MANAGING THE CYPRUS PROBLEM IN BRUSSELS

C O N F I D E N T I A L SECTION 01 OF 03 NICOSIA 000136

SIPDIS

SIPDIS

FOR DAS MATT BRYZA FROM AMBASSADOR SCHLICHER

E.O. 12958: DECL: 02/01/2016
TAGS: PGOV PREL TU CY
SUBJECT: MANAGING THE CYPRUS PROBLEM IN BRUSSELS

Classified By: Ambassador R. Schlicher, reasons 1.4 (b) and (d).


1. (C) Matt: In advance of your upcoming visit to Brussels,
we would like to share some thoughts regarding recent
developments on Cyprus, and in particular the Greek Cypriot
strategy vis-a-vis Turkey and the EU. The Europeans need to
hear a sobering message about the potential consequences of a
supine acceptance of Papapdopoulos's hard-line tactics and
the importance of coming through with more concrete
assistance for the Turkish Cypriot community. We should
encourage the EU to help, not hinder, the settlement process
by staying away from political issues better negotiated under
UN auspices; the EU message should be to encourage the
parties -- as well as the UN -- to get back to the
negotiating table as soon as possible. If the Greek Cypriots
continue to hobble European efforts to ease Turkish Cypriot
isolation -- or manage to ensnare the EU in the politics of
Cyprus problem -- prospects for both a Cyprus settlement and
Turkish EU membership will suffer.

THE EU: PLAYING PAPADOP'S GAME
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2. (C) President Papadopoulos continues to pursue his
strategy of using Turkey's EU accession process as a stick
with which to beat Cyprus-related concessions out of the GOT;
he wants to confront Turkey with hard choices in hopes of
avoiding his own. This approach does nothing to advance the
cause of Greek Cypriot and Turkish Cypriot reconciliation,
and Papadopoulos has further eroded prospects for reviving
serious settlement efforts by aggressively defending ROC
prerogatives and blocking even modest efforts by the EU to
reach out to the Turkish Cypriots. The EU's GOC-inspired
failure to fulfill its commitment to easing Turkish Cypriot
isolation ups the ante for Turkey and increases the
likelihood of a major clash between Ankara and Brussels over
such issues as implementation of the Customs Union Protocol.
In Papadopoulos's universe, this would be a positive
development. For a range of reasons the Europeans,
especially the Commission, have too often played the role of
enabler to Papadopoulos's hard-line strategy, leaving the
settlement-minded Turkish Cypriot leadership in the lurch.


3. (C) The GOC has killed the EU's proposed direct trade
measures for the Turkish Cypriots -- which to the GOC
represented a dangerous step toward "upgrading" the "illegal
TRNC." Beginning in 2004, the GOC mounted a successful
campaign first to convince the Commission and other member
states (especially the Dutch and Luxembourg presidencies) to
decouple trade and aid -- and then to use the threat of veto
to make sure trade never surfaced on the Council's agenda.
The GOC has permitted the Turkish Cypriots to sell some goods
to the south (and in theory to the rest of the EU via
ROC-controlled ports) by agreeing to the EU's Green Line
regulation. But trade has been very modest so far, with
practically no Turkish Cypriot goods making their way to
other EU markets through the south. It is unlikely that
trade across the Green Line will provide an economic boost to
the Turkish Cypriots sufficient to close the gap between the
two sides.


4. (C) Emboldened by EU acquiescence to trade/aid decoupling,
the Greek Cypriots then thwarted the Europeans' planned
assistance program in December 2005 by insisting the
Commission issue a declaration regarding Varosha and a freeze
on property development in the north as a condition for GOC
approval of aid. The Turkish Cypriots resisted this,
however, on the grounds that Varosha and property were
settlement-related issues best handled by UN-brokered
negotiations. When aid was not passed by the end of the year
(resulting a loss of 120 million out of the original 259
million euro package) Commission staff sheepishly suggested
to us that the UK Presidency was to blame for the aid
stalemate, since the British did not press Talat hard enough
to accept this deal.


5. (C) Our assessment is different. Empire-building
Commission staff appeared to be in such a rush to get their
assistance program up and running, that they were ready to
accept Greek Cypriot conditions that actually set back
overall prospects for a settlement. By accepting the GOC's
demand for a declaration, the Commission maneuvered the
Turkish Cypriots into catching the blame for scuttling the
aid program -- damaging their own credibility as a
non-partisan player, embarrassing Talat, rewarding Greek
Cypriot hardball tactics, and thereby worsening the general
atmosphere between the two sides.

