LOW EXPECTATIONS FOR GERMAN-LED TALKS ON DIRECT

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 001306

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DECL: 04/18/2017
TAGS: PREL EUN CY TU
SUBJECT: LOW EXPECTATIONS FOR GERMAN-LED TALKS ON DIRECT
TRADE FOR N. CYPRUS


Classified By: ENLARGEMENT UNIT CHIEF VINCENT CARVER FOR REASONS 1.5 (B
/D).

SUMMARY
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1. (C/NF) Without disclosing details, the German Mission
told us April 18 that German talks April 17 with northern
Cypriot advisor Pertev on direct trade provided no
breakthrough. The German and British missions and the
Commission Office for northern Cyprus have told us separately
that they doubt a deal on direct trade will be reached during
the German Presidency. All three contacts claimed that the
lack of movement on direct trade would not negatively affect
Turkish accession negotiations on "technical" chapters -- at
least not this year. Greek Cypriot advisor Tzionis meets
with the Germans in Brussels April 24. END SUMMARY

GERMAN TALKS WITH PERTEV LITTLE NEW
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2. (C/NF) The German Mission is keeping details of the talks
it is brokering on direct trade with northern Cyprus very
close hold. Nevertheless, the German Mission told us April
18 that it is quietly trying to persuade the Greek Cypriots
and the Turkish Cypriots to find enough room to compromise
and open Famagusta for direct trade. In this regard the
German MFA Director for European Affairs met northern Cypriot
advisor Pertev in Brussels April 17. Commission officials
participated in parts of the discussion devoted to technical
issues.


3. (C/NF) According to our German contact, Pertev had little
new to offer: he stressed that if no deal were to be reached
during Germany's presidency, Talat might "abandon" the EU
track. Pertev also stressed the need for Turkish Cypriot
entrepreneurs to compete on an equal footing with Greek
Cypriot ones should any contracts be awarded as the result of
a possible deal. In addition, Pertev emphasized that the
Greek Cypriots should have no say in implementing details,
such as certification, should a deal be reached. Finally,
Pertev complained that the Turkish Cypriots were learning of
Greek Cypriot counter-proposals (NFI) only through third
parties, rather than directly from Nicosia. Asked what the
Germans' next step would be, our contact said that
Papadopoulos' diplomatic advisor, Tasos Tzionis, would come
to Brussels April 24 for talks.

IF GERMANY CAN'T DELIVER, LITTLE PROSPECT FOR PROGRESS IN
COMING YEAR
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4. (C/NF) Our German source acknowledged that expectations
for a breakthrough were low. Berlin, however, will continue
to try to move the parties closer together, in part because
it does not see the upcoming Portuguese and Slovenian
presidencies as placing much emphasis on resolving the direct
trade issue. Our German contact reiterated his observation
from the previous week -- no member state wants to expend the
political capital to press Nicosia to live up to its December
2006 and January 2007 commitments to allow for direct trade.

BUT TURKISH ACCESSION NEGOTIATIONS SHOULDN'T BE HARMED ...
MAYBE
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5. (C/NF) A Commission official dealing with northern Cyprus
and a UKEU contact confirmed this. Our Commission source
said that Nicosia is playing hardball on direct trade while
trying to be slightly more flexible on the Gambari process
and CSBMs, such as crossing points access. Nicosia has also
largely refrained from stalling the Turkish chapter
negotiations (confirmed by our German and UK contacts, both
of whom predicted that two or three more chapters (financial
controls, economic and monetary policy, and statistics) might
be opened in June.


6. (C/NF) Pushing Nicosia on direct trade could lead to both
a collapse of the German-led talks and to an even tougher
Cypriot line on opening additional chapters for Turkey, our
British colleague underscored. He added that, in his
personal view, the best policy would be to promote progress
in Turkey's "technical" chapter negotiations while keeping
Papadopoulos and Talat talking indirectly on direct trade.
According to our British contact, this is probably the most
one can hope for given the Turkish presidential and
parliamentary elections, as well as the Cypriot elections
next year. He concluded that, if the Turks genuinely begin
to implement their recently announced action plan (which none

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of our contacts had yet seen) for EU integration, so much the
better for moving forward in 2008.

COMMENT
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7. (C/NF) While our contacts are not optimistic that the
German-led talks will succeed, they are more sanguine that
Turkish accession negotiations will not stall -- at least not
this year -- as a result. The great unknown appears to be
how hard Nicosia may push for the introduction of
"normalization" (Turkish recognition of the ROC) as a
condition for opening any more chapters, including even the
technical ones that our contacts predicted might be opened in
June. With neither the Germans nor the British apparently
willing to face down the Greek Cypriots (and, as usual,
probably a few other member states hiding behind the Cypriots
as well) we hold little expectation that an agreement on
direct trade will be reached during the German Presidency.
GRAY
.