Cyprus British Foreign Affairs Committee Report on Cyprus

Alexandros Lordos · instructor

Hi all,

I am copy-pasting here the British Foreign Affairs Committee Report on Cyprus, which was just published this morning. I got an advance copy last night, because the authors used my survey extensively, but I wasn't allowed to release it until this morning.

This is an important document, because it will form the basis for British Policy on Cyprus in 2005. I suggest we all read it and then discuss it.

Warning: This is a LONG post.

Conclusions and recommendations

1. After careful consideration, we conclude that it was right that all those on the electoral roll in northern Cyprus were able to participate in the referendum held in April 2004, and we recommend that the same arrangements should apply in respect of any future referendum on a solution to the Cyprus problem. (Paragraph 80)
2. We conclude that there is as yet little evidence that the Republic of Cyprus has fully taken on board that its membership of the EU involves obligations, as well as opportunities. We recommend that the Government work on a bilateral level, and with its European partners, to encourage Cyprus to adapt to European Union values and methods of working. (Paragraph 103)
3. We are greatly disappointed that it has so far proved impossible to gain agreement on the modest but important proposals to improve the operation and usefulness of the Green Line Regulation on intra-island trade. We recommend that the United Kingdom work closely with the Luxembourg presidency to secure early implementation of these changes and to streamline procedures for making further amendments. We further recommend that the EU should take steps to bring in genuinely free trade, with traders in the South of the island being free to move goods and products across the line to the North. (Paragraph 115)
4. We regret that valuable aid for the people of northern Cyprus is being held up by political and procedural disputes within the EU. We recommend that the Government use its good offices to persuade all parties to remove the remaining obstacles to disbursement of this aid. (Paragraph 122)
5. We conclude that undertakings given to Turkish Cypriots by the international community must be honoured. We recommend that the Government do more to turn its words into action, by working with the Luxembourg presidency of the EU to remove obstacles to direct trade with and travel to northern Cyprus, and that it encourage the wider international community to do the same. (Paragraph 135)
6. We recommend that in its response to this Report, if not sooner, the Government clarify whether it has the power to authorise direct passenger flights between the United Kingdom and northern Cyprus. We further recommend that, if it does possess the power to authorise flights, the Government announce a date from which such services will be permitted, subject to satisfactory safety inspections of the facilities at Ercan and other assurances. (Paragraph 146)
7. In the absence of an early overall settlement, we recommend that the Government support practical measures which will enable Turkish Cypriots to trade with the United Kingdom and other countries, such as refurbishment and then joint operation to EU standards of the port at Famagusta, as proposed by the government of Cyprus. (Paragraph 152)
8. We reiterate our previous strong support for Turkish membership of the European Union. We conclude, however, that in practice Turkish accession will be impossible for as long as there is no settlement of the Cyprus problem. We also conclude that Turkey has the power greatly to assist both a settlement in Cyprus and its EU aspirations, for example by withdrawing some of its many thousands of troops from the island, and we call upon it to do so. (Paragraph 163)
9. we conclude that, despite assertions to the contrary, there is no wish or intention on the part of the British Government to perpetuate the present state of affairs on the island, still less to move towards a permanent and legal partition, which would be in no one’s best interests. (Paragraph 172)
10. We conclude that the Government’s decision to offer to transfer sovereignty over almost half of the United Kingdom’s sovereign base areas on Cyprus to the island’s two communities as part of an overall settlement was a constructive and useful gesture, with no negative consequences for the United Kingdom’s interests. We recommend that the Government be prepared to renew the offer with the same conditions as before in the event that progress towards a settlement is resumed. (Paragraph 182)
11. We recommend that in any future negotiations on a settlement based on the Annan Plan, the parties be invited to consider accelerating the withdrawal of Turkish and Greek forces and the demilitarisation of Cypriot forces, so that all these are reduced to zero and security guarantees are provided by an external force acting under the terms of a mandatory resolution of the United Nations Security Council. (Paragraph 195)
12. We note the very strong feelings of the Greek Cypriot people about the need for restitution of property to its rightful owners and conclude that the property issue remains one of the most crucial to be addressed in the search for a solution to the Cyprus problem. We conclude that in any revival of the talks process it will be necessary to find ways of addressing Greek Cypriot concerns which do not disadvantage Turkish Cypriots. An element of outside financial support may be helpful in this regard. (Paragraph 199)
13. We conclude that British citizens who intend to buy property in northern Cyprus risk exposing themselves to legal action by Greek Cypriots who may be the rightful owners of those properties. We recommend that the Government lose no opportunity to warn prospective purchasers of this risk. (Paragraph 200)
14. We recommend that a population census be held in northern Cyprus, funded by the European Union and carried out either by an appropriate international body or by the Turkish Cypriot authorities under close international supervision. (Paragraph 205)
15. We recommend that in any resumption of negotiations for a settlement of the Cyprus problem, the Government seek to persuade the parties of the need for an increase in the number of Turkish settlers who will be required to return to Turkey as part of a solution, together with improved financial compensation for them. The precise figures should be for negotiation between the parties. (Paragraph 208)
16. We conclude that a substantive financial gesture by Turkey on the property compensation issue would be a magnanimous and positive move which would reflect well on Turkey and should be of some assistance in reducing Greek Cypriot opposition to a solution which stops short of full restitution. (Paragraph 211)
17. We conclude that the costs of a settlement in Cyprus may be considerable, but that the international community is able and willing to make a substantial contribution to them. We recommend that the Government seek to ensure that, before any further referendum is held on the island, clear information is available to the people of Cyprus on the extent of the financial contribution which will be made by countries other than Cyprus. We further recommend that the Government and the European Union look sympathetically at ways of alleviating the financial burdens of a settlement on ordinary Cypriots. (Paragraph 216)
18. We conclude that, in the absence of an overall solution to the Cyprus problem, a step-by-step approach is likely to be better than no progress at all. We also conclude that confidence-building measures have a role to play, but only if they are consistent with the principles which underlie the Annan Plan, and only if they do not diminish the prospects of an overall settlement. We recommend that the Government consider lending its support to any worthwhile and practicable confidence-building measures which meet those criteria. (Paragraph 223)
19. We conclude that a lasting settlement of the Cyprus problem is overwhelmingly in the interests of the people of Cyprus and that it offers important advantages for the European Union, for Turkey and for the international community. We further conclude that, although the prospects for success may not be great, the opportunities which will arise in mid-2005 must be seized. As one of the Permanent Five on the UN Security Council, as President of the EU in the second half of 2005 and as a guarantor power in relation to Cyprus, the United Kingdom is in a uniquely special position to assist the process. We recommend that the Government make the achievement of a solution to the Cyprus problem a priority of its foreign policy in 2005. (Paragraph 236)

Introduction

1. The island of Cyprus has been divided between its majority Greek Cypriot and minority Turkish Cypriot populations physically since 1974, and psychologically for far longer. Attempts to end the physical division, to find a solution to what has become known as “the Cyprus problem” came closer to success than ever before in 2004, with the publication of a UN-brokered scheme—the ‘Annan Plan’—on which both communities were able to vote in simultaneous referendums. The result of those referendums, in which two thirds of Turkish Cypriots supported the Plan, but three quarters of Greek Cypriots rejected it, was a stalemate. The internationally-recognised Republic of Cyprus, which exercises de facto control over only the Greek Cypriot-controlled parts of the island, entered the European Union in May 2004; the self-styled ‘Turkish Republic of Northern Cyprus’ is recognised only by Turkey, 35,000 of whose troops are garrisoned there. Turkey’s candidature for membership of the EU is blighted by the fact that its forces occupy a large part of the territory of an existing member state. It is hardly surprising that, after decades of simmering on the back burner of international priorities, the Cyprus problem has become a focus of attention. A further attempt to find a solution which is acceptable to a majority of all the people of Cyprus is likely to take place later this year.
History of the Cyprus Problem
2. The long, complex and unhappy history of the Cyprus problem was set out in a Report of our predecessor Committee in 1987.1 For some (mainly Turkish Cypriots) the Cyprus problem began in 1963; for others (mainly Greek Cypriots) it began in 1974. This Report considers developments since 1987. If anything, we heard too much about the history of the Cyprus problem during this inquiry, and heard less than we would have wished to hear about the future. We accept, however, that just as with Ireland, no-one can claim to understand the Cyprus problem who has not studied its history. Although our main purpose is to look forward, we set out here a brief chronology of events since the previous Report.2
3. The election of a new, pro-settlement Greek Cypriot President, George Vassiliou, in 1988 provided fresh impetus for inter-communal negotiations. These proved fruitless and with the momentous events of the period 1989–91 in Russia and Europe, the Cyprus problem fell down the list of priorities for the international community. It remained there until April 1992, when United Nations Security Council Resolution 750 was adopted, in which it was asserted that a settlement must be based on “a state of Cyprus with single sovereignty, an international personality and a single citizenship, with its independence and territorial integrity safeguarded, and comprising two politically equal communities.”3 UN-sponsored talks with the active involvement of Secretary-General Boutros-Ghali began later that year on the basis of a document which came to be known as the Set of Ideas, but they had not been completed by the time Greek Cypriot Presidential elections were due in February 1993. The parties had in any case been unable to agree on a range of issues, not least the delineation of the areas to be under Greek and Turkish Cypriot administration.
4. Following the elections in 1993, Glafcos Clerides returned to the President’s Palace in Nicosia and made Cyprus’s accession to the EU his priority.4 Although a great deal of work was carried out on the basis of the UN Set of Ideas in the period 1993–94, followed by some nugatory work on a series of confidence-building measures (some of which had been proposed by our predecessor Committee) there was little real progress towards a settlement during this period, which was characterised by occasional violence along the Green Line and in the UN-patrolled buffer zone. In 1994, the European Court of Justice declared direct trade between member states of the European Communities and northern Cyprus to be illegal and the following year, Greece agreed to support a customs union between the EU and Turkey only if Cyprus was accepted as a candidate for full membership. In May 1996, the British Government appointed its former Ambassador to the United Nations, David (now Lord) Hannay, to the newly-created post of Special Representative for Cyprus.6
5. Early in 1997, Mr Clerides made moves to acquire surface-to-air missiles from Russia—a step certain to annoy Turkey, which duly threatened to take military action. Despite these setbacks, and thanks not least to the efforts of Lord Hannay and Malcolm Rifkind, in July and August 1997 Turkish Cypriot leader Rauf Denktash and President Clerides met for direct talks, first in the United States and then in Switzerland. Like all the previous talks, these failed (in this case, Lord Hannay told us, partly because of tensions concerning Turkey’s application to be a candidate for membership of the EU).
6. Glafcos Clerides was narrowly re-elected as President of Cyprus in February 1998. In April, Turkey and northern Cyprus created a ‘joint economic zone’, further cementing the divide. The missile crisis was still at its height in September 1998, when the then House of Commons Foreign Affairs Committee visited Cyprus as part of its inquiry into EU enlargement. It was resolved only in December, following the application of strong pressure by Greece, which was concerned for its own relations with Turkey. Greece and Turkey had been close to war several times in the 1990s over territorial disputes. This tension was dissipated by the resolution of the missile crisis in Cyprus and then the mutual assistance between Greece and Turkey after the earthquakes of August and September 1999, so preparing the way for Turkey to take a further step towards EU membership. However, Greece accepted this development only in exchange for explicit undertakings that Cyprus’s accession would not depend on a settlement of the Cyprus problem.
7. With both Cyprus and Turkey aspiring to join the EU, the minds of the international community once more focused on the Cyprus problem and, in the words of Lord Hannay, “we had a further and much more elaborate attempt in which we, the European Union, the United States and the United Nations worked systematically together and that led through a series of negotiations … to the Annan Plan.” We summarise the process which led to the Plan in the next chapter of our Report.