SEEKING A CHANGE OF VENUE: UN TO EU
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6. (C) December's aid trainwreck is part of a larger Greek
Cypriot strategy to move discussion of settlement-related
issues from the UN to the EU. Indeed, after immediately
rejecting Turkey's January 2006 "Action Plan" (which sought
to link the implementation of Turkey's EU obligations to the
EU's commitments to the Turkish Cypriots),the GOC spokesman
reiterated the long-standing Greek Cypriot demand for the
hand-over of Varosha. From the Greek Cypriot perspective,
this approach makes a great deal of sense.


7. (C) Papadopoulos and his team of advisors (made up
overwhelmingly of lawyers) view Turkey's EU accession as a
legalistic, contractual process in which there is no room for
bargaining. The Cyprus problem, however, is an amalgam of
fundamentally political questions -- which the UN has
historically, and correctly, sought to resolve through a
process of bicommunal give-and-take. By tying settlement
questions to Turkish EU accession (where he theoretically has
a veto),Papadopoulos seeks to capitalize on Turkey's
European ambitions in order -- by putting Turkey's own hard
choices up front -- to circumvent political negotiations in
which Greek Cypriots might have to make tough compromises.
Although Papadopoulos steadfastly maintains that he wants the
UN process to resume, it is no accident that he has littered
the way with obstacles -- by playing coy about Greek Cypriot
negotiating goals, refusing to meet Talat (and trying to
frighten others from doing so as well),and insisting on
vague steps to "prepare the ground" before any talks can take
place.

OUR MESSAGE TO THE EU: WAKE UP AND SMELL THE COFFEE
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8. (C) These developments have ominous implications both for
settlement prospects and for candidate Turkey's willingness
to play ball with the EU. On the settlement front, the
once-bitten-twice-shy Turkish Cypriots will not trust the EU
as an honest broker as long as it is hobbled by a
veto-wielding Papadopoulos. Greater EU involvement in
settlement-related questions not only undermines the UN, but
also drives the Turkish Cypriots further from the negotiating
table. The European Union can play a valuable role in
support of UN efforts (offering to fund the opening of Ledra
Street, for example, once a UN-brokered deal is reached),but
we should encourage them (especially the Commission) to keep
their nose out of issues like Varosha that belong squarely on
the UN's agenda. To us, this is a separate question from
whether Talat and/or the GOT should signal willingness to
deal with the GOC on Varosha under UN auspices.


9. (C) At the same time, the Europeans should look for
concrete ways to help keep the Turkish Cypriots on board the
pro-European, pro-settlement bandwagon. Talat's long-term
political survival is dependent on his ability to deliver on
voters' expectations of an end to "isolation" and eventual
reunification of the island. For the moment, the EU has
given Talat very little to show for his pro-settlement
policies and rhetoric -- even though Europe's proximity and
economic power mean that the Turkish Cypriots have nowhere
else to turn if they are to find a viable alternative to
greater dependence on Turkey. If the Commission cannot find
creative ways around Greek Cypriot obstructionism, then
perhaps right-thinking member states can -- for example by
offering bilateral development assistance to the Turkish
Cypriot community, as the UK is already doing. If the
Europeans fail to take concrete steps, nationalist
politicians currently waiting in the wings may reassert
themselves, resulting in a Turkish Cypriot leadership far
less enthusiastic about reunification with the south.


10. (C) The corollary to helping the Turkish Cypriots is for
the Europeans to make it clear to Papadopoulos that the EU
has neither the ability nor the intention of helping him out
of the Cyprus problem via hints of an EU-led political
process. The time has come for Papadopoulos to stop stalling
and sit down with Talat to negotiate seriously. The EU
cannot facilitate this dialogue, but member states and the
Commission should certainly be prodding Papadopoulos to
reengage in meaningful UN-brokered talks.


11. (C) Meanwhile, the international players should be
looking for initiatives which will actually cost Papadopoulos
in domestic political terms should he say "no." Turkey's
recent "Action Plan" was easy for Papadopoulos to reject;
indeed most Greek Cypriots sneer at the proposal. That said,
Gul's initiative did have the benefit of putting some
domestic pressure on Papadopoulos to put forward some ideas
of his own. In this sense, there is the possibility of
forging future initiatives which Papadopoulos may need to
take seriously.


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12. (C) It is worth stressing to the Europeans that the
current stalemate on the Cyprus problem cannot be ignored,
and will continue to cause repeated and regular crises in
EU-Turkey relations until some kind of meaningful UN
settlement process gets underway. We leave it to our
colleagues in Embassy Ankara to assess likelihood of Turkey
freezing its accession process as a result of Greek Cypriot
intransigence over Cyprus and/or EU failure to deliver for
the Turkish Cypriots. From our perspective, however, it is
clear the Greek Cypriots underestimate this possibility;
Papadopoulos is cocksure that he has the GOT against the
ropes because Turkey's interest in the EU will not flag. The
Europeans should be helping us convince him that this is not
a sure thing.
SCHLICHER