US embassy cable - 05NICOSIA1617

CONFIDENTIAL NICOSIA 001617 
 
SIPDIS 
 
 
E.O. 12958: DECL: 09/22/2020 
TAGS: PREL, PGOV, CY 
SUBJECT: "AND FOR MY NEXT TRICK...":  REVISITING THE CYPRUS 
ISSUE AFTER OCTOBER 3 
 
Classified By: CDA Jane Zimmerman; Reason 1.4 (b) and (d) 
 
1.  (C) Summary:  Although the end result of the EU's October 
3 decision on Turkey was positive, the tortuous negotiations 
on the framework and the "counter declaration" highlight the 
implications that the unresolved Cyprus dispute has for U.S. 
interests across a wide range of issues.  While the prospects 
for a new round of Cyprus talks appear dim, we should take 
concerted steps now both to enhance the prospects of success 
for any future negotiations and to ensure minimum spillover 
into other issue areas.  Our immediate goals should include: 
building bridges between the two communities; reinforcing 
Turkish Cypriot support for reunification; and promoting a 
more constructive Greek Cypriot position on the settlement 
package.  In the absence of negotiations on a comprehensive 
settlement, we may want to try to broker some accommodation 
on the parallel issues of boycotts and embargoes that will 
advance U.S. interests in nonproliferation and enhanced 
NATO-EU cooperation.  Meanwhile, we should work to deepen our 
dialogue with Nicosia on issues that go beyond the Cyprus 
problem where we have shared interests.  These include 
counterterrorism, nonproliferation and UN reform.  End 
Summary. 
 
A Fresh Look 
------------ 
 
2.  (C) Now that the contentious October 3 EU decision to 
begin accession negotiations with Turkey is behind us, it is 
worth taking another look at the fundamentals of the Cyprus 
issue and considering afresh what steps the United States, 
the EU, the UN, and other key actors can take to both advance 
the prospects for an eventual settlement and minimize the 
negative consequences of the current impasse.  Although the 
end result of the October 3 decision was a success, the 
tortuous negotiations on the framework and the "counter 
declaration" regarding Ankara's obligations towards the ROC 
made clear that the Cyprus problem will continue to spill 
over into other issue areas and complicate key aspects of our 
regional agenda.  That the Cyprus dispute remains a serious 
drag on Turkey's EU aspirations is obvious.  Cyprus has 
already signaled its intention to turn Turkey's ratification 
of the customs union protocol into another mini-crisis for 
the EU if Ankara insists on including its own July 
declaration in the package the government will forward to the 
Grand National Assembly for approval.  Equally, the feud 
between Turkey and Cyprus undermines our efforts to find a 
modus vivendi for EU-NATO cooperation, restricts the progress 
of rapprochement between Greece and Turkey, and undercuts 
cooperation between the EU and key nonproliferation 
mechanisms such as MTCR and the Wassenaar Arrangement.  If 
the Cyprus problem cannot be "solved," we will need to find a 
way to manage it more effectively. 
 
Quo Vadis:  Prospects for New Talks 
----------------------------------- 
 
3.  (C) Although President Papadopoulos and other senior GOC 
officials regularly claim that UN SYG Annan is on the verge 
of launching an initiative on Cyprus, the prospects for a new 
round of talks are -- at best -- dim.  Following the last 
round of UN "pulse-taking" in June, then U/S Kieran 
Prendergast reported to the Security Council that the gap 
between the positions of the two sides was wide and growing 
and the level of mutual confidence low and falling. 
Moreover, he described the proposed Greek Cypriot list of 
changes to the Annan Plan as "daunting."  Prendergast himself 
told us that he put considerable thought into his choice of 
adjectives.  It is a characteristic understatement. 
Papadopoulos continues to believe that Greek Cypriot 
interests are best served by shifting the locus of action 
from the UN to the EU and using Turkey's own European 
ambitions to leverage unilateral concessions out of Ankara. 
Nicosia's experiences last December and in the run-up to 
October 3 have exposed the shortcomings of this approach, but 
Papadopoulos has not lost faith in the longer-run efficacy of 
EU leverage. 
 