Reasons for the present inquiry
8. Had it not been for the rejection of the Annan Plan by the majority Greek Cypriot population of Cyprus, it is most unlikely that we as a Committee would have carried out this inquiry and produced this Report. However, when that rejection happened, there was a natural desire among all friends of Cyprus to know how and why the best opportunity to secure a peace deal on the island had been missed, and whether there was any prospect of rescuing it.
9. Those of us who were members of the Committee in the last Parliament had visited Cyprus in 1998, in order to assess the preparedness of Cyprus for EU accession. This work had been followed up during a further visit in 2002, when we met all the major participants in the then talks process. We also went to Ankara in 2002, and subsequently produced a Report in which we considered Turkey’s candidacy for EU membership; and we discussed Cyprus with leading Greek political figures during Greece’s Presidency of the European Union in 2003. We decided to draw together and follow up this work by seeking answers to a number of questions which, we felt, arose from the referendum result:
. • whether the UK should continue to back the Annan Plan;
. • the implications for the EU of the admission of a divided country;
. • what role the UK should play in the continuing process of negotiations between the two communities on the island;
. • implications of the Annan Plan’s rejection for the northern part of the island;
. • whether the British Government should seek to alter its relationship with the northern part of the island, and if so how; and
. • implications for the EU’s relationship with Turkey.

10. Below, we discuss these questions under three broad headings: the Annan Plan; the role of the European Union; and the role of the United Kingdom. In a final section on the way forward, we set out our ideas on how progress might yet be made towards a final, complete and fair settlement of the Cyprus problem.
Acknowledgements
11. We received more than 260 written submissions to our inquiry. This degree of public interest and involvement in the work of the Foreign Affairs Committee is unprecedented, certainly in the last ten years. As well as submissions from the governments of the United Kingdom and the Republic of Cyprus and from the administration of the ‘Turkish Republic of Northern Cyprus” we received a number of useful contributions from academics, interest groups and informed observers of the process. Those of us who went to Cyprus in November 2004 also met many political, business and community figures on both sides of the Green Line, including President Papadopoulos, Mr Denktash and Mr Talat. A full record of these meetings was made for the benefit of those of us who were unable to participate. We learnt a great deal from the written evidence and from the discussions held during the visit.
12. In Westminster, we heard oral evidence from the Minister for Europe, Dr Denis MacShane; Mr Pierre Mirel, Director, Enlargement Directorate, European Commission; Lord Hannay, former United Kingdom Special Representative to Cyprus; Mr Özdem Sanberk, former Turkish Ambassador to the United Kingdom; Mr Philippos Savvides, Research Fellow at the Hellenic Foundation for European and Foreign Policy (ELIAMEP); and Dr Christopher Brewin, Senior Lecturer in International Relations at Keele University. We were also fortunate to be able to hold private discussions in London with UN Secretary-General Kofi Annan and with Sir Kieran Prendergast, the UN Under-Secretary-General for Political Affairs. We decided at the outset of our inquiry not to hear oral evidence from representatives of the Greek Cypriot or Turkish Cypriot administrations or from the two communities’ expatriate groups in London. Our deliberations were well-informed by the extensive written evidence received from all these.
13. The bulk of the written evidence to our inquiry (210 out of over 260 submissions) came from private individuals, the great majority of whom, we judge, fall broadly into three groups: Greek Cypriots, or those of Greek Cypriot origin; Turkish Cypriots, or those of Turkish Cypriot origin; and Britons who live or own property in Cyprus. We are grateful to all those who took the trouble to write to us with their views. All submissions received were read, circulated to the Committee and evaluated as we compiled our Report. For reasons of space and because of the very similar terms in which many of the submissions received from private individuals were expressed, we have decided not to publish a large number of them. However, those which we have not published are listed on page 86 of this Report and have been deposited in the Records Office of Parliament, where they may be consulted.
14. Finally, we have made some use of published sources in preparing our Report. Most notably, these include the Annan Plan itself; the Secretary-General’s Report to the Security Council on his mission of good offices; Lord Hannay’s book, Cyprus—The Search for a Solution,18 published during our inquiry; and the ‘Lordos study’ of Greek Cypriot public opinion, Can the Cyprus Problem be Solved?, which was also published while our inquiry was under way. Where these sources have been used, they are cited in the text.

