US embassy cable - 05BRUSSELS537

C O N F I D E N T I A L SECTION 01 OF 05 BRUSSELS 000537 
 
SIPDIS 
 
NOFORN 
 
DEPT FOR EUR DAS KENNEDY, EUR/SE AND EUR/ERA 
 
E.O. 12958: DECL: 01/27/2015 
TAGS: PREL, CY, TU, EAID, EUN, USEU BRUSSELS 
SUBJECT: EU GAME PLAN ON TURKEY AND NORTH CYPRUS 
 
 
Classified By: USEU/POL Harry O'Hara, reasons 1.4 b/d. 
 
1. (C) Summary: A number of European Commission officials 
expressed concern to visiting EUR DAS Ambassador Kennedy on 
January 27 about the inability of the member states to free 
up 
the trade and financial assistance package to north Cyprus 
that the Council had approved in July 2004. They also worry 
Cyprus could create additional difficulties as the EU and 
Turkey move towards starting accession talks in October 
2005. Commission officials also preview how they hope to 
work with Turkey in coming months to keep momentum going 
without raising domestic internal public EU fears about 
Turkey. End Summary. 
 
2. (SBU) Ambassador Kennedy met with a wide of European 
Commission, Council, Presidency officials during her 
January 26-27 meetings in Brussels. They included EC 
director-general Fabrizio Barbaso in DG-Enlargement; Cabinet 
advisor on Turkey and Cyprus Jean-Christophe Filori; EC 
Director Pierre Mirel for Turkey and Cyprus; EC 
head-of-unit for Cyprus, Leopold Maurer; EU head of unit 
for Turkey, Martin Harvey; Council Secretariat Director 
General 
Robert Cooper and Council Secretariat expert on Turkey, 
Gabriele 
Scaramucci; Council Policy Unit head Christoph Heusgen and 
his deputy Kees Van Riij; Luxembourg President Rep (and 
Ambassador to Spain and Turkey) Senningen and Luxembourg 
MFA expert Jean Delvaux; Turkish Ambassador to the EU 
Demiralp and North Cyprus "Prime Minister" Talat. She was 
accompanied by USEU/POL O'Hara. (Conversation reported in 
USEU today January 28 and summary emailed to EUR/SE and 
Embassy Nicosia) 
 
Commission Blocked on North Cyprus 
 
3. (C) Commission officials in DG-Enlargement (responsible 
for Turkey and North Cyprus) are deeply worried by the 
inability of the Luxembourg Presidency and the 
member-states to convince Cyprus to play a more 
constructive role. They believe that an "unsolved Cyprus 
problem"  affects North Cyprus and also how the EU handles 
Turkish accession between now and October 3. Both the 
Commission and the Turkish Ambassador to the EU told 
Ambassador Kennedy that this is "too long a time" for 
EU "inaction." 
 
4. (C) On North Cyprus, Cyprus is blocking modification of 
green-line regulations to allow more trade (current value: 
150,000 euros/month with most traded item being toilet 
paper); July 2004 Commission proposal to permit greater 
north/south trade and the release of 259 million Euros in a 
financial aid package for North Cyprus. In addition, the 
Commission is unhappy with Cypriot harassment of EU 
officials working in Cyprus. 
 
Green-line progress 
 
5. (C) Commission officials told us, however, that they are 
getting signals that Cyprus might permit a modification of 
green-line regulations to allow processed goods to be 
traded (currently blocked) and also to increase the value 
of goods for personal use to be carried across the border 
from 30 euros to 175 euros per person. Since the 
liberalization of the green line, the EC estimates that 
close to 500,000 Euros has been traded - much less than had 
been expected. On the more positive side, the EC has 
observed an increase in the number of people from North 
Cyprus working in Cyprus.  Ambassador Kennedy suggested 
that the Commission could do a study of green line trade as 
a way to increase attention to the need by the 
member-states to do more on to increase it.  EC 
DG-Enlargement Director General Barbaso asked the Cyprus 
unit to pull something together to capture this.  Barbaso 
also said that while he had been disappointed that the 
member states hadn't approved green line changes, he 
believed that getting progress on the green line could be 
an important confidence building measure that might help 
convince member states to move on the trade/aid package. 
(Update: On February 4, the EC and Cyprus signed a prelimnary 
agreement designed to increase trade over the green line. The 
agreement will to need to be formally approved by the member 
states.) 
 