4.  (C) If Papadopoulos is in no hurry for a quick fix to the 
Cyprus problem, neither is Ankara.  The GOT has been spending 
down the credits it accumulated with its support for the 
Annan Plan in April 2004 and does not yet seem to understand 
that Turkey's "yes" is a depreciating asset.  Among the 
principal actors, the only party eager for a resumption of 
talks is the Turkish Cypriot side.  Turkish Cypriot leader 
Mehmet Ali Talat makes no secret of his frustration and 
impatience.  He won power on a pro-solution, pro-settlement 
platform but cannot deliver without Greek Cypriot 
cooperation.  This also explains Talat's single-minded focus 
on easing Turkish Cypriot isolation.  Steps in this direction 
 
would not only constitute a political victory for 
pro-solution forces in the north, they would also -- in 
Talat's view -- put pressure on the Greek Cypriot side to 
adopt a more constructive and flexible approach.  It is 
unlikely, however, that Talat will get the chance to test 
this hypothesis.  We have already put in play most of what we 
have to offer and the Europeans are constrained in their 
ability to reach out to the Turkish Cypriots by Nicosia's 
membership in the club.  The EU's inability to agree on a 
package of trade and aid measures for the Turkish Cypriots, 
for example, reflects GOC resistance to any "upgrading" of 
the Turkish Cypriot administration or any kind of direct 
relationship between the EU and Turkish Cypriot "officials." 
 
 
5.  (C) Under these circumstances, Annan is understandably 
reluctant to reengage on the Cyprus issue and we should not 
push him to do so.  There are, however, things we can do to 
ensure that when and if a new round of Cyprus talks do begin 
they have a realistic chance to succeed.  Our goals should 
include: 
 
-- Building bridges between the two communities; 
-- Reinforcing Turkish Cypriot support for reunification; and, 
-- Promoting a more constructive Greek Cypriot position. 
 
6.  (C) We are already hard at work on all three objectives. 
Our traditional bicommunal programs support the first goal, 
as do our newer efforts aimed at matchmaking between Greek 
Cypriot and Turkish Cypriot businesses.  We have also had 
some success in promoting the opening of more crossing 
points, encouraging progress in the Committee on Missing 
Persons, de-mining, and pressing the Turkish Cypriot side to 
allow Orthodox religious services in the north and to allow 
access by preservation experts to medieval monuments in the 
Nicosia Buffer Zone.  With respect to support for 
pro-solution Turkish Cypriots, the $30.5 million Cyprus 
Partnership for Economic Growth (CyPEG) has been successfully 
launched with three long-term contracts in place.  These 
three contracts are focused on enterprise development and 
banking; water and energy use efficiency; and environmental 
protection.  Unfortunately, Greek Cypriots are inclined to 
look at both CyPEG and our bicommunal programs as threatening 
or even as "punishment" for their opposition to the Annan 
Plan.  It is, therefore, important for the Department to seek 
relief from the implications of the Nethercutt Amendment in 
Appropriations Acts for FY 2006 and future years so that USG 
bicommunal programs do not have to exclude activities that 
benefit the Government of Cyprus. 
 
7.  (C) The third goal, pressing the Greek Cypriot side to 
adopt a more constructive position, is both the most 
important and the most difficult.  We cannot be too 
aggressive in pursuing this goal as just the hint of American 
pressure is enough to rally even Papadopoulos' most committed 
opponents to his banner.  Our best hope here is that a 
prolonged period of UN inaction will strain the President's 
relationship with AKEL, his instinctively pro-solution 
partner in government.  Parliamentary elections scheduled for 
May 2006 will be a critical bellwether of the price AKEL will 
pay for supporting Papadopoulos.  While Anglo-American 
pressure is relatively easy for Papadopoulos to discount and 
shrug-off, pressure from fellow Hellenes is harder to ignore. 
 A combination of pressure from the inside (AKEL) and the 
outside (Athens) will be necessary if Papadopoulos is to be 
convinced to adopt a more conciliatory approach to the UN and 
his Turkish Cypriot compatriots. 
 
Quo Vadis Redux:  What Do We Do Without Talks? 
--------------------------------------------- - 
 
8.  (C) As a new round of Cyprus talks appears unlikely at 
any point in the foreseeable future, we need to develop a 
coherent strategy for managing the spillover effects of this 
exasperating problem.  Although the parenthetical language 
added at Cypriot insistence to paragraph 7 of the negotiating 
framework nearly derailed the entire process, it is in our 
interest that Ankara stop blackballing Cyprus in all 
international organizations as a matter of principle.  This 
would effectively "de-fang" one of the most potent arguments 
the Greek Cypriots have in pressing for the EU to adopt a 
hard-line approach with Ankara.  Moreover, bringing Cyprus 
into groups such as the MTCR or the Black Sea Economic 
Cooperation forum on merit would be good for the work of the 
groups in question and eliminate a potentially serious point 
of friction between key international organizations and the 
European Union.  Turkey's adopting a more flexible approach 
to engaging the ROC internationally might also open up 
possibilities on the EU-NATO front where Ankara's insistence 
on a strict reading of Berlin-Plus requirements are 
 