The Annan Plan

Genesis of the Plan
15. The United Nations has been directly involved in Cyprus since the early 1960s, when inter-communal violence reached such levels that from 1964 a peacekeeping force of ‘blue berets’ was deployed between the Greek and Turkish Cypriot communities in Nicosia and at other flashpoints on the island. After the events of 1974 and the physical division of the island, successive secretaries-general sought to use their good offices to bring about a solution of the Cyprus problem. The Set of Ideas produced by Secretary-General Boutros-Ghali in 1992 did not produce a settlement, but they remained on the table and were picked up again by Secretary-General Kofi Annan as his team began work in earnest in 2001.
16. In November 2001, as the strong likelihood of Cyprus’s accession to the EU with or without a solution to the Cyprus problem became a near-certainty, Turkish Prime Minister Bulent Ecevit announced that Ankara could in that event “annex” northern Cyprus.21 With a new sense of urgency evident, on 4 December President Clerides and Mr Denktash held face-to-face talks in the buffer zone at the latter’s instigation and announced the resumption of negotiations from early 2002. We visited the island in March 2002 and held discussions with both men. We formed the impression at that time that Mr Clerides was anxious to secure a settlement, in order that a united Cyprus could join the EU. Our opinion of Mr Denktash was that he understood the opportunities opened up by accession, but that he was not inclined to compromise.
17. The EU summit in Copenhagen in December 2002 provided a natural deadline for these negotiations, for it was to be at this summit that the question of Cyprus’s accession would be determined. The first version of what later became known as the Annan Plan was released in November 2002 and a revised version was made available in December. The final version of this phase, Annan 3, was presented to the parties in February 2003. To no-one’s surprise, but to wide disappointment, the negotiations failed once again, finally coming to a halt at The Hague in March.
18. Lord Hannay, who was closely involved in this process, told us that “it was Mr Denktash who prevented the negotiation and acceptance of Annan Two or Three at Copenhagen and then at The Hague,” because he once again refused to accept a settlement which did not involve prior recognition of his breakaway state, the ‘Turkish Republic of Northern Cyprus.’ If Annan 3 had been put to the vote, we were told not only by Lord Hannay but by many Greek Cypriots during our visit in November 2004, it could well have been approved by the electorate in the South under the leadership of President Clerides. It might even have been approved by Turkish Cypriots too, although that is much more doubtful. Of course, if the Plan had been accepted in 2003 by Greek Cypriot voters and rejected by their Turkish counterparts, the situation now would be totally different and the Republic of Cyprus would not have lost the moral high ground from which it fell with such a loud crash a year later.
19. Version three of the Annan Plan was remarkably similar to the later version five, on which the referendums took place, although there were also important differences. The territorial adjustments provided for in both were almost the same; the numbers of people in both communities entitled to citizenship was the same (in practice, this affected the North more than the South); and the provisions relating to the continuing in force of the Treaty of Guarantee were the same. We turn now to version five of the Annan Plan, on which Cypriots were to vote in April 2004.
The process of negotiating the Plan
20. The period from the election of President Papadopoulos to the end of 2003 was described by Mr Annan as “a fallow period in terms of my good offices”, but it was a period in which two very important developments took place in Cyprus. In April, to general surprise, the Turkish Cypriot authorities unilaterally relaxed restrictions at the Green Line in Nicosia, allowing Greek Cypriots to visit the North freely for the first time since 1974. The impact of this move was profound. Greek Cypriots were able to visit their former homes in the North, and in many cases to speak to their new inhabitants. In some cases, personal effects were returned, although not all encounters were so positive. And by visiting shops, restaurants and other facilities in the North, Greek Cypriots came into contact with their Turkish Cypriot counterparts, some of them for the first time, and found they were able to relate to them as people. In the first year, Cypriots made more than three million crossings of the Green Line, using the four crossing points then open, with very few incidents reported.26
21. The second development on the island was the election, in December 2003, of a pro-solution administration in the North. The new ‘prime minister’, Mehmet Ali Talat, made it clear that he was committed to taking his people into the European Union; that could happen only if there was a settlement of the Cyprus problem. The election of Mr Talat, following as it did the election of a pragmatic and stable government in Ankara under Prime Minister Erdoğan, created a new, more favourable climate for negotiations. “After weighing the situation”, Mr Annan contacted both sides and, following a series of consultations, announced on 13 February 2004 that the parties had agreed to negotiate on the basis of Annan 3, with simultaneous referendums to be held before 1 May, the date of Cyprus’s accession to the EU.
22. Faced by that deadline of Cyprus’s accession date to the European Union, Mr Annan decided that the negotiations could not continue indefinitely and secured the agreement of the parties “to complete the plan in all respects by 22 March 2004.” In our view, given the history of protracted efforts to reach a settlement, he would have been right to work to a deadline, even without the accession date. Although President Papadopoulos later complained of “undue haste and a rush to impose a settlement”, and the influential AKEL party called for the referendum to be postponed,31 we agree with Dr Savvides that “the mistake of the previous efforts [was] that they were open-ended.” The issues were well known and so, indeed, were most of the solutions. What was required was a process under which the Plan could be ‘sold’ to the two communities by their leaders.
23. In this respect, version five of the Annan Plan differed crucially from version three. In earlier versions of the Plan, both communities’ political leaders would have been required to endorse the Plan and to have campaigned for it among their respective electorates. Under Annan 5, the Secretary-General’s determination to produce a definitive scheme by the deadline meant that he had to drop insistence on support by the leaderships. This step was probably taken in order to cater for the perceived likelihood—which must at the time have seemed a racing certainty—that Turkish Cypriot leader Rauf Denktash would refuse to campaign for the Plan, even if he could be prevailed upon to sign it.33 Ironically, it allowed another intransigent leader, Greek Cypriot President Papadopoulos, to withhold his support from the Plan.
24. The curious and, for most observers, surprising reversal of roles between the traditionally rejectionist Turkish Cypriot leadership and the normally more pro-settlement Greek Cypriot leadership was a consequence of two unrelated factors: the election of a pro-Europe government in Turkey under Mr Recip Erdoğan; and the election of a more hard-line President of the Republic of Cyprus, the rejectionist Tassos Papadopoulos. With Mr Erdoğan in power in Ankara, the uncompromising stance of Rauf Denktash ceased to be supported by Turkey. This allowed negotiations on the Annan Plan to move forward, all the time with an expectation that Mr Denktash would at some stage walk out, as he had done so many times before, but eventually reaching the point where a settlement was in sight. By the time Mr Denktash did withdraw from the process, more moderate Turkish Cypriot politicians were able and willing to take his place.
25. This unexpected development forced the Greek Cypriot political leadership, which was previously secure in the knowledge that the other side would once again be seen as the wreckers of a deal, to face up to whether it really supported the terms of the Annan Plan. The answer was “No.” In his televised address to the people of Cyprus on 7 April, President Papadopoulos called on them to give the Plan “a resounding No.”
26. Mr Annan was later to complain, in unusually blunt terms for an international civil servant and an experienced diplomat, that President Papadopoulos had not “accurately reflected the contents of the plan” when addressing the Greek Cypriot people,36 and to imply that the President had reneged on earlier commitments to support the Plan.37 EU Enlargement Commissioner Günter Verheugen reportedly complained that he was prevented from addressing the Greek Cypriot people on the Plan. Mr Annan also called on the Greek Cypriot side to articulate their concerns “with clarity and finality”, thereby suggesting that the concerns had not been so communicated during the negotiating process.
27. This interpretation of the Greek Cypriot Government’s negotiating stance is widely shared. We therefore asked the Government of Cyprus to supply us with copies of the documents in which it had articulated its concerns during the negotiating process. We received a large bundle of papers in response to this request. The papers support the contention by President Papadopoulos that he had submitted to the UN “more than 200 pages of comprehensive proposals.” Unfortunately, the Greek Cypriot proposals were not consolidated until late in the process, on 25th March; they were not prioritised; and they did not provide the “clarity and finality” which the Secretary-General evidently required.
28. There have been suggestions that the government of the Republic of Cyprus did not negotiate in good faith. Lord Hannay has stated as much in his recent book and we were told that EU Enlargement Commissioner Günter Verheugen “felt betrayed.” Neither are we aware of significant third-party support for the way in which the Greek Cypriot representatives conducted the negotiations, although we note that Mr Annan went out of his way to praise the other participants. The backing of Greece was “a credit to that country and her leaders”; he “appreciated the strong support of the Turkish government, from the top down”; and he placed on record his “appreciation of the efforts of Mr Talat both in the process and in the run-up to the referendum.”47 The absence from the Secretary-General’s Report of any such positive reference to President Papadopoulos is surely eloquent evidence of his views.
29. The process of transforming version three of the Annan Plan into what became version five began in February 2004. From 19 February to 22 March, the parties negotiated in Cyprus, without significant progress, although important details were agreed by officials working on the details of implementation. The original deadline having been overshot, from 24 March the Secretary-General convened a meeting in Bürgenstock, Switzerland. In their capacity as the guarantor powers, Greece, Turkey and the United Kingdom also participated in this final phase of talks, which ended, as provided for in the originally agreed timetable, on 29 March. Mr Annan has described in his report to the Security Council how at Bürgenstock there were no face-to-face negotiations between the parties, all formal exchanges being made through the UN negotiating team. President Papadopoulos was absent for much of the time and Mr Rauf Denktash failed to attend at all. The Turkish Cypriots were represented by Mr Talat and Mr Serdar Denktash, but President Papadopoulos has consistently refused to deal directly with Mr Talat. Mr Annan clearly found this very frustrating.
30. In accordance with procedures agreed between the parties in February, allowing him “in the event of a continuing and persistent deadlock” to use his discretion to finalise the terms of the Plan, Mr Annan then produced a text to submit to the people of Cyprus, for approval by separate referendums in the two communities. In his report to the Security Council of May 2004 he stated that this final text preserved the balanced proposals of the Plan which had been agreed before, “while addressing to the extent possible the key concerns of each side.” Dr Denis MacShane told us that “It is difficult to think of a better deal that could have been agreed by all the different parties involved and then put to the vote of the people.” However, it was this text which was rejected by the Greek Cypriot electorate just over three weeks later.
31. We summarise the Plan’s main provisions below, before focusing on four specific areas of contention which, it has been suggested to us, contributed significantly to the decision by more than three quarters of Greek Cypriots voting in the referendum to reject it.

Contents of the Plan
32. Version five of the Annan Plan53 proposed a “new state of affairs in Cyprus”, based on the Swiss cantonal model. A United Cyprus Republic (UCR) would be formed, with a federal government and two constituent states: one predominantly Greek Cypriot, eventually comprising about 71 per cent of the land area of Cyprus; and the other predominantly Turkish Cypriot, comprising about 29 per cent of the land area. Cypriots would be citizens both of the UCR and of the appropriate constituent state.
33. The federal government of the UCR would include not less than one third Turkish Cypriot ministers, with the Presidency and Vice-Presidency alternating between the two communities each ten months. A bicameral federal parliament consisting of a Senate—in which both communities would be represented equally—and a Chamber of Deputies—not less than one quarter of whose members would be elected by Turkish Cypriots—would legislate, through a weighted system of voting. The Supreme Court would be made up of three Greek Cypriot, three Turkish Cypriot and three non-Cypriot judges.
34. Turkish and Greek military forces would withdraw in phases so that by 2019 at the latest there would be no more than 650 Turkish and 950 Greek troops on the island. All Greek Cypriot and Turkish Cypriot forces would be dissolved. Territorial adjustments between the two component states would take place in six phases over a 42-month period, and the question of the rights of those who had lost their property would be dealt with under a complex system of reinstatement or compensation.
35. The Plan, containing fourteen Articles and nine Annexes, was supplemented by much detailed draft legislation and subsidiary agreements, which officials of the two communities were able to agree in technical working parties. It is remarkable that so much of the detail was agreed upon and that it remains, apparently, non-contentious.

The contentious issues
36. Our purpose in this section of our Report is to describe four of the main areas of contention, based both on the evidence we have received and on the many discussions which took place during the visit some of us paid to the island. In a later section of the Report we consider how each of these areas of contention could be resolved satisfactorily and we set out our conclusions.
37. The issues on which we focus here are among those identified by Greek Cypriots who voted against the Plan. In preparing this section, we have made extensive use of the survey and statistical analysis of Greek Cypriot public opinion carried out by Mr Alexandros Lordos. We wish to emphasise, however, that where we have cited Mr Lordos’s published survey we have done so because it confirms what we were told in evidence and also what we heard directly from many other sources when we visited Cyprus. We are grateful to Mr Lordos for carrying out his survey and for drawing the publication of its results to our attention.
38. It should also be borne in mind that, although most of them voted for the Plan, many Turkish Cypriots also had concerns about aspects of it. The London representative of the ‘TRNC’, Mr Namik Korhan, told us that “A very long list of why the plan should have been rejected exists in the minds of each and every Turkish Cypriot, let alone the leadership.”63 Some of these are enumerated in the evidence of the largest political party in northern Cyprus, the UBP. Mr Korhan added that “any initiative by the Greek Cypriot side or any other third party to make amendments to the Annan Plan is not acceptable on the part of Turkish Cypriots.” Mr Lordos has recently carried out a survey of Turkish Cypriot opinion, in order to identify the issues which most concern them. The key to any successful revival of the Annan Plan will be to meet the objections of Greek Cypriots in ways which do not reduce the attractions of the Plan to Turkish Cypriots. This will be a formidable challenge.