Trade/Assistance Package: next steps 
 
6.  (C) Even though the Commission complained that the 
Luxembourg Presidency had not followed through on a 
promise to put the stalled trade and aid package on the 
January 31 General Affairs and External Relations Council 
meeting, they acknowledged it would most likely have 
remained blocked by Cyprus. They also acknowledged that 
TRNC "PM" Talat had been pushing them on trade and not to 
decouple trade and the aid package.  The Commission has 
agreed that until after elections in North Cyprus that they 
would not decouple. But, as Commissioner Rehn cabinet 
advisor on Turkey and Cyprus told us, the Commission wants 
to work with the member states to get the financial 
assistance package rather than nothing. What the Commission 
hopes is to convince the Luxembourg Presidency to put on 
the COREPER agenda financial assistance for North Cyprus in 
what is being called here "decoupling in time but not in 
substance."  The Commission hopes that the member-states 
will not accept a Cypriot condition that the location of 
the headquarters from programs in the package for North 
Cyprus be in the South. 
 
UN, not EU, for Cyprus 
 
7.  (C) Commission officials told us that the EU also wants 
the UN reengaged in Cyprus but does not want another 
failure. The Commission believes that EU member states, the 
US and other countries need to keep pressing on 
Papadapoulos to say what wants rather than what he doesn't 
want. The Commission told us that it continues to oppose a 
Cypriot trial balloon to have the EU replace the UN. 
 
Running out of money in North Cyprus? 
 
8.  (C) The Commission head of unit for Cyprus told us that 
he is worried that the Commission's current programs in 
North Cyprus could run out of money by the end of 2005 and 
then when they do get new money they will have a shortened 
timeframe to approve projects in the North (deadline end of 
CY 2006) and spend money (by the end of CY 2009). 
Currently the EC is concentrating on agri-business, 
teaching how to adapt to various EU acquis requirements, 
improving the process of issuing certificates of origin, 
and facilitating greater trade across the green line. One 
positive new development is that now that Turkey is 
officially a candidate country, the EC can work with 
Turkish companies located in the North. 
 
Turkish Accession and Cyprus "unreined" 
 
9.  (C) On Turkey, the Commission believes that with no one 
in the EU willing to get Cyprus to "act more like 
Europeans" or to control them, it is better to avoid giving 
Cyprus opportunities to create additional difficulties for 
Turkish accession. Currently the Commission is fending off 
an effort by Cyprus to interpret the December 17 Council 
conclusion that Turkey will sign a customs protocol as a 
requirement that Turkey open its ports to Cypriot ships. 
Already the Commission has decided to move its accession 
partnership agreement with Turkey from March/April 2005 to 
November 2005, well after the October 3 date for the 
beginning of accession talks. Commission sources tell us 
that the accession partnership document (which essentially 
is a roadmap provided by the Commission to a candidate 
country that provides them with short/mid-term priority 
things to do) has to be approved by all member-states.  The 
Commission does not want to provide Cyprus with this 
opportunity. 
 
10.  (C/NF) Also indicative of the Commission's unhappiness 
is that they called in the Cypriot Perm-Rep January 25 for 
a meeting with DG-Enlargement chief of staff who told 
Cyprus to stop being so negative. When they told this to 
us, they asked that we not share this because they had not 
told the Luxembourg Presidency of their action.  In our 
meeting with DG-enlargement officials, DG Director General 
Barbaso felt compelled to remind his unit heads and 
directors that despite their frustrations with the 
Presidency, they need to go softly with the Luxembourgers. 
We also felt that his remark was also a bit directed to us 
and we were reminded on more than one occasion that small 
countries are very sensitive to being pushed around by 
bigger countries both in and out of the EU. Commission 
officials also questioned the impartiality of Luxembourg Amb. 
Fernand Karthausen who is accredited to Cyprus and Greece. He 
is Luxembourg's EU point man on Cyprus by is regarded as 
heavily pro-Greek Cypriot. 
 
