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June 10, 2012, Sunday

Cyprus: a reliable and sensible partner?

On July 1 Cyprus will take over the EU’s rotating presidency for six months. Cyprus has been divided into a Greek Cypriot south and the Turkish Cypriot north since 1974.

Given the difficulties that exist between the Greek Cypriots and Turkey, there have been concerns over how it may affect the EU’s already problematic relations with Ankara. Turkey does not recognize the Republic of Cyprus and is the only country to recognize the self-proclaimed Turkish Republic of Northern Cyprus, where it maintains some 40,000 troops, has considerable influence over decision-making and pretty much keeps the country afloat financially with over $1 billion in aid each year.

Obviously the Greek Cypriots want to make a success of their presidency. Earlier this week at a breakfast meeting, Cyprus’s permanent representative to the EU, Ambassador Kornelios Korneliou, underlined that the bilateral issues the Greek Cypriots have with Turkey would not be on the agenda; that Cyprus would not promote its national positions but rather behave as an honest broker and would prove itself to be a reliable and sensible partner during its presidency. This is something that Greek Cypriot leader Dimitris Christofias has also been adamant about. In a recent interview with Turkish Policy Quarterly, he said Cyprus “would implement the decisions of the EU in relation to the candidate countries, including Turkey, with objectivity and neutrality as proponents of the council’s common position. We hope that Ankara will respond in good faith.”

I really do hope that this will be the case, but given the fact that the Greek Cypriots have gotten into a habit of promoting the Cyprus issue at every opportunity, it may prove to be quite a difficult habit to break, but let’s wait and see.

While there is clearly no love lost between the Greek Cypriots and Turkey, Ambassador Korneliou stated that Cyprus regretted Ankara’s decision not to have anything to do with the Greek Cypriot presidency. He reiterated that Cyprus fully supports Turkey’s EU accession process because a “European Turkey is in our interests” but Turkey needs to “play by the rules of the game,” like all other candidate countries. Turkey has been unyielding in that dealing with the Greek Cypriots was not an option. This was reiterated earlier this week by Foreign Minister Ahmet Davutoğlu, who said: “Our position on the presidency of the Greek Cypriots is clear… The relations and contacts with the EU will continue, but none of the ministries, institutions of the Turkish Republic will be in contact with the EU presidency in any of the activities related to the Greek Cypriot presidency.”

Beyond the “Turkey issue,” it is far from an easy time to be taking up the presidency. While the role of the presidency may have weakened under the Lisbon Treaty, the Greek Cypriots will nevertheless have something of a mammoth task ahead of them, picking up the “eurozone crisis” business from the Danes. Not only is the EU as a whole still absorbed by the eurozone crisis, Greek Cyprus -- the eurozone’s third-smallest economy -- is in a particularly difficult spot, finding itself up to its neck in economic problems and in the running to become the bloc’s fourth recipient of aid as a deadline looms to recapitalize the islands second-largest bank.

Popular Bank requires some 1.8 billion euros in fresh capital to meet European regulators’ conditions by June 30. Having already been bailed out once some 12 months ago by the Russians, Nicosia is now having to face up to the fact that it may need to prepare a bailout request to save its banking system which, because of its ties and exposure to the Greek banking system and debt, is on the brink of collapse. However, Cyprus is concerned that there may be certain conditions attached that may not be acceptable, including that any assistance should not compromise the island’s low-tax status which has economically propped up the (Greek) Cypriot economy for decades.

On other issues related to foreign policy, the Greek Cypriots are planning to push ahead with a number of key trade agreements, including with Japan and Canada, and will be working to keep both the European Neighborhood Policy (ENP) and enlargement on track. Ambassador Korneliou declared that the economic crisis should not be allowed to have an impact on EU foreign policy priorities such as the EU’s role in the Arab Spring or the European integration processes of the countries of the Western Balkans and Iceland, stating that it was important to maintain momentum. Strong focus would also be placed on relations with Russia, with whom Greek Cyprus has very warm ties.

The ambassador also indicated that the presidency would like to do something about the “anti-EU sentiment” which has mushroomed as a consequence of the eurozone crisis, with citizens losing faith in the EU. This would include efforts to increase employment opportunities and push a “better Europe” agenda, trying to make it more relevant and interesting to citizens. He said EU leaders need to start sending the right messages in order to boost the morale and psychology of citizens. Good luck Nicosia!

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