FATE OF "RULING" TURKISH CYPRIOT PARTY DEPENDS ON

C O N F I D E N T I A L SECTION 01 OF 02 NICOSIA 000067

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/SE

E.O. 12958: DECL: 01/23/2018
TAGS: PGOV PREL TR CY
SUBJECT: FATE OF "RULING" TURKISH CYPRIOT PARTY DEPENDS ON
NEGOTIATIONS

REF: NICOSIA 980

Classified By: Classified by Ambassador Ronald Schlicher, Reasons 1.4 (
a) and 1.4 (d)

1.(C) Summary: The fate of the staunchly pro-reunification
"ruling" Republican Turkish Party (CTP) increasingly depends
on the successful resumption of Cyprus problem negotiations.
CTP rose to power by waving a "united Cyprus" banner and
remains northern Cyprus,s dominant political force, but
barring a successful resumption of talks with Greek Cypriots,
the party could revert to minority status, the situation
prevailing in the pre-Annan Plan period. CTP insiders worry
that rank-and-file Turkish Cypriots are growing increasingly
pessimistic - even disinterested -- over the possibility of
reaching a federal Cyprus solution, long the party,s raison
d'etre. Further damaging CTP,s prospects are the T/C
community's deteriorating economy and its own mediocre record
on administration. Perhaps sensing the risks inherent in
tying the party,s future to the achievement of a federal
settlement that by definition requires G/C buy-in, CTP
leaders, including "TRNC President" Mehmet Ali Talat, have
hinted that other solutions merit consideration, especially
if "Greek Cypriot intransigence" dooms another major effort.
End Summary.

"NO PLAN B"
--------------


2. (C) CTP insiders increasingly tell us that they have no
alternative strategy should bi-communal talks remain mired in
mutual distrust and recrimination after February 2008 Greek
Cypriot presidential elections. Cyprus problem negotiator
Ozdil Nami told us that the party is still wedded to a
solution along the lines of the Annan Plan (i.e., a bi-zonal,
bi-communal federation) and enjoys Turkey,s full support.
He added that "we do not have at yet a 'Plan B' if the
negotiations go nowhere -- we will be in an awkward
position." Asim Akansoy, "President" Talat,s private
secretary, was blunter: "Our fate as a 'ruling party' is

SIPDIS
tied to the Cyprus Problem and solving it." Sami Ozuslu, a
columnist for the CTP daily "Yeni Duzen" and member of the
party's influential central administrative committee, said a
"Plan B" was not even being discussed in the party.


3. (C) However, CTP interlocutors complain that the Turkish
Cypriot community, despite voting overwhelmingly for the
Annan Plan in 2004, has grown skeptical over the possibility
of living side-by-side with G/Cs in a federal state. Akansoy
claimed that keeping the idea of a solution alive" -a demand
of the international community" -- was growing increasingly
difficult, and that "people are getting sick of it." UNFICYP
polling conducted in early 2007 supports Akansoy's fear.
According to their numbers, 70 percent of T/Cs do not see a
solution "in the foreseeable future," while 59 percent find a
two-state solution "satisfactory." Only 45 percent agree
with "bi-zonal, bi-communal federation" as the preferred
settlement model.

"We are administrating poorly"
--------------


4. (C) CTP's failed and or belated attempts at structural
reform, combined with a deteriorating economy, further
exacerbate the party,s woes. Muharrem Faiz, a respected
pollster, told us that for the first time in his nearly
twenty years of polling, Turkish Cypriots' appraisal of
successful "governance" depended more on results and services
than on shared ideology. If so, CTP is in trouble.
"Presidential" spokesman Hasan Ercakica told us flat-out that
the party "has been administrating badly" and was
unsuccessful in "education, healthcare, etc, etc." Necdet
Ergun, an economic columnist and former economic adviser to
Talat, was a bit more forgiving: "CTP tried but couldn,t do
it all." He claimed the "government" was delaying real
reform until after the Cyprus Problem is solved.


5. (C) What reforms CTP has managed to enact -- such as
changes to social security -- have alienated much of its
trade union base. Pollster Faiz told us that 15 percent of
CTP voters in 2005 were angry with the party in part because
of its "anti-union" activities and would have a hard time
voting for CTP again. Soyer admitted that certain party
initiatives had hurt the base; Ercakica claimed the CTP had
lost its trade union allies. Neither man seemed worried
about this development, however.

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"Real Economic Problems"
--------------


6. (C) Failure to jump-start negotiations may also spell
economic doom for an already wobbly T/C economy, much in the
same way the enthusiastic run-up to the Annan Plan helped to
trigger a three-year boom. At present, CTP faces an
officially projected negative growth of two to three percent
in 2007 (Ref A),a contraction in the all-important building
sector that has set off a liquidity crisis, and a bloated
state payroll and burgeoning 2007 budget deficit rumored to
be at least 400 million YTL (around $325 million). Ergun
predicts an economic "crisis" if negotiations, and the
expectations of a "better tomorrow" that typically accompany
them, do not begin. "If talks don,t start, we are going to
have real problems," he fretted.


7. (C) A serious economic downturn would also increase an
already alarmingly high level of Turkish Cypriot dependence
on Ankara, since Turkey is unlikely to leave the T/Cs out in
the cold. "Prime Minister" Soyer complained to us that he
needed increased financial support from Turkey because of the
economic downturn. T/C businessmen worried that, as payback,
mainland Turkish business interests would win sweetheart
deals, to the islanders, detriment. Ergun noted that Turkey
"could clean house" politically in the event that it had to
bail out the T/Cs economically, a gloomy prospect for the
"ruling" CTP.

Need for a Tack Change?
--------------


8. (C) This convergence of political, administrative, and
economic negatives has CTP leaders feeling queasy and
vulnerable, since another failed negotiation, a la 2004,
would prove disastrous for the party. Cyprus Problem
Negotiator Nami warned that "we cannot present another plan
to our people that the Greek Cypriots might later reject with
impunity." Ozuslu sees the right-wing T/C parties giving CTP
a serious political beating in response. To insulate the
party from such an outcome, CTP bosses talk openly of an
"escape clause" for Turkish Cypriots should the next solution
effort fail because of G/C intransigence. Talat on January
21 alluded to a threat "that would hurt Greek Cypriots if
they don't accept a solution. The world could stop
recognizing them as the only government of Cyprus." Left
unsaid was the corollary: some sort of upgraded status for
the "TRNC."

Comment
--------------


9. (C) Despite its statist instincts and increasingly
nationalist rhetoric, CTP is still the international
community's best T/C partner in working toward a federal
Cyprus solution. It is the sole party in the north that both
truly believes in a reunited island and has a "TRNC-wide,"
well-functioning organization to help deliver it. While
pessimism and a two-state fallback plan may be permeating
party halls, CTP remains supportive of a bi-zonal bi-communal
federal Cyprus along the lines of the 2004 Annan Plan. To
illustrate, not a single "TRNC" flag was displayed at the
party's December 2007 birthday bash attended by "Prime
Minister" Soyer and "President Talat." Rather, massive
posters touted "SOLUTION, EQUALITY, FEDERATION," and close by
hung an undivided map of Cyprus. But absent the start of
real negotiations and barring an economic turn-around (the
latter highly unlikely),CTP will, as party insiders
forecast, be hard-pressed to stay in command after 2010
"parliamentary" elections, with a fractious coalition
preferring partition to reunification waiting in the wings.
SCHLICHER