More Unease over Luxembourg Presidency 
 
11.  (C) Turkish Ambassador to the EU Demiralp expressed 
his concern over the Luxembourg presidency. He said that he 
was concerned by a "sentimental solidarity" between 
Luxembourg and Cyprus, two small-states. He also noted that 
he had not detected any "will" by Luxembourg to move ahead 
on the trade/assistance package for Cyprus.  Demiralp 
wondered if the Luxembourg Presidency was prepared to spend 
its capital to move ahead on political issues (like Turkey) 
or would it try to focus on economic issues. 
 
Luxembourg Presidency Dilemma 
 
12.  (C/NF) Jean-Paul Senninger, the Madrid-based 
Luxembourg Ambassador to Spain and Turkey, told us 
privately that the Luxembourg Government is in fact talking 
with the Cypriot government to get them to act in a more 
responsible "European" fashion. He stressed that Luxembourg' 
s discussions were useful because it was a conversation 
between small countries, neither of whom like to be bullied 
by big states (or for that matter, the Commission), and 
that Luxembourg had a lot of experience working the EU 
system to its advantage. He noted that the Luxembourg 
government will seek to use a visit by Papadopoulos during 
the 
second half of February to pass these messages. From our 
perspective, it is not clear that other member states or 
the Commission were aware of Luxembourg's efforts. 
 
COSEE Highlights 
 
13.  (C) At the January 26 US/EU COSEE experts meeting, 
Senninger was quite insistent that dialogue between the 
Presidency country and Cyprus was intense. He noted that 
the Presidency would be in Ankara February 27-28 for 
meetings and that Turkish FM Gul and Luxembourg Minister 
for European Affairs Nicolae Schmitt planned a separate 
meeting.  At times, we felt that his remarks were as much 
directed towards the Commission officials and the UK rep in 
the room as they were to us. 
 
Progress on Turkey 
 
14. (SBU) In their presentation at the COSEE meeting, 
Commission officials previewed their intense activities in 
Turkey in coming months.  EU political monitoring missions 
are planned for March and June with Association Council and 
Committee meetings for March and April. Civic Society 
exchange programs both in Turkey and in the member-states 
are in full swing as the number of EU/Turkey educational 
exchanges programs continues to increase.  The Commission 
believes that the quality of EU/Turkey dialogue on 
sensitive human rights issues including torture is 
excellent. There remain a number of difficult issues, 
however, particularly on religious freedom.  Senninger 
noted the Luxembourg Presidency was very interested in 
seeing Turkey make progress on religious freedom. He said 
that these and other issues would be discussed at the 
EU/Turkey troika meeting in Ankara on March 7.  After 
expressing his appreciation for US reporting on religious 
freedom in Turkey, he wondered if perhaps this would be a 
theme that the US and the EU could explore together in 
further detail. (Rehn adviser Filori also highlighted to 
us action on the religious area, particularly the law on 
foundations.) 
 
Getting the Negotiating Framework Agreement with Turkey 
 
15. (C) The Commission wants to present this agreement " 
later rather than sooner" because it too will require 
approval by all 25 members. The Commission also wants to 
keep high-profile Turkey discussions out of the limelight 
until after the French Constitutional referendum (early 
June). The current plan is to present this agreement to the 
first July GAERC in the UK Presidency and allow 
member-states time to discuss it before approving it before 
October 3. The Negotiation Framework Agreement establishes 
the rules of the game for the accession process and covers 
levels of representation, number of meetings but also 
provides guidance on controversial topics such as 
safeguards and derogations. The Commission anticipates that 
discussion of this agreement will be difficult not only 
because of Cyprus but of other member state concerns on 
labor mobility, regional and agricultural subsidies. 
(Comment: 
We were struck that the Commission seemed so concerned with 
their internal procedures that they almost neglected to 
talk with us about the fact that Turkey also has to sign 
the agreement.)  Getting Turkish agreement is not going to 
be automatic; in fact, Turkey has already sent a note 
verbale to the Commission saying that it will sign not/not 
an agreement with permanent derogations.  The Commission 
hopes to preempt some problems by using its negotiating 
framework agreement with Croatia, which is scheduled to be 
approved next month, as its model for Turkey (so as to 
avoid debates about double standards for Turkey). 
 