Security guarantees and Turkey’s continued military presence
39. Under arrangements which were largely negotiated between Greece and Turkey in the 1950s, the Republic of Cyprus established in 1960 was to allow on its soil a maximum 950 troops from mainland Greece and 650 from mainland Turkey. Throughout the late 1960s and early 1970s, this rule was flouted and in 1974 the Greek military (who were also the civil power in Athens at the time) brought about a coup against the Government of the Republic of Cyprus. They put into power Nicos Sampson, a former terrorist who espoused political union between Cyprus and Greece (enosis). Turkey then intervened militarily. Ironically, both Greece and Turkey, together with the United Kingdom, were obliged to respect and uphold the independence of Cyprus under the 1960 Treaty of Guarantee.
40. After the coup of 1974 had been reversed, bringing down the Greek colonels’ regime in Athens with it, the provisions of the 1960 constitution with regard to troop levels were again flouted by both sides, but most blatantly by Turkey, which has since July 1974 maintained a garrison on Cyprus of approximately 35,000 troops (Greece has about 1,250 troops in the South).
41. It can be seen how for each community on Cyprus, therefore, the presence of forces from the ‘motherland’ powers has been a source both of fear and of comfort. Turkish Cypriots, who suffered at the hands of Greek and Greek Cypriot forces between 1963 and 1974, feel that they need guarantees of their security, guarantees which historically have been provided only by the Turkish armed forces. Greek Cypriots, who in 1974 were victims, first of the machinations of the Greek military, and then directly at the hands of Turkish forces, continue to regard the latter as the principal threat to their peace and security.
42. Force levels on the island were always bound to be one of the most difficult parts of a settlement to negotiate and on which to reach agreement. In earlier versions of the Annan Plan, all forces would have been withdrawn at the time of Turkey’s accession to the EU or after 21 years, whichever came first. In Annan 5, the approach taken appears to have been to persist with the maximum ‘motherland’ troop levels permitted under the 1960 arrangements and with the status of Greece and Turkey as ‘guarantor powers’, but to overlay this with a strong guarantee of the status and security of both communities, underpinned by the UN Security Council. As noted above, this meant that by 2019 the
Turkish military contingent in Cyprus would have been reduced to no more than 650 personnel.70 The government of Cyprus suggested to us that, contrary to what the Secretary-General stated in his Report to the Security Council, the earlier provision (in Annan 3) for complete removal of the Turkish troops was changed at the insistence, not of Turkish Cypriots, but of Turkey.72
43. In a last-minute attempt to deal with the Greek Cypriots’ feelings of insecurity, the United Kingdom and United States brought forward a draft mandatory Resolution in the UN Security Council to give effect under Chapter VII of the UN Charter to the provisions in the Plan calling for international support for its implementation and enforcement. The Resolution was vetoed by Russia. Some observers have suggested that the Russians were exercising a proxy veto for the Republic of Cyprus. The presence in Moscow of the Cyprus Foreign Minister at the time the veto was cast was noted by Lord Hannay, the British Government and others. It has also been suggested that the Russian veto was cast on procedural grounds. However, during a visit to Moscow by Prime Minister Erdoğan in January 2005, President Putin said that Russia had used its veto “not to block the taking of this decision but to rule out any possible influence on the outcome of the referendum.” The effect nonetheless was to block the taking of a decision. We agree with the United Kingdom’s Minister for Europe that this was “an extraordinarily unhelpful veto.”
44. President Papadopoulos referred to the 650 troops as a “bridgehead”. One of our witnesses described what we suspect was a representative view of Greek Cypriots that “this was legitimising the presence of the invading forces.” The Lordos study shows that even moderate Greek Cypriots feel strongly that it would be inappropriate for Turkey to maintain armed forces in Cyprus and to have the right to intervene militarily even following a settlement. According to Lordos, more than three quarters of Greek Cypriots believe it is essential that Turkey should be obliged to reduce its forces to 650 within a much shorter timescale, and about three fifths demand that the troops should leave altogether and want to see an end to the right of unilateral intervention claimed by Turkey under the Treaty of Guarantee. A shortening of the timetable for a reduction in troop levels is actually the alteration to the terms of the Annan Plan most strongly sought by Greek Cypriots.

45. Why do Greek Cypriots feel so strongly about the continued presence in the Turkish Cypriot-administered area of the island of 650 Turkish troops? Such a small force is not going to be able directly to threaten the security of over 600,000 Greek Cypriots and, in any case, Cyprus is famously within only a few minutes flying time for the Turkish Air Force’s fast jets. The fact that Greek Cypriots apparently seek an accelerated reduction more than they demand a complete withdrawal suggests to us that the fundamental problem with the force level and guarantor power provisions of the Annan Plan was that the Greek Cypriots’ experiences of 1974 meant that they did not trust the Turks.83
Refugee return and property rights
46. The events of 1974 displaced approximately 50,000 Turkish Cypriots and 180,000 Greek Cypriots, separating them from their homes and property. It has been a long-standing goal of Greek Cypriot refugees to repossess their properties and, in many cases, to return to live or to work in them. Lord Hannay has described the property question as the most complex and most sensitive of the core issues of the Cyprus problem.
47. The Annan Plan provided for the property rights of Greek Cypriots to be balanced against the rights of those now living in the homes or using the land, some of them Turkish Cypriot refugees from the South of the island, who had lost homes of their own, but many others of them Turkish settlers. Most Greek Cypriot property owners would have been able to return to their properties, because they lie in the area to be transferred to Greek Cypriot administration. Of the remainder, under a complex formula set out in the Plan, most of those who had lost a single dwelling standing on a plot of up to approximately a quarter of an acre or, in five specified villages, any property, would be entitled to recover the entire property, and others to recover one third of their property by value or area, receiving compensation for the balance.
48. However, a number of exemptions and exceptions apply, which in practice would have reduced the scope for owners to recover their property, or would at the very least have complicated or protracted the process of recovery. For example, if a property had been substantially improved by its new inhabitants they might be entitled to compensation. It was also suggested to us that most agricultural holdings are too small to be included in the scheme. For a period of five years after the entering into force of the Plan, the great majority of Greek Cypriots with property in the North would be unable to return to live in their homes, and it would be fifteen years before all restrictions were lifted. Also, all proceedings before the European Court of Human Rights for recovery of property in Cyprus would have been struck out.
49. In its submission to our inquiry, the Ministry of Foreign Affairs of the Republic of Cyprus stated that up to 95,000 Greek Cypriots would be likely to return to the areas to be handed over from Turkish control to the Greek Cypriot constituent state, and that by 2023 up to 51,000 Greek Cypriots would be able to take up residency in the Turkish Cypriot constituent state. However, in his report to the Security Council, Mr Annan suggested that the Plan “would effectively allow over time some 100,000 Greek Cypriots to take up permanent residence in the Turkish Cypriot State” and an unlimited number to maintain second homes there.
50. The written evidence of the FCO makes no mention of the property issue in its discussion of the reasons for the rejection of the Annan Plan by Greek Cypriot voters. There has also been a perception in some quarters that Greek Cypriots will not, in fact— whatever their currently expressed views—wish to return to live or work in the areas which, under the Plan, will be part of the Turkish Cypriot constituent state. Under this perception, the problem is essentially one of compensation, rather than of the right of return.
51. However, when we were in Cyprus, we heard a great deal about this aspect of the Plan, enough to convince us that when it comes to reaching a final settlement of the Cyprus problem, the right of return and property rights remain close to the heart of the matter. This impression was confirmed by the Lordos Study, which recorded support among Greek Cypriots for an increase in the proportion of property situated in the Turkish Cypriot administered areas to be returned to its Greek Cypriot owners as higher (at 63 per cent) than support for an increase in the proportion of the island to be administered by the Greek Cypriots (50 per cent).
52. The property issue is important to Greek Cypriots not just for economic reasons. Even those born after the events of 1974 feel an emotional tie to their ‘home’ village in what Greek Cypriots often refer to as “the occupied territories”. The right of return is seen by many Greek Cypriots, just as it is seen by the Palestinians, in terms of the principle of just redress for a wrong committed by a militarily superior neighbour, not as a bargaining chip in some wider process of negotiation. Our impression is that most displaced Turkish Cypriots have less of a desire to return to their former homes and prefer to remain in the North, accepting a property in exchange for that which they have given up.
53. The Ayios Ambrosios Association wrote to us on behalf of their members, who in 1974 had to leave their village, 20 miles East of Kyrenia (Girne), in an area which under the Annan Plan would be part of the Turkish Cypriot component state. They pointed out that under the limits which the Plan would place on the numbers of former residents allowed to return, only over-65s could go back to their homes between the second and fifth years; and returnees can amount to no more than six per cent of the population of the village up to the ninth year, 12 per cent up to the fourteenth year and 18 per cent up to the 19th year.92 When we visited Cyprus, the point was made to us that these small numbers would in many villages be unlikely to be able to sustain facilities such as schools and churches in their communities.
54. For Turkish Cypriots as well, however, the property issue and the right of return for Greek Cypriots are very sensitive areas. Turkish Cypriot leader Rauf Denktash has previously expressed his fear that a right of return and its natural corollary, freedom of movement and of settlement, would rapidly lead to “Hellenisation” of the whole of Cyprus.93 The principle underlying a bi-zonal solution would of course be undermined if Turkish Cypriots were to be outnumbered or dominated by Greek Cypriots within the Turkish Cypriot constituent state. Those of us who visited the island last November found that this concern was widely shared in the North and our impression is that, if anything, the prospect of cultural and economic domination by Greek Cypriots is a greater concern there than the problem of displacement of Turkish Cypriots and settlers who would have to leave the properties they currently live in, when they are returned to their rightful owners.
55. Greek Cypriots, on the other hand, also have concerns about their cultural identity. Under the Annan Plan, the constituent states of the United Cyprus Republic and not the federal authorities would be responsible for many services within their areas, including education, although Article 4 of the Plan declares that cultural, religious and educational rights of members of one community living in the area administered by the other community are “protected”. Greek Cypriots fear that returning families would find that their cultural identity would be suppressed by a Turkish Cypriot administration. They therefore seek adjustments to the Annan Plan which would give the federal authorities a greater role in the provision of services such as education.

