Billions to pay if Cyprus talks fail, UN special envoy warns

March 26, 2011, Saturday/ 18:14:00

Failure in long-running talks to reunify divided Cyprus would saddle both sides with a massive wave of property claims that could run into “tens of billions of euros,” the United Nations envoy overseeing the negotiations has said.

The continued stalemate would spur compensation litigation for property lost since the island’s ethnic division in 1974, when Turkey intervened after a coup by supporters of union with Greece, Alexander Downer told The Associated Press in an interview on Thursday. Downer said he hoped to wrap up negotiations by the end of the year, adding that the rival parties’ positions are “not irreconcilable.”

The 1974 intervention that split the island along ethnic lines displaced some 170,000 Greek Cypriots and about 40,000 Turkish Cypriots. Around 80 percent of private property in the Turkish Cypriot north is owned by Greek Cypriots. Turkish Cypriots, meanwhile, own 15 percent of private property in the internationally recognized Greek Cypriot south.

“To resolve all of this will cost tens of billions of euros eventually, and they will be bills that will fall on Turkey and the Greek Cypriots,” said Downer. “They will be shelling out tens of billions of euros if you make any half-reasonable assessment of the value of these properties.”

Reunification talks between Greek Cypriot leader Dimitris Christofias and Turkish Cypriot leader Derviş Eroğlu are now in their third year with only limited progress to show, and faith in a successful outcome has sharply waned on both sides.

Disillusionment has led around 1,000 Greek Cypriots to apply to the Turkish Cypriot Immovable Property Commission, a body set up five years ago to adjudicate property claims through a mixture of restitution, compensation and exchange. Only 161 claims have been settled so far, with 65.5 million euros ($92.5 million) paid out.

Downer said market confidence in Greek Cyprus would be shaken if the talks collapse, while foreign investment in the island’s rebounding economy would suffer. International frustration at failure after a “massive investment” in yet another round of talks would bring its own political costs, he said. “If people want to just bury their head in the sand and say, ‘It’s just a threat, nothing will ever happen,’ well, they’re wrong.”

Downer was critical of recent dour assessments of the talks from both sides, insisting that a deal to forge a federation composed of Turkish Cypriot and Greek Cypriot constituent states was within reach. “There’s no reason why they can’t solve all these problems, their positions are not irreconcilable,” said Downer. “But I think it is very important to work at it, not to be making forecasts of doom, but to be demonstrating determination to succeed.”

Downer said significant progress has been made on how the two communities will share power under a federal roof, as well as on economic and EU matters. But much work remains on issues including the territorial boundaries of the constituent states and on property which he said was “without any doubt the most difficult issue.”

“If you want to reunify Cyprus, the only way you can do that is through a federation. That is the only way, there isn’t any other way,” Downer said.

The UN envoy said he expects negotiations to slow down in the run up to Greek Cypriot and Turkish parliamentary elections in May and June respectively, but expects things to pick up quickly after that. Although there are no deadlines in the open-ended process, Downer said the aim is to wrap up negotiations by the end of the year, adding that the two sides “don’t have the luxury of time.”

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