The Commission game plan: post-October 3 
 
16. (C) While the Commission hopes to avoid another 
bruising December 17 last-minute "psycho-drama" over Turkey 
(but no one is taking bets on this), they are aware that 
after the UK presidency (which they expect to be helpful on 
Turkey) comes Austria. Commission conventional wisdom is 
that the Austrian Presidency will not block progress on 
Turkey but will not be prepared to take any bold steps. 
Therefore, the Commission hopes that they can open more 
than one chapter of accession talks by the end of 2005 and 
will try to open as many as they can. To make this happen, 
they will start with easy ones (e.g. standardization of 
statistics) that are not controversial (since closing a 
chapter requires all member states to agree). The 
Commission plans to simultaneously start up the screening 
process (a 6-8 month process) where the Commission reviews 
a candidate's laws and regulations to identify areas where 
national law has to modified to agree with Community law. 
There had been some concern in the Commission that some 
member-states might instruct the Commission to do screening 
before opening up chapters for negotiation but these 
concerns seem to have abated for now (thus delaying 
accession talks until well into 2006).  After Austria, the 
Finns will have the Presidency at the end of 2006 and the 
Commission is optimistic that the Finnish Presidency will 
be proactive and helpful on Turkish accession. 
 
The famous "additional protocol:" the Ankara Agreement 
 
17.  (C/NF) The Commission recently submitted the 
additional protocol to Turkey per the discussion at the 
December 17 European Council.  What the Commission wants is 
for Turkey to agree to it by initialing 
the agreement. Turkish Ambassador Demiralp told us that 
there is no legal equivalent to this under Turkish 
law; namely Turkey "signs" rather than "initials" 
agreements. (For that matter, the Commission is also 
struggling with the December 17 Council requirement that 
the protocol be signed - for the Commission, protocols are 
not/not normally signed.) While Demiralp does not know how 
his government will respond to the EC, he was aware of the 
EU's bureaucratic needs - namely that the Commission needs 
Turkey's approval so that the document can be approved by 
the Council (consensus decision), then go to the European 
Parliament for its assent (a process that could take up to 
3 months) and then back to Turkey for its signature before 
October 3.  The Commission informally provided us a copy of 
the "additional protocol" (faxed to EUR/ERA Volker/Bono) 
and asked we not reveal that we have it as a number of 
member states don't have it either. 
 
18.  (C) The Commission hopes to get something from Turkey 
by the end of February indicating "agreement" on the 
protocol so that they can start this process.  The EC 
believes that this has to be done before Cyprus will 
approve the negotiating framework agreement for Turkey.  In 
addition, the Commission is nervous about an argument being 
made in Brussels by Cyprus that a Turkish "signature" is 
not enough; rather what the EC should demand is " 
provisional implementation" of the protocol.  The legal 
services of DG-enlargement interpret this as meaning " 
concrete deeds" before October 3. One example apparently 
cited by the Cypriots would be the use of Turkish ports by 
Cypriot ships. 
 
Turkey will sign but... 
 
19.  (C) Demiralp assured us that Turkey will follow 
through on its promise to sign the protocol but the 
government will not submit it to the Turkish Parliament. 
Implementation of the protocol will take place but in the 
context of the negotiations and not as a precondition. 
Turkey is considering an additional declaration at the time 
of its signing that repeats that signing this does not mean 
"recognition." Commission officials are aware that 
Turkey is considering this "extra" declaration but hopes 
that somehow Turkey might avoid doing this. What the 
Commission fears is that Cyprus will seize on this as 
another occasion to create mischief. 
 
NATO/EU 
 
20.  (C) When asked by Ambassador Kennedy for an update on 
Turkish blocking of Cyprus and Malta from NATO/EU meetings, 
Demiralp replied that Ankara is working on this issue and 
will get back to us in due course. He agreed that this was 
important and took on board our point that NAC/PSC dialogue 
was deteriorating. 
 
21. (U) Ambassador Kennedy cleared this cable. 
 
Schnabel 
.