A missed opportunity in Cyprus to revive talks

ALEXANDER BÜRGİN

Greek Cyprus needs financial assistance in order to tackle its debts crisis, mainly caused by the engagement of its banks in Greece. As with other EU countries struggling with high debts and an ailing banking sector, EU assistance is conditional. The EU has offered a 10 billion euro bailout fund in return for the commitment of the Greek-Cypriot government to a range of reforms including, inter alia, measures against money laundering, a modest increase of the corporate tax and a one-off tax on bank deposits designed to provide a contribution of 5.8 billion euro to the bailout package from domestic sources. After an intensive debate about the levies on bank depositors, the Greek-Cypriot parliament accepted the EU demands on March, 25.

Even if painful for the country concerned, it is justifiable that the assistance donors set conditions. And it is also justifiable that the conditions for a bailout plan mainly deal with economic issues. However, as well as economic conditions, it is also legitimate to impose political conditions as a precondition for financial assistance. In the case of Greek Cyprus, there is a political condition which is clearly appropriate: A stronger commitment by Greek-Cypriot government to the reunification of the island.

However, the opportunity has been missed to add this demand to the list of demands. Since the Greek-Cypriot government officially requested a bailout fund in June 20012, none of the EU leaders have promoted the idea of a linkage between monetary support and calls for more engaged negotiations on a settlement to reunify the divided island.

Unfortunately, the European Union has missed this opportunity to attempt to revive the reunification talks. Of course, specific demands such as a corporate tax increase can be more easily overseen than a political commitment for engaged reunification talks with the Turkish North. However, the effect of such a demand as a political signal should not be underestimated. First, it would have demonstrated the political will of the EU to overcome the division of the island. Second, it would have strengthened the position of those political actors interested in a pragmatic solution in the Greek part of the island. Nicos Anastasiades, president of Greek Cyprus since February 2013, can be considered one of the pragmatists, as he supported the UN Plan for reunification which foresaw the establishment of a federation of two states and which was rejected by the Greek-Cypriots in a referendum in 2004. No doubt, his election has nourished the hope that he will pursue a more moderate policy on this issue.

However, it is not easy to persuade the skeptical Greek Cypriot public to adopt a pragmatic approach.

In the face of such opposition, the justification of a moderate approach with reference to the conditional monetary support of the EU could have paved the way to overcoming the resistance of the numerous hardliners. As it is probable that a single bailout fund will not be sufficient to overcome the financial crisis in the Greek part of the island, and that further EU monetary support will be needed in the future, the EU is in the position to link further money transfers to progress in the reunification negotiations.

I admit that this is a rather optimistic scenario; nevertheless, it was an option worthy of consideration. The fact that EU leaders totally failed to consider this scenario illustrates their lack of serious interest in a solution to the Cyprus conflict. Furthermore, it also shows their lukewarm interest in removing one of the most important obstacles in Turkey’s EU accession process. Since December 2006, eight chapters in the accession negotiations of Turkey to the EU have been frozen due to the deterioration in the relationship between Turkey and Greek Cyprus after the failed 2004 reunification referendum. There is no possibility of EU membership for Turkey without a solution to the Cyprus conflict. Thus, the negotiations for a bailout fund represent the failure to take advantage of a significant opportunity to revive the accession negotiations with Turkey.

Alexander Bürgin is Assistant Professor at the International Relations and Political Science Department at Izmir University of Economics.