US embassy cable - 04BRUSSELS4617

C O N F I D E N T I A L BRUSSELS 004617 
 
SIPDIS 
 
DEPT FOR EUR DAS KENNEDY 
 
E.O. 12958: DECL: 10/26/2014 
TAGS: PREL, ZS, CY, EUN, USEU BRUSSELS 
SUBJECT: EU NORTH CYPRUS TRADE/AID: UPDATE 
 
REF: USEU BRUSSELS 3821 
 
Classified By: USEU POL Harry O'Hara, reasons 1.4 b and d. 
 
 1. (C) Summary: The EU has separated its trade and financial 
package for North Cyprus in order to get the aid package 
approved on November 22. One Council source told us that this 
is a "split in timing -- not in substance" because member 
states have informally committed themselves to get a trade 
package together for North Cyprus sometime in 2005.  The 
procedural torpor is a result of Cyprus's hard line and EU 
unwillingness to isolate or punish a member state. End 
Summary 
 
Financial Package: The Way Ahead 
-------------------------------- 
 
2. (C) Council Secretariat and Commission officials tell us 
that once the Foreign Affairs Committee of the European 
Parliament approves the Commission proposal of 259 million 
Euros of financial assistance for North Cyprus (positive vote 
expected late October 26), it will be submitted to the next 
Plenary Session of the European Parliament (o/a November 18), 
where approval is expected. From there, the Commission 
financial package will be submitted to the November 22 EU 
General Affairs and External Relations Council (GAERC) for 
final approval. 
 
Trade Package: A Commitment to Act in Good Faith 
--------------------------------------------- --- 
 
3.  (C) A Council official involved in navigating the 
assistance package to the GAERC told us that the financial 
package is pre-cooked and that the Cypriots and the Greeks 
are comfortable with it. However, to free up the financial 
package, EU member states, under the Dutch Presidency, had to 
agree to split the assistance package from the trade package. 
 The UK was unhappy with this split but accepted a 
"gentlemen's agreement" that a final EU trade package would 
not be forgotten or diluted and that member states would 
commit themselves to getting an agreement within a fixed time 
frame (notionally some time in early 2005). 
 
Consensus vice QMV 
------------------ 
 
4.  (C) Previously we reported on a split between the legal 
services of the Council and Commission over whether qualified 
majority voting (QMV) or consensus would be needed for a 
decision on the trade package. Typically, trade matters with 
third parties are decided by QMV.  The Commission argued that 
this was no exception. Others in Council and the Dutch 
Presidency argued that, politically, it was not acceptable 
for the EU to approve a trade measure to North Cyprus against 
the wishes of Cyprus.  A Council source told us that there 
remains considerable concern among member states over the 
perception of forcing something on Cyprus, a small and new EU 
member, without its approval. Our Commission interlocutors 
were not happy with this outcome, and worry about how little 
the EU has been able to do in North Cyprus. 
 
Comment 
------- 
 
5. (C) Even through Cyprus has played this very tough, many 
EU member states do not want to be seen as punishing or 
"bullying" a member state.  The Dutch Presidency, in 
particular, has demonstrated flexibility and patience with 
Cyprus by first getting them to let the assistance package 
get out of COREPER and on its way to the GAERC, and then 
ruling against the Commission on the trade package. 
Unfortunately, this cautious approach has slowed down 
movement on both aid and trade for North Cyprus.  As a 
result, six months after the referendum, North Cyprus has 
nothing to show from the EU for its support for the UN 
reunification plan. 
 
McKinley