handicapping efforts to promote cooperation.  Even though 
Turkey is now obligated "to progressively align" its policies 
on membership in international organizations with those of 
the EU, it is unlikely that Ankara will ease up on Cyprus 
without some kind of quid for the Turkish Cypriots.  We could 
look at ways the Greek Cypriot side might loosen certain of 
the restrictions in place on -- for example -- Turkish 
Cypriot participation in international sporting events in 
exchange for Ankara's acquiescence to Nicosia's joining the 
MTCR.  This is obviously not easy and the odds of success are 
not high, but the potential payoff is significant and it is 
worth taking a serious look at the possibilities. 
 
Meanwhile... 
------------ 
 
9.  (C)  We must not lose sight of the fact that Cyprus is a 
country, not a problem.  As a member state of the European 
Union, it is now part of the vaunted transatlantic 
relationship and we should look for opportunities both to 
broaden and deepen our cooperation with Nicosia on issues 
that have little or nothing to do with the island's division. 
 Our cooperation on counterterrorism and nonproliferation has 
generally been excellent.  Cyprus was the first EU state to 
sign a PSI shipboarding agreement with United States.  We 
cooperate well and closely on anti-money laundering efforts 
and terrorist financing.  We should work to build on these 
areas of cooperation and keep our differences over the Cyprus 
issue separate and apart.  One area where we should put 
pressure on the government is the GOC's unwillingness to 
crack down on the activities of Kongra Gel/KGK on Cyprus. 
The island is both a base for fundraising operations and a 
key transit point for KGK fighters.  The Greek Cypriots are 
ambivalent about the KGK, and there is a certain "enemy of my 
enemy" mentality that reinforces the authorities natural 
tendencies to passivity.  Getting the GOC to do more about 
Kongra Gel will be a high priority for the Embassy's 
Counterterrorism Working Group. 
 
10.  (C) We are also working with the GOC to support U.S. 
policy on UN reform.  This is an area in which FM Iacovou is 
knowledgeable, interested, and generally right-thinking.  We 
intend to raise the profile of this issue in our dialogue 
with the GOC not because Nicosia is particularly influential 
in the UN system but because it is an area of considerable 
commonality of view.  In trying to get beyond the Cyprus 
problem, we will need to emphasize points of agreement and 
minimize areas of intractable disagreement.  Hopefully, we 
can leverage cooperation on UN reform into broader 
cooperation on a range of regional and global concerns. 
Nicosia's decision to launch a new aid program -- capitalized 
at $5-6 million a year -- will also generate new 
opportunities to work with the GOC in coordinating our 
response to humanitarian crises, particularly in Africa. 
 
11.  (C) Cyprus' role in the Middle East remains largely one 
of potential, but we will continue to look for ways to engage 
the GOC constructively in the BMENA initiative.  The Cypriots 
do have good contacts with the Palestinian leadership and GOC 
officials are frequent visitors to Damascus, Beirut and 
Tehran.  At a minimum, more regular consultation with the GOC 
on developments in the Middle East should encourage Nicosia 
to take a more active role in regional affairs.  Cyprus likes 
to bill itself as a bridge between Europe and the Middle East 
and a logical home for multinationals looking to invest in 
the region.  While it is not at all clear that the corporate 
world feels the need for a bridgehead, we should seek to 
capitalize on Nicosia's own self-image to promote BMENA 
objectives. 
 
Comment 
------- 
 
12. (C)   It is easy to despair when considering the 
prospects for a Cyprus settlement.  The Cyprus problem here 
is like the weather.  Everybody talks about it, but nobody 
does anything about it.  Moreover, time is the enemy of a 
solution.  Without a settlement, the vectors in the relevant 
variables are almost all negative, including:  demographic 
and political trends, the pace of development of disputed 
properties, growing cynicism and indifference in the south, 
and impatience and frustration in the north.  To the extent 
possible, therefore, we want to liberate U.S. policy towards 
Cyprus from the anchor of the Cyprus problem itself.  Cyprus 
is no longer (and truthfully never really was) a single-issue 
country.  EU accession has only confirmed and accelerated 
this trend.  While this development does little to help us 
solve the Cyprus problem, it does create considerable 
incentive for us to get beyond the problem and advance our 
shared goals in the many areas where we can cooperate 
meaningfully with Nicosia. 
 
ZIMMERMAN