Turkish ‘settlers’
56. When Turkish troops occupied more than 36 per cent of Cyprus in 1974, most Greek Cypriots fled South of the ceasefire line. In 1975, almost all of those who had remained were expelled by the Turkish authorities. The homes, farms and businesses they left behind were more than the Turkish Cypriot population could use and into this partial vacuum were soon sucked thousands of Turkish citizens, mainly from Anatolia. This process was encouraged by Turkish Cypriot leader Rauf Denktash, and it has continued to the present day.95 There has been much intermarriage between settlers and Turkish Cypriots and of course there are many children who have been born to such couples, who are regarded as being entirely Turkish Cypriot and who may be eligible for citizenship of the Republic of Cyprus. Large numbers of Turkish Cypriots have left their homeland, many of them using their status as Commonwealth citizens to emigrate to the United Kingdom, Australia or Canada. Their places, too, have largely been taken by newcomers from the Turkish mainland.
57. Although many Turkish Cypriots would be able to trace their ancestry to past generations of immigrants from Anatolia, a distinctly Turkish Cypriot identity has developed over the years. Turkish Cypriots generally adopt a more western and secular lifestyle than is followed in rural parts of mainland Turkey. The term which is widely used to refer to mainland Turks who live in northern Cyprus is ‘settlers’, although many of them are migrant workers or others with no desire or intention of remaining permanently in Cyprus. For convenience, and for want of a more widely-accepted term, in this Report we refer collectively to Turks living in northern Cyprus who do not have citizenship of the Republic of Cyprus as ‘settlers’.
58. To Greek Cypriots, the Turkish settlers are illegal immigrants, many of whom have illegally occupied their homes, taken over their businesses, and developed their land, whereas all but a few of the most hard-line Greek Cypriots will now recognise Turkish Cypriots as fellow citizens, with full property and other rights. We consider that the legal logic of this position is undeniable (notwithstanding this, it is of course denied by many Turks and Turkish Cypriots). The Government of the Republic of Cyprus is regarded by all states other than Turkey as the legal embodiment of the state formed in 1960 by international treaty. Only that government has the right to confer, or to remove citizenship. The administration north of the ceasefire line on the island, although it has exercised de facto control over more than one third of the territory of the Republic of Cyprus for more than 30 years, does not have de jure powers. It cannot confer citizenship of the Republic of Cyprus; it can only confer ‘citizenship’ of a country which no state other than Turkey recognises.
59. As with the troops issue, there is both a practical consideration and a principle at stake here. On the practical side, many settlers are occupying land and buildings which fall to be returned to Greek Cypriots under the Plan. They will have to go somewhere, and Greek Cypriots suggest that they should return to Turkey. Under the Annan Plan, thousands of them would have had to do just that, although the precise numbers are disputed. The Plan caps the number of persons of Turkish origin who can be given citizenship of Cyprus at 45,000 and provides for curbs on immigration from Turkey and Greece for a period up to 19 years. In his Report to the Security Council, the Secretary-General suggested that “about half” of the settlers (a number certainly to be counted in the tens of thousands) would have to leave the island. In his retort to Mr Annan, President Papadopoulos suggested that all but a few thousand would be able to stay, and the Cyprus Ministry of Foreign Affairs told us that “under the 2004 version of the Plan, 111,000 Turkish settlers were either entitled to UCR citizenship or to residence.” The difference between the figures may be due partly to differing assumptions about what choice would be made by settlers offered the right of residence without citizenship.
60. The issue of principle is, as ever, more difficult to resolve. The corollary of the assertion by Mr Annan that thousands of settlers should return to Turkey is that thousands of those who remained would become citizens of the new Cyprus. Many Greek Cypriots find this difficult to accept: it alters the demography of the island; and it creates very close ties between a segment of the population and Turkey. They would agree with the conclusion of the Council of Europe Parliamentary Assembly in May 2003 that “the presence of the settlers constitutes a process of hidden colonization.”
61. Typical of the submissions we received from Greek Cypriots was that of Lobby for Cyprus, which told us that the settlers “were deliberately and cynically despatched to Cyprus by Turkey to change the demographic composition of the island” and which called for removal of these “colonists.” According to the Lordos study, three quarters of Greek Cypriots regard it as essential that as part of a settlement of the Cyprus problem more Turkish settlers should be obliged to leave the island, and well over half (63 per cent) also demand stricter limitations on future Turkish immigration. The settler issue is thus one which appears to have caused many Greek Cypriots to vote against the Plan.
62. The related question, of whether Turkish settlers should have been allowed to vote in the referendum, is considered at paragraphs 73 to 80 below.

Financial and economic costs of implementation
63. When we visited Cyprus, we heard from some of those whom we met in the South that the Annan Plan was unfair in that its implementation would impose a high economic cost on Greek Cypriots. Not only would many Greek Cypriots lose part of the value of their homes, land or businesses in the North, but they would incur almost the whole cost of compensation for such unrecovered property and of rebuilding the infrastructure and reviving the economy in the areas returned to their administration.
64. Further, under the Annan Plan, the Greek Cypriot population would have borne 90 per cent of the cost of administering federal services of the United Cyprus Republic, despite constituting about 80 per cent of the population and holding only two thirds of the seats in the lower house of the legislature and half of the seats in the upper house. It is no surprise, therefore, to see in the Lordos study that 73 per cent of Greek Cypriots apparently regard a fairer distribution of costs as essential if they are to support a settlement, and that three quarters of them require Turkey to compensate them for the value of any property which cannot be recovered.
65. Once again, we see an obstacle to acceptance of the Plan which is both practical and principled. No-one wants to dip into their pocket if it can be helped, but neither do Greek Cypriots see why they should pay to put right a wrong which, so far as they are concerned, was created by the Turkish Army and has been exacerbated ever since by poor decisions by those in charge of the North’s economy, such as the use of the weak Turkish Lira as the currency, and a lack of investment. The fact that Greek Cypriots are on average three times wealthier than Turkish Cypriots is not seen by them as sufficient reason for asking them to pay the bills for a reunification scheme which in any case delivers only part of what they seek.

The referendums of April 2004
66. Simultaneous referendums took place in both parts of the island on 24 April 2004. In the Turkish Cypriot area, 64.9 per cent of voters supported the Annan Plan; turnout was 87 per cent. In the Greek Cypriot area, 75.8 per cent of voters rejected the Plan, on a turnout of 88 per cent. Under the Plan’s own terms, it was from that moment “null and void”. In this section, we examine the referendum campaigns in both communities.
The referendum in the South
67. The official referendum campaign lasted just over three weeks, but in the South of the island it effectively began months before. There has always been a strong element in Greek Cypriot political life which has rejected the very concept of a bi-communal (still less a bi-zonal) federation, believing that, as in many other countries, the rights of minorities should be protected in a strong, unified state. This element has never supported the basic premise of the Annan Plan and, as one of our witnesses observed, “the campaign for the ‘No’ started even before Mr Papadopoulos was President; it started from the very first day we had the first version of the Annan Plan.” A seemingly well-prepared and well-resourced ‘No’ campaign got under way as soon as the Plan was published. However, as Mr Annan noted in his report to the Security Council, supporters of the Plan could only start to sell it once its final shape was known, and “the ‘Yes’ campaign did not get up and running until the last 10 days before the referendum.”
68. In his broadcast to the Greek Cypriot people on 7 April, Mr Papadopoulos said that the Plan would “do away with our internationally recognised state exactly at the moment it strengthens its political weight, with its accession to the European Union” and called on them to give the Plan “a resounding No”. Three quarters of them did just that.
69. How did this result come about? Undoubtedly, as we have seen, the Greek Cypriots had (and still have) major and genuinely felt concerns about the terms of the Annan Plan, although those opposing the Plan were by no means in agreement as to why they were voting ‘No’. These concerns were shared, and even reinforced, by their political leadership. The President of Cyprus, most of the Greek Cypriot political leaders, the head of the Greek Orthodox Church in Cyprus and many other senior figures in the Greek Cypriot community campaigned openly and strongly for a ‘No’ vote. Even the political party AKEL, traditionally one of the most pro-settlement parties, after much discussion and a failed attempt to delay the vote, came out against the Plan, calling on the electorate to give it a ‘soft No’ (rejection now, to allow a better Plan to be accepted later). To former Turkish diplomat Özdem Sanberk, the answer to the question posed at the beginning of this paragraph was simple: “The failure of the Annan Plan, in my opinion, is the lack of the political will of the Greek Cypriot leadership, they did not speak up for the Annan Plan.”

70. Lord Hannay agreed that there had been a long-standing failure on the part of Greek Cypriot leaders:
I do think that all Greek Cypriot politicians, and that includes President Clerides and his party, have some responsibility for the fact that they did not prepare opinion on their side of the island for the necessary compromises. For many, many years, Greek Cypriot politicians in every election had promised the sky, the moon and the stars to their electorate, that all Greek Cypriots would go back, all Turkish troops would be removed and all the settlers would be sent back to Turkey. If you read their election speeches, that is what they said. Then of course the Annan Plan appeared, and it did not quite say that, and nobody was ready for it.
71. Meanwhile, the international community, accustomed to hearing a loud ‘No’ from the direction of the ‘presidential’ palace in north Nicosia, failed to turn its ear to the South. By the time the approaching ‘No’ was heard in New York, London and elsewhere, the argument was lost. As Dr Savvides put it, “one of the things that I think that the international community can be criticised on is that it focused so much on the Turkish Cypriot community leadership in fact, how to avoid the obstacle named Rauf Denktash, that it ignored developments within the Greek Cypriot community.”
72. Whether a more energetic campaign by the international community, especially the countries of the European Union, to market the Plan to Greek Cypriot voters would have succeeded is open to question—it could just as easily have backfired. What seems rather to have been the case is that those putting together the Plan were so aware of the need to avoid a ‘No’ vote in the North, that they put into it features which, in the context of unrealistically high Greek Cypriot expectations of what was achievable, made a ‘No’ vote more likely in the South. If this analysis is accepted, the outcome of the vote among Greek Cypriots was effectively already decided when the final text of the Plan was published on 31 March.

