots would be
willing to meet "any time and anywhere" to discuss the
technical details of other arrangements. Taking the bridge
down unilaterally at this point, however, would be too much
of a concession, Erk suggested. He said he could envision a
situation where traffic went around the bridge, which could
be left standing as an "artistic" monument to peace. Erk
criticized the UN, however, for "bowing to Greek Cypriot
pressure" on the question of Ledra Street, suggesting that
UNFICYP might no longer have the credibility to play honest
broker in talks over the issue. The arrival of the new
UNFICYP Chief of Mission might change the dynamics of the
situation, but Erk felt that a "third party" such as the U.S.
or "an EU member state" might be a more effective mediator.


12. (C) Meanwhile, both Erk and Kalyoncu predicted that the
new Turkish Cypriot property legislation would pass muster
with the ECHR -- even if some Greek Cypriots would have to
accept compensation rather than restitution of their property
in the north. Indeed, although the new Property Commission
had not been formed, some Greek Cypriots had already made
informal inquiries about compensation or restitution. Erk
and Kalyoncu expect more applications if the ECHR rules that
the new Commission indeed constitutes an effective local
remedy. The echoed the common local assumption that Turkey,
which had strongly supported passage of the north's new
property regime, would gladly foot the bill for the
Commission's decisions on compensation and restitution in
order to stave off even costlier Loizidou-type ECHR rulings
in the future.

TIP Issues: Not a Priority on Either Side of the Green Line
-------------- --------------


13. (C) Neither our Greek Cypriot nor Turkish Cypriot
interlocutors had much new information to offer regarding TIP
issues. Eliza Savvidou from the ROC Ombudsman's Office
expressed considerable frustration with the government's
delay in implementing the TIP comprehensive National Action
Plan that the Council of Ministers adopted last spring. On
the Turkish side, Sahali reiterated that the weaknesses in
the north's infrastructure kept them from effectively
preventing and containing the problem, but maintained that no
new cabaret licenses had been issued under the Talat
administration. He also pointed to the creation of a new
victim helpline in the north as a step in the right direction.
SCHLICHER