CYPRUS: DIKO BATTLE COULD AFFECT COALITION, TALKS

UNCLAS SECTION 01 OF 02 NICOSIA 000200

C O R R E C T E D C O P Y (ADDED SIGNATURE)

SENSITIVE, SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL CY
SUBJECT: CYPRUS: DIKO BATTLE COULD AFFECT COALITION, TALKS

NICOSIA 00000200 001.2 OF 002



1. (SBU) SUMMARY: Democratic Party (DIKO) leader Marios Karoyian
suffered a major defeat in March 15 internal party elections that
puts his political future in doubt, threatens the fragile coalition
with President Demetris Christofias's AKEL party, and conceivably
could hinder Cyprus settlement talks. Though Karoyian won
re-election unopposed, party forces advocating a harder-line Cyprus
problem policy -- and distance from Christofias -- won a controlling
majority in the decision-making organs of the party. Immediately
upon taking power, they reiterated their disagreements with the
President and called for a reassessment of DIKO's cooperation with
the government. Sensing a possible crack in the coalition,
opposition Democratic Rally (DISY) made alliance overtures to
centrist DIKO, an electoral nightmare scenario for Christofias. In
response, the President may give greater weight to DIKO's hard-line
CyProb views in order to maintain coalition health. END SUMMARY.

--------------
DIKO Leader Suffers Major Defeat
--------------


2. (SBU) DIKO's division into pro-Karoyian and pro-former President
Tassos Papadopoulos factions has never been more evident than in the
party's electoral congress of March 15. Though both factions
espouse uncompromising views on the Cyprus problem, the former
supports a more tolerant stance towards President Christofias for
the sake of staying in power, while the latter advocates a more
demanding and critical approach and occasionally threatens to
withdraw from government. Karoyian himself was elected unopposed,
but the remaining three top leadership positions and the majority of
the seats in the powerful Executive Office went to candidates
representing the rival camp. George Colocassides was re-elected
DIKO Deputy Leader, Nicolas Papadopoulos (the late President's son)
was elected Vice President, and Papadopoulos's godson, Kyriacos
Kenevezos, was re-elected General Secretary. Nine out of 20 members
of the Executive Office are hardcore Papadopoulos acolytes, six side
with Karoyian, and the remaining five are considered neutral. In
the elections for new Central Committee members, Papadopoulos's
daughter, Anastassia, in her first bid for a party post, won the
highest number of votes from among all candidates.


3. (SBU) Opinion leaders viewed the results as a major defeat for
Karoyian and a message that the DIKO rank-and-file favors a
harder-line approach towards the Christofias administration.
However, Karoyian's conciliatory stance towards Christofias is but
one reason for the embarrassing defeat. Image-wise, the
pro-Karoyian candidates were considered less savvy politicians and
relatively inexperienced, for example. Further, the loss indicated
that the party leader, in his two-and-a-half years in power, had
failed to control fully the party machinery. Former DIKO Deputy
Leader Nicos Cleanthous told EmbOff on March 18 that in 2006, Tassos
Papadopoulos "had allowed" the election of Karoyian but intended him
only to play a transitional role while son Nicolas gained necessary
DIKO experience.

--------------
Winners criticize Christofias
--------------


4. (SBU) Hours after the election, predictions that the
pro-Papadopoulos camp would press for a reassessment of the
relationship with Christofias were confirmed. Deputy Leader
Colocassides on March 17 announced that DIKO's cooperation with the
President should be reexamined, since there were serious
disagreements on the Cyprus issue but also on other crucial issues
such as education reform, defense, the economy, and Cyprus's
possible membership in the Partnership for Peace (PfP). New DIKO VP
Nicolas Papadopoulos severely criticized Christofias's handling of
the Cyprus issue and promised he would push for changes in approach.
Christofias's positions were inspired by the Annan Plan, he
accused, while the Turkish Cypriot side was pushing for a two-state
solution -- anathema to Greek Cypriots.


5. (SBU) Most experts believe Karoyian has no choice but to align
with the party hard-liners. Opposition daily "Politis" wrote on
March 17 that Karoyian was a "hostage" of the pro-Papadopoulos camp,
and that one of their immediate goals was the inclusion of a DIKO
representative in Christofias's negotiating team. A newly-elected
member of the Executive Office, former Minister of Education Akis
Cleanthous, confirmed in a meeting with PolOff on March 19 that
getting a seat at the negotiating table was indeed the top priority
of the new DIKO Executive Office.

--------------
Christofias in a bind
--------------


6. (SBU) A Presidential Palace source told the Embassy on March 19
that Christofias was gravely concerned over the outcome of the DIKO
election. He reported that Christofias has no other option but to
be flexible with DIKO; otherwise, he will "throw it into the arms of
the opposition [DISY]." Former Justice Minister and Government
URBANCIC

NICOSIA 00000200 002.2 OF 002


Spokesman Kypros Chrysostomides, once a DIKO leader and now a close
ally of Christofias, predicted on March 18 that DIKO would withdraw
from the government, perhaps even before the European Parliament
elections in June 2009. He argued that, in such an eventuality, the
third coalition partner, socialist EDEK, might follow suit.
Chrysostomides did not expect that developments in DIKO would impact
Christofias's Cyprus problem policy significantly, however, since he
believed the President would prefer to drive DIKO out of the
coalition than to move away from the solution process.


7. (SBU) DISY has tried to build bridges with DIKO in hopes the
latter will abandon the government coalition. DISY leader Nikos
Anastassiades on March 15 publicly invited DIKO to join the European
People's Party Group in the European Parliament -- of which DISY is
a member -- and committed himself to supporting DIKO's application
without any preconditions. Anastassiades also underlined a number
of common positions shared by the two political parties, on the EU's
Lisbon Treaty, PfP, education reform, and economic policy. A DISY
source told the Embassy that Anastassiades's attempts to co-opt DIKO
would not affect his support for Christofias's settlement efforts,
however.

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


8. (SBU) With or without Karoyian's blessing, the new DIKO crew
will press Christofias for an increased role in CyProb
decision-making, as well as on secondary issues like education
reform. It will take very skillful maneuvering on the President's
part to keep DIKO in the pro-government coalition without making
major compromises on vital policy issues, especially if DISY
continues its effort to woo DIKO.
URBANCIC