The referendum in the North
73. To seasoned Cyprus-watchers, the ‘Yes’ result in the North was if anything a greater volte-face than the ‘No’ result on the other side of the Green Line, albeit a more welcome one. The elected leader of the Turkish Cypriot administration, Mr Talat, campaigned vigorously for a ‘Yes’; elder statesman Rauf Denktash fought no less strongly for a ‘No’. The December 2003 ‘parliamentary’ elections had given Mr Talat and his pro-solution allies a shade over half of the votes, although post-election manoeuvres had robbed him of a majority in the Turkish Cypriot assembly. In the end, the views of the new generation of Turkish Cypriot politicians triumphed over those of the old. Lord Hannay felt that it was the lively political debate in northern Cyprus which was partly responsible for delivering such a strong ‘Yes’ in the referendum:
… interestingly enough, on the north of the island, they were ready for it, because they had been having a tremendously lively debate for two years about whether or not they could trust Mr Denktash to negotiate in good faith and finally they had come to the conclusion, the majority amongst them and that was reflected in the huge demonstrations in Nicosia at the end of 2002 and the beginning of 2003, that he could not be trusted; and that they wanted to sign up to the Annan Plan and to join the European Union at the same time as the south.
74. Much of the nervousness in advance of the referendum in the North was occasioned by uncertainty over how Turkish settlers in northern Cyprus would vote, given that one consequence of implementation of the Annan Plan was to be that thousands of settlers would have to leave the island. It is instructive, therefore, to look at the distribution of votes in the North.

Alexandros Lordos · instructor

75. According to figures provided to us by the Turkish Cypriot authorities, Turkish Cypriots (ie, Turkish Cypriot citizens of the Republic of Cyprus) were more supportive of the Plan than were Turkish settlers. The ‘TRNC’ told us that “the Iskele district, which is mostly populated by citizens who have acquired citizenship over the last 30 years, had the lowest percentage of Yes votes” in the North. Even in Iskele (Trikomo), however, well over half of those voting supported the Plan. In areas with relatively few settlers, the ‘Yes’ vote was higher—in North Nicosia, it was over 70 per cent. The apparent majority ‘Yes’ vote among settlers can probably be explained in part by the fact that many thousands of them would have gained citizenship under the Plan; for those who had calculated that they would qualify for such citizenship, a ‘Yes’ vote must have seemed tantamount to a ticket to Europe.
76. To many Greek Cypriots, the question of how many settlers voted for the Plan and whether they swung the vote (clearly, they did not) is irrelevant—the point is that as illegal immigrants they should not have been allowed to vote at all. The Greek Cypriot leadership naturally raised this point with Mr Annan during the negotiating process, pointing out various precedents and legal opinions. In his ‘good offices’ report, the Secretary-General noted that the Greek Cypriot side had proposed that voting in the referendum should be limited to those who had Cypriot citizenship in 1963 and their descendants. The report refers to the “apparent impracticability” of this proposal and that it would have required the Turkish Cypriots to accept the Greek Cypriot interpretation of the history of their island in the early 1960s. In the event, despite “persistent, repeated calls” by the Greek Cypriot side to disenfranchise the settlers, they were allowed to vote in the referendum. As Lord Hannay put it,

The voting rolls which existed for Turkish Cypriot parliamentary elections and Turkish Cypriot presidential elections were in existence and they were what they were. I think it was generally agreed, and indeed the Greek Cypriots knew all about this, that this was a valid basis on which to seek an opinion.
77. The arguments against allowing settlers to vote were undoubtedly strong. We acknowledge the force of the case made by the government of the Republic of Cyprus and we note that the electoral rolls in the North clearly include information on when voters attained ‘citizenship’. It would thus have been feasible to restrict the vote in the North to those born on the island, most of whom are Turkish Cypriot citizens of the Republic of Cyprus. Against this, however, it has to be remembered that the fate of the settlers, too, was being determined. Their right to remain on the island was at stake. Most of the settlers also consider themselves to be ‘citizens’ of the ‘TRNC,’ to which they pay their taxes and under whose laws they live. Their interests cannot, however, be ignored or dismissed.
78. We note in passing that Greek (or other) immigrants who have been given citizenship by the Republic of Cyprus are able to vote in elections or referendums in the South, but that Turkish Cypriot citizens of Cyprus who live in the South do not have the vote in elections. For this reason, electoral law in the Republic has been found to be discriminatory.
79. One way of dealing with Greek Cypriot objections to the participation of settlers in any future vote in the North might be to require a solution to be approved by a majority of Turkish Cypriots, as well as by an overall majority of those taking part. A referendum carried out on such a basis could be regarded as valid by all parties. Turkish Cypriot objections to releasing information on the origins of voters would have to be overcome, to allow such a referendum process to be observed and validated by outside monitors.

80. After careful consideration, we conclude that it was right that all those on the electoral roll in northern Cyprus were able to participate in the referendum held in April 2004, and we recommend that the same arrangements should apply in respect of any

The ‘good offices’ report of the Secretary-General
81. On 28 May 2004, the Secretary-General of the United Nations published a report on his mission of good offices in Cyprus. Noting that his plan had been accepted by the Turkish Cypriot electorate by a margin of two-to-one, but rejected by the Greek Cypriot electorate by a margin of three-to-one, he concluded that the outcome of the referendums “represents another missed opportunity to resolve the Cyprus problem. … There is no apparent basis for resuming the good offices effort while the current stalemate continues.” The disappointment felt by the Secretary-General and his team is evident both from the content and from the tone of the document, and is entirely understandable.
82. The Secretary-General’s report provoked a remarkable response from President Papadopoulos. In a letter to Mr Annan dated 7 June, the President complained that parts of the report were “snide”, “offensive”, “ironic” and “sarcastic” and lambasted the UN’s “misguided negotiating tactics”, accusing it of acting with “undue haste”. One thing Mr Papadopoulos’ letter ensured is that the UN will not be unduly hasty in seeking to revive its mission of good offices. Mr Papadopoulos appears to have replaced Mr Denktash as the man on Cyprus who says ‘No’. As Lord Hannay put it to us, “I am afraid to say that his [Mr Papadopoulos’] communications to the Secretary-General that I have seen in the last year bear a striking resemblance to those of Mr Denktash in the previous 30 years.”131

Political developments in the South
83. Following the referendum, Greek Cypriot politics have been characterised by much disagreement and recrimination, but there has been no fundamental shift in opinion. It must have been galling for Greek Cypriots, victims of an invasion by a militarily far superior foreign power in 1974, to find themselves portrayed as the wreckers of a deal which would have restored to them much—but not all—of their land, many—but not all— of their homes, and all of their international status. As Cyprus’s former High Commissioner in London, Michael Attalides, has observed, “The Cyprus Government and the Greek Cypriots have lost the moral high ground and the capital of good will accumulated with the international community from repeatedly being the side that had shown political will for solving the Cyprus problem.”
84. Most affected by the fallout from the referendum has been the major party on the left in south Cyprus, AKEL. Traditionally pro-settlement and with a history of talking and listening to moderate Turkish Cypriot politicians, AKEL has been undergoing what one of our witnesses described as “almost a crisis.” Its decision to call for a “soft No” in the referendum has left it bearing a large part of responsibility for the Plan’s failure. We gained a sense when we were in Cyprus of a feeling that AKEL had misjudged the situation in April and was looking for ways of realigning itself, perhaps behind a modified Annan Plan. As the Minister for Europe suggested to us, “there were people [in AKEL] listening perhaps to the tom-toms in the undergrowth and no political party necessarily wants to be on the wrong side of a referendum vote.” Such a political party is also likely to wish to be on the right side of a vote, when circumstances change. The challenge for AKEL, it was suggested to us when we visited the island, is to work for and to lead that change.
85. One question which many friends of Cyprus have asked themselves in the wake of the referendum in the South is, does Greek Cyprus really want a settlement? Anticipating that question, the Government of Cyprus told us “in the strongest possible terms, that Greek Cypriots … rejected this particular Plan and not the solution of the Cyprus problem.” But what sort of solution would Greek Cypriots have supported? As the real possibility of a bi-zonal federation loomed, many Greek Cypriots must have viewed with alarm the prospect of a formal end to the existence of the Republic of Cyprus as created in 1960. What many Greek Cypriots actually wanted, it was suggested to us, was a return to a strong, central state. They may still want it. In the words of Dr Brewin, “Mr Papadopoulos has been very consistent since his early beginnings as a leader of the struggle in wanting a proper sovereign state with minority rights for Turkish Cypriots, but he has never taken the view that this should mean that they should have an equal power in the state.”136 It is our view that the actions and inactions of the present Greek Cypriot political leadership are entirely consistent with a strategy designed, over time, to achieve a unitary state and to avoid a bi-zonal solution. Such a strategy would be predicated on full membership of the EU (now achieved), continuing the isolation of northern Cyprus and placing the onus on Turkey to reconcile its EU aspirations with its stance on the Cyprus problem, thus achieving for Greek Cypriots a more attractive solution than UN-sponsored negotiations could ever produce.
86. The Lordos study of Greek Cypriot public opinion asked one thousand Greek Cypriots to choose their preferred model for the future of Cyprus. Very slightly fewer than half of the sample opted for a unitary state as their “ideal solution”, and only 16 per cent opposed it. If this survey, which we understand was conducted in full conformity with accepted standards for such exercises, is accurate, it suggests a degree of attachment among Greek Cypriots to the unitary state model which the supporters of any revised plan incorporating a bi-zonal solution will have to work hard to overcome.
87. However, the picture may not be so bleak as it appears. The same survey also found that, although only 14.7 per cent of Greek Cypriots would regard a bi-zonal solution as an ideal solution, almost 70 per cent of them would tolerate it. Thus, there appears to be an acceptance on the part of most Greek Cypriots that a bi-zonal solution is the most likely outcome. What is far from certain is whether the present Greek Cypriot political leadership shares that view; we suspect they do not.

