CYPRUS: 2006 COUNTRY REPORT ON TERRORISM

1. (U) Per Reftel, Post offers the following input for
the 2006 Annual Terrorism Report. A note on terminology is
in order: Since 1974, Cyprus has been divided de facto
into the Greek Cypriot government-controlled area,
comprising the southern two-thirds of the island, and a
northern third, administered by Turkish Cypriots. For
clarity's sake, in this report we use interchangeably
"Cyprus," the "Republic of Cyprus" ("RoC"), and "the south"
when referring to the internationally recognized,
government-controlled zone. We refer to the north as "the
area administered by Turkish Cypriots" or "the Turkish
Cypriot-controlled area." It is imperative to remember
that the so-called "Turkish Republic of Northern Cyprus"
("TRNC") is not recognized by the United States or any
country other than Turkey. The Embassy point of contact
for this report is Laurent de Winter, who can be contacted
via email at dewinterlm@state.gov.

General Assessment


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2. (SBU) Despite limited resources, Cyprus takes a clear
stand against international terrorism and is supportive of
U.S. counterterrorism efforts. The government continues to
allow blanket overflight and landing rights to U.S.
military aircraft supporting operations in Iraq and
Afghanistan. However, the government has raised its
concerns about the allegations in a Council of Europe
report identifying Cyprus as a "staging post" for U.S.
counterterrorism rendition flights. In addition,
parliamentarians have called for inspections of all U.S.
Government aircraft landing on the island. Cyprus is a
party to all relevant UN conventions on terrorism, is
generally supportive of international efforts to block and
freeze terrorist assets, has implemented Financial Action
Task Force (FATF) recommendations, and conforms to European
Union (EU) directives on counter-terrorism. In 2005, the
director of the Cyprus Central Intelligence Service (KYP)
drafted legislation to restructure, modernize, and
strengthen Cyprus's intelligence-gathering capabilities.
KYP submitted the legislation in 2006, but as of December,
the parliament had not passed it.



3. (SBU) Additionally, Cyprus was the first EU member
state to sign a shipboarding agreement with the United
States under the auspices of the Proliferation Security
Initiative Agreement (PSI). Cypriot authorities in
September boarded and searched a Panamanian-flagged vessel,
the M/V Gregorio I, carrying military equipment from North
Korea to Syria. They eventually released its cargo to
Damascus, however, determining it did not constitute
proscribed materiel. Cyprus has been slow to pass a new
comprehensive law on arms sales, but authorities are close
to agreement on the language of the draft legislation.
Cyprus's legal framework for investigating and prosecuting
terrorist-related activity remains relatively weak. In
October, however, the legislature reached a political
compromise to amend Chapter 17 of the Constitution, which
concerns the right to privacy. The move paves the way for
the government to introduce new legislation that would
permit authorities to conduct wiretapping and sting
operations (currently, evidence gathered via wiretaps or
internet surveillance is not admissible in court.)



4. (U) The United States and the Republic of Cyprus
cooperate closely on terrorist finance and money laundering
issues. In the area administered by Turkish Cypriots,
issues of status and recognition inevitably isolate and
restrict the ability of Turkish Cypriot authorities to
cooperate on counterterrorism. The "TRNC" cannot sign
treaties, UN conventions or other international
agreements. Moreover, the area administered by Turkish
Cypriots lacks the legal and institutional framework
necessary to combat money-laundering and terrorist
financing effectively. Within these limitations, however,
authorities in the Turkish Cypriot-controlled area have
cooperated with the United States in pursuing specific
CT-related objectives.


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Safe Haven


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5. (U) According to media reporting, the Kurdish Workers'
Party (PKK)/Kongra Gel (KGK) has an active presence on both
sides of Cyprus. The PKK reportedly uses the island as
both a fundraising and transit point. Experts estimate the
Kurdish community in the government-controlled area to
number 1,500. Among Kurdish-origin Turkish settlers in the
north, the KGK reportedly enjoys significant support.
Cyprus maintains that it is fulfilling all responsibilities
with respect to the EU designation of the PKK/KGK as a
terrorist organization. Both RoC and Turkish Cypriot
authorities believe there is little risk the PKK/KGK will
conduct operations here and are reluctant to take any
action that might make the island a potential target. In
addition, Turkish authorities believe that the large
Turkish troop presence in the north acts as a significant
deterrent to open PKK/KGK activity. U.S. and Cypriot
officials regularly discuss the PKK/KGK issue.



6. (U) Third-country nationals comprise approximately 10
percent of the Republic of Cyprus population. The asylee
community is large and growing. There is concern here that
this population represents a potential source of recruits
for terrorist groups looking to extend their reach into
Europe. Moreover, the UN-patrolled "Green Line" dividing
north and south is relatively porous. Immigration controls
are uneven, and it is relatively easy for asylum seekers to
cross from the Turkish Cypriot-controlled area to the RoC.
This represents a potential vulnerability and access point
for terrorist groups seeking entry into an EU member state
(the EU "acquis communitaire" currently is suspended in the
north.)