Political developments in the North
88. In October 2004, the minority administration of ‘prime minister’ Mehmet Ali Talat, who had campaigned strongly in favour of the Annan Plan, resigned as it became apparent that there would be no early ‘reward’ for Turkish Cypriots’ support for the Annan Plan and some of his supporters defected. Mr Talat, whom we met during our visit to Cyprus, has remained in office pending elections, which are to be held on 20 February. There have also been suggestions in the press that he will stand for ‘president’ in further elections, due in April. The current incumbent, Rauf Denktash, has announced that he will not seek reelection, although neither does he intend to retire from politics.
89. Michael Attalides suggested that Rauf Denktash “seems to have been moved to the sidelines”, although his voice is surely loud enough to be heard from there. However, his influence on Turkish Cypriot—and, perhaps more significantly—on Turkish public opinion is likely to remain strong. Mr Denktash is the most prominent rejectionist in the North, but he is far from alone. The National Unity Party (UBP), founded by Mr Denktash, is the main right-wing political grouping in northern Cyprus and has been in power for most of the past 30 years. It opposed the Annan Plan on the basis that it would have resulted in economic domination of the North by Greek Cypriots. Echoing comments by rejectionist Greek Cypriots about the Plan’s alleged lack of ‘functionality’, the UBP also told us that the Plan would have been unworkable in practice “even with goodwill and tolerance on both sides.”
90. Professor Clement Dodd, who is close to a number of leading Turkish Cypriot politicians, has concluded that “There would seem to be little profit in persisting with the Annan Plan.” His view reflects a tendency among influential figures in the North to see a bi-zonal solution of the Cyprus problem as being against the interests of Turkish Cypriots. This tendency supports a Turkish Cypriot state which is either independent or in a very loose confederation with a Greek Cypriot state and which has a continuing close relationship with Turkey. The political resurgence of the UBP since the referendum may be evidence that this view is gaining ground among Turkish Cypriot voters. According to Professor Dodd, “it is now difficult to see an alternative to a two-state solution.” If this is so, it underlines the extent of the opportunity missed last April.
91. It is clear that the continued support of Turkish Cypriots for a solution based on the Annan Plan cannot be taken for granted. The results of the ‘parliamentary’ elections in the North on 20 February will be the best indication of the extent to which Turkish Cypriots remain convinced that a bi-zonal solution is both a realistic and a desirable goal.

Conclusion
92. During our visit to Cyprus, we were warned by almost every Greek Cypriot we met not to support international moves to end the isolation of the Turkish Cypriot community. The reasoning behind this was that, once Turkish Cypriots have the economic benefits of direct trade with and travel to the rest of Europe, they will cease to have any incentive to support a political settlement on the island. This is the counterpart of the argument used by Turkish Cypriots in the years leading up to Cyprus’s accession to the European Union, that Greek Cypriots would have no incentive to resolve the island’s problems once they had achieved for themselves the benefits of membership of the EU.
93. We do not believe that either of these theories holds true for the majority of Cypriots. On the contrary, we believe that most people in both communities on Cyprus, well educated and economically literate as they are, realise very well that all Cypriots stand to gain from a politically and economically secure united state of Cyprus which is within the EU. We certainly gained the impression that most Greek Cypriots, although now enjoying the benefits of EU membership, remain convinced of the need for a settlement of their island’s problems; and our discussions with Turkish Cypriot politicians and business people persuaded us that they, too, see the bigger picture. Together, both communities can achieve so much more than they can apart.
94. However, there can be no perfect solution, no magic formula which delivers all the demands of both communities. Greek Cypriots and Turkish Cypriots alike will need to make concessions if a workable, lasting settlement is to be achieved. Their leaders will have to show qualities of statesmanship which have not been apparent thus far and to demonstrate their commitment to whatever settlement may be agreed, by campaigning for a resounding ‘Yes’.
95. Michael Attalides has written that Cyprus now finds itself in the “third space” of the European Union, a place where the atmosphere may be more conducive to a settlement than on Cyprus itself, or even the United Nations. In the next Chapter, we consider the Cyprus problem in relation to the EU and the prospects for agreement on aid to and trade with the North of the island.

The European Union dimension

Cyprus and the EU
96. Cyprus’s path to membership of the European Union began in 1973 with the signing of an association agreement with the European Community. The events of the following year meant that her journey to the EU was to take longer than had been anticipated. A customs union was eventually signed in 1987 and in 1990 Cyprus’s formal application for EU membership was accepted. In 1995, approval was given for the accession process to get under way, with or without a solution to the Cyprus problem, as part of a deal to bring in ten new members and advance Turkey’s EU aspirations, Greece giving up her long-running veto against the establishment of a customs union with Turkey.
97. Christopher Brewin explained: “To end a period of really bad relations with Turkey, the EU paid the asking price for lifting the Greek veto on moving to the final stage of lifting the customs union with Turkey. As that price was allowing Cypriot accession talks without a prior settlement, this required the EU to ignore the first Copenhagen requirement.”147 Professor Clement Dodd summarised the compromise as, “Eastern enlargement was more important than settling the Cyprus issue.”148 When formal negotiations commenced in 1998, Turkish Cypriot representatives were invited to join discussions as part of the Republic of Cyprus team, but declined to do so.
98. Accordingly, in December 1999 in Helsinki, the Council confirmed that Cyprus’s accession would “be made without [a solution] being a pre-condition” The Copenhagen Council of December 2002 concluded that Cyprus would be admitted to the European Union and that in the absence of a settlement, the application of the acquis to the northern part of the island would be suspended. Thus, when the divided island formally became a member of the European Union on 1 May 2004, the Union’s laws were duly suspended in the North.
99. Since May 2004, the Republic of Cyprus has held an important advantage as a voting member of the European Council. This can only have strengthened the hand of President Papadopoulos in calling for a ‘No’ vote on the Annan Plan: “Shall we do away with our internationally recognised state exactly at the very moment it strengthens its political weight with its accession to the European Union?” On the other side of the Green Line, Rauf Denktash has claimed that “Repeated statements to the effect that Cyprus would be accepted as an EU member, whether there was an agreement or not, fed the intransigence of the Greek Cypriot side.”
100. In an apparent bid to obtain concessions from Ankara ahead of the December 2004 EU summit, when a decision on Turkey’s entry was to be made, President Papadopoulos described his country’s newly-acquired veto as “a weapon we have in our hands.” He also claims to have plenty of ammunition, with no fewer than 64 opportunities to block Turkey’s accession: one at the beginning and one at the end; and two for each of the 31 technical chapters.
101. Talk of using the veto so soon after joining the club may be unpopular, but there is also some evidence to suggest that, since entering the European Union, the government of Cyprus’s actions have been less than wholeheartedly communautaire. The spirit of cooperation, the big picture which was the impetus behind European enlargement, seems to be lacking. For example, the Republic of Cyprus, which has successfully claimed to represent all the people of the island, has appointed only one Turkish Cypriot to its representation in Brussels.156 Cyprus has also blocked the EU’s direct trade proposal, which we discuss in detail below. Commenting on Cyprus’s obstruction of the financial aid and trade proposals, Dr MacShane, said: “We have not found a solution and it would be perfectly fair to say that, in my judgment, the officials of the Republic of Cyprus are not working with us to find a solution.” Christopher Brewin was of the opinion that “the European Union has to get a grip on it.”
102. Former senior Cyprus diplomat Michael Attalides, whom we met while in Cyprus, has written that
Being a member of the European Union is extremely important and pregnant with potential. But this potential is not realizable as an automatic outcome of the legal fact of membership. The legal fact of membership needs to be complemented with the full practice of membership in all fields of EU activity. The fruition of the legal fact of membership will only come through building up political capital for Cyprus within the EU, forming internal alliances or, simply put, making friends and influencing people.
Mr Attalides continues
In [the EU’s] political culture nationality and cultural diversity are sacred, but nationalism is rejected. Basic citizens’ rights are paramount and continually widened, but compromise is also valued. Democratic values are a sine qua non, but democracy is not always interpreted as strict numerical proportionality. The effort to reach unity in diversity leads to a situation where exclusion, xenophobia and prejudice are combated and the normal conduct of business involves accommodation of opposing views, painstaking efforts towards consensus, pragmatic implementation of principles, and tolerance of cumbersome decision making processes.
This is wise advice for any new member of the EU, and particularly for Cyprus. It would be a great mistake for Cyprus to see membership of the EU in terms of gaining leverage over Turkey or over Turkish Cypriots.
103. We conclude that there is as yet little evidence that the Republic of Cyprus has fully taken on board that its membership of the EU involves obligations, as well as opportunities. We recommend that the Government work on a bilateral level, and with its European partners, to encourage Cyprus to adapt to European Union values and methods of working.
Ending the isolation of the North
104. There is no doubt that northern Cyprus is isolated. As we discuss in greater detail below, direct travel from the United Kingdom and almost every other country to ports and airports in the North is impossible. Opportunities for trade are similarly constrained. Residents of northern Cyprus who are not also citizens of the Republic of Cyprus or of another EU country cannot even visit the South of the island. The consequences of this isolation are obvious to any visitor to the island who travels to both sides of the Green Line. Turkish Cypriots are poorer than Greek Cypriots; they drive older cars, on less well-maintained roads; their economy and infrastructure are less developed.
105. Turkish Cypriots blame their relative lack of prosperity on the ‘embargo’ operated against them by other countries, at the insistence of the internationally-recognised government of Cyprus. Greek Cypriots point to mismanagement of the economy of the North, including use of the Turkish Lira, and place responsibility on those Turkish Cypriot leaders who, with the encouragement of Turkey, chose ‘independence’.
106. It is certainly worth recalling that even after 1974 northern Cyprus was quite free to trade directly with countries of the European Community, until it chose unilaterally to declare independence. As Lord Hannay reminded us,
… the north had every right to trade with the European Union; unfortunately they destroyed it, on a technicality (their ability to do so) by declaring their independence and thus invalidating all the stamps and seals which they used to show that the goods had been properly inspected and so on, so it was a self-inflicted wound by the Turkish Cypriots, by Mr Denktash’s policy of pursuing status rather than pursuing a settlement. But I do not think we should forget that the European Union’s original purpose in signing the customs union with Cyprus was that all Cypriots, Greek and Turkish, should benefit from free trade and the customs union.
However, we see nothing to be gained now from an apportionment of blame for past mistakes. Our purpose in the sections below is to consider the difficulties which have arisen in respect of current proposals for ending the isolation of Turkish Cypriots, and ways of resolving them.
The Green Line Regulation
107. Just days after the referendums, on 29 April 2004, the European Council approved a Regulation which established rules for the crossing of goods and services across the Green Line. Under the Regulation, Turkish Cypriots are able to export their goods through the port of Larnaca in the South, and to trade directly with Greek Cypriots.
108. The Regulation applies both to products which originate wholly in northern Cyprus, such as agricultural produce, and to finished products, such as furniture. It is not intended to apply to products which have been imported illegally (as the Republic of Cyprus would argue) through ports in the North. The EU Council of Ministers has been given legal advice that the Regulation’s application to finished products is intended to relate only to products which have already crossed the Green Line from South to North in an unfinished state, and which are then finished in the North for return to the South.
109. Volumes of trade across the Green Line, initially very small, have started to pick up. In the first week of December 2004, the value of goods traded across the line—mainly agricultural produce—exceeded the value for the entire month of October. The European Commission told us that “Between 23 August 2004 (when the Green Line Regulation became fully operational as regards trade) and 31 December 2004, goods worth approximately €475,000 crossed the line. Meanwhile the main products are vegetables (38% in total; 50% of the December crossings) followed by paper (16%) and furniture (10%).” Although volumes remain low, it seems there is every prospect that they will increase further, especially if operation of the Regulation is improved and if confidence among business people increases.
110. It was the Turkish Cypriot side which took the initiative, in April 2003, to open the Green Line. It is disappointing, therefore, that they have not yet reached agreement on proposals made in July 2004 by the Greek Cypriot side to open further crossing points.165 During our visit to Cyprus we heard that there are currently only four crossings along the entire length of the Line, which has meant that at busy periods queues of people form.166
111. It is also disappointing that the Turkish Cypriot authorities continue to impose an almost complete ban on the movement of goods from South to North. This lack of symmetry in the operation of the Regulation lends credence to claims that Turkish Cypriots are being protectionist, and that they fear successful intra-island trade will undermine their case for direct trade with other countries.
112. Although some restrictions imposed by the Greek Cypriot authorities have been lifted, others remain. For example, Mr Mirel told us that “One of the issues we are trying to convince the Republic about is to allow truck drivers, taxi drivers, from the north to move goods into the south, otherwise the Green Line regulation does not mean anything.” In October 2004, in an interview with the Turkish press, Mr Talat complained that the Greek Cypriot authorities were “searching in detail every car, the cars of tourists, taxis and lorries. They are imposing very high insurance fees and assuming a deterrent attitude”. The Ministry of Foreign Affairs in Nicosia told us that
On 30 July 2004, the Government announced further supplementary measures in order to facilitate the movement and transport of Turkish Cypriots and their goods. As such, the Government decided on the amendment of the relevant legislation, so that public service vehicles owned by Turkish Cypriots are allowed to cross the line, loaded with persons or products, as appropriate. Such vehicles include:
.-trucks to transport goods for own account;
.-trucks to transport goods for hire or payment;