7. (U) Turkish Cypriot authorities in 2005 adopted
"legislation" strengthening controls against illegal
immigration and tightening "citizenship" requirements. It
is unclear, however, how well they are implementing the
regulations. Turkish Cypriots contend that they now have a
much better picture of the third-country population
crossing the Green Line toward government-controlled
territory.

Terrorist Groups and Organizations on Cyprus


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8. (S) While there is no evidence of designated Foreign
Terrorist Organizations (other than PKK/KGK) operating in
Cyprus, there is a sizable and growing Jama'at al-Tabligh
Islamic missionary society (JT) and Jama'at Islami
Bangladesh (JIB) presence on island. Both of these south
Asia-based, fundamentalist Islamic groups have a large
following among the Pakistani, Afghani, Bangladeshi, and
Sri-Lankan nationals resident here. Members of JIB,
represented in Cyprus by the Islamic Forum Europe, raise
significant sums of money to send back to JIB headquarters
in Bangladesh. Both the JT and the JIB preach a very
conservative form of Islam with an anti-western theme.
Intelligence and law enforcement experts believe that JIB,
in particular, has had a role in violent activities in
Bangladesh. In addition, there is significant concern that
JT and JIB both have links to Islamic militant groups in
other parts of the world, which might target them (JT and
JIB) for recruitment. While the activities of both are
confined mainly to the government-controlled area of
Cyprus, there is growing evidence they seek to expand their
membership rolls in the north as well.

Cypriot Counterterrorism Cooperation


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9. (SBU) Cyprus's eastern Mediterranean location and the
large volume of container traffic moving through its major
ports makes the island potentially convenient for terrorist
organizations seeking transshipment points for WMD and
other items of concern. While RoC agencies responsible for
nonproliferation assess there is only a small risk that
illicit materials may move through transit cargo, the
United States continues to push for increased maritime
cooperation. In encouraging the RoC to create a more
cohesive export control system and to endorse more
proactive nonproliferation enforcement, the Embassy's

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Export Control and Border Security (EXBS) office provided
training in 2006 to government enforcement entities. This
included courses in Cyprus and the United States on topics
such as air and seaport interdiction, commodity
identification and hazardous material response, as well as
issuance of, and training on, a nonproliferation database.
Participants in the various programs came from myriad RoC
agencies, including Customs, Police, and Commerce.



10. (SBU) In addition to EXBS activities, 2006 saw
increased collaboration between the Embassy and the U.S.
Defense Threat Reduction Agency (DTRA) in providing
antiterrorism programming to Cyprus through its
International Counterproliferation Program (ICP). Most
notably, in October ICP provided an "Executive Seminar" on
terrorist applications of weapons of mass destruction for
40 senior Republic of Cyprus officials. This seminar is
the precursor to subsequent ICP training programs, and the
Embassy expects ICP-provided training of RoC
non-proliferation/counterterrorism officials to increase in


2007.



11. (SBU) In the area administered by Turkish Cypriots,
the question of political recognition again complicates the
ability of the U.S., EU, and others to provide help to or
engage in direct cooperation with Turkish Cypriot "Customs"
and "Migration" authorities. Specifically, they require
additional training in the areas of basic inspection and
equipment familiarization/utilization.



12. (U) The United States and the Republic of Cyprus
cooperate closely on issues related to terrorist finance
and money laundering. In 2005, the U.S. Financial Crimes
Enforcement Network (FinCEN) and the Cypriot Financial
Intelligence Unit (MOKAS) signed a Memorandum of
Understanding designed to formalize and enhance their
historically excellent relations. Throughout 2006, MOKAS
proved a reliable Embassy interlocutor in combating
terrorist financing.



13. (SBU) In the north, Turkish Cypriot authorities lack
the legal and institutional framework to meet minimum
international standards with regard to combating money
laundering and terrorist finance. In addition, the north
lacks modern audit control technology, relying instead on
antiquated paper-based systems. Consequently, the Turkish
Cypriot community's financial sector is vulnerable to abuse
by criminals and terrorists.



14. (U) Nevertheless, the Turkish Cypriot community has
taken some steps to prevent terrorist financing within its
banking institutions. For instance, the "TRNC Central
Bank" regularly asks financial institutions to search for
assets linked to individuals or entities whom the U.S.
and/or UN 1267 Committee has designated as terrorists. In
September, Turkish Cypriot "parliamentarians" passed
"legislation" designed to prevent money laundering and
improve oversight over casinos, offshore banks, and
currency exchange firms. The law appears a great
improvement over the prior regulatory regime, but its
effectiveness is as yet indeterminate.



15. (SBU) The Republic of Cyprus generally responds in a
timely fashion to requests for assistance regarding threats
against the Embassy. On two occasions in November, for
example, the Embassy sought help, and each time, RoC police
conducted independent, serious investigations. The Embassy
has not always agreed on the punitive action the government
has taken vis-a-vis suspected perpetrators, however. As a
European Union member, Cyprus must comply with certain EU
regulations that grant great protections to criminal
suspects.
Schlicher