-tourist buses and coaches; and
- taxis owned by Turkish Cypriots.
However, the MFA neglected to tell us that they continue not to recognise driving licences issued in the North. In practice, therefore, few Turkish Cypriots are able to drive their trucks, buses or taxis across the Green Line.
113. The EU has been seeking to remove some of the other restrictions and in November 2004 made a series of specific proposals. These would allow trade in animals and animal products, easier movement of agricultural goods and relaxation of restrictions on goods for personal use. The proposals were discussed in working groups of officials with a view to their adoption at a meeting of the Council of Ministers in December. However, on 7 December Cyprus requested a delay, and then remittance of the proposals to the Council of Permanent Representatives (COREPER). This manoeuvre has effectively stalled the measure.
114. We consider that intra-island trade can only be a good thing: it has the potential to increase the prosperity of Greek and Turkish Cypriots alike; and it will break down barriers of mistrust and dislike. We agree with Lord Hannay that “if you freed up trade both on the island and between the island and the European Union, you would get a lot of prosperity for the Greek Cypriots too because the Turkish Cypriots are going to buy a lot of Greek Cypriot services if there is a freedom of trade on the island, so I think, as I keep saying, it is not a zero-sum game; it is a game in which the cake can get larger.”172 It is therefore deeply unfortunate that, in the circumspect words of the European Commission’s spokesman, “Neither side has taken concrete measures to improve the operation of the Green Line Regulation.”
115. We are greatly disappointed that it has so far proved impossible to gain agreement on the modest but important proposals to improve the operation and usefulness of the Green Line Regulation on intra-island trade. We recommend that the United Kingdom work closely with the Luxembourg presidency to secure early implementation of these changes and to streamline procedures for making further amendments. We further recommend that the EU should take steps to bring in genuinely free trade, with traders in the South of the island being free to move goods and products across the line to the North.
Aid to the North
116. Two days after the referendums, the EU General Affairs and External Relations Council agreed that failure to achieve a settlement should not detract from the need to assist the North, though by no means was this to be construed as recognition of the ‘TRNC’. In 2002, the European Council had set aside €259 million to help northern Cyprus and the Council now invited the Commission to develop comprehensive proposals for disbursement of this sum, with particular emphasis on the economic integration of the island and on improving contact between the two communities and with the EU. On 7 July, the Commission brought forward “A regulation establishing financial support for the economic development of the Turkish Cypriot community and for improving contacts between the two communities.” The Regulation was to place “particular emphasis on alignment with EU legislation and policies, reconciliation and confidence building measures, social and economic development, development of infrastructure and people to people contacts.”
117. Christopher Brewin gave us an example of the sort of project which could be funded under the aid package and which would prepare the way for implementation of a settlement.
So the money for Turkish Cyprus is for building houses north of Morphou for Turkish Cypriots to leave Greek houses now in preparation for a settlement. At the moment the aid is entirely around pre-accession kinds of things with feasibility studies. If the Turkish Cypriots actually had to build houses in anticipation of a settlement, which they will have to do when the Greeks go back into their properties, this would be a really positive signal that we expect a settlement and the EU could do that.
We agree that a shift in focus from feasibility studies to tangible preparations for a new state of affairs in Cyprus would be entirely appropriate. Others, however, have pointed out that the funds could be spent in ways which would make matters worse.
118. Lobby for Cyprus was concerned that aid might be used to improve properties which rightfully belong to Greek Cypriots (and thus, under the terms of the Annan Plan, make it more difficult for these owners to reclaim them). To guard against this, the Lobby urged that all funding should be channelled through the Republic of Cyprus authorities.177 In discussing this point before us, Dr MacShane said that “the Government of the Republic of Cyprus, is arguing that it should have a particular interest in how [aid] is disbursed just as other Member States like to ensure that money from Brussels does not flow to areas and projects over which it has no say. We believe that it should be disbursed directly in the North. This is an area of continuing discussion.” Speaking two weeks later, the European Commission’s Mr Mirel told us that
… after very lengthy discussions on the proposal, we have now full agreement, including the Republic of Cyprus, whereby this aid package could be used for the north—that would be implemented directly by the European Commission—but actually we would use the European Agency for Reconstruction which we have set up for the Western Balkans, which is a very experienced body to implement this type of programme, and they would open an operational centre in Cyprus. There is full agreement on this idea.
119. We welcome this agreement on the mechanics of delivering the aid. However, the €259 million has been a long time coming, and it has yet to arrive. Although we gained the clear impression when in Cyprus that Turkish Cypriots see the aid regulation as being a good deal less urgent or important than the direct trade regulation, the fact remains that this money could go some considerable way towards preparing northern Cyprus for what we hope will be its early integration into the EU.
120. Delay has occurred because the British Government and the Dutch presidency have treated the aid regulation and the direct trade regulation as a package of measures aimed at ending the isolation of the Turkish Cypriots, while the Government of Cyprus, on the other hand, supports the aid regulation but not the trade regulation. Cyprus’s High Commissioner in London told us that
… certain third countries, including the United Kingdom, have refused to cooperate in a constructive manner, in reaching an agreement on the text of this [the financial aid] regulation holding it, in a manner of speech, ‘hostage’ to agreement being achieved on the so-called draft regulation on ‘direct trade’. This conditionality in fact is what held up the implementation of the draft regulation on ‘financial support’ and not any prevarication on the part of the Republic of Cyprus.
121. The United Kingdom has indeed been at the forefront of the policy of linking the aid and trade regulations, and that linkage has undoubtedly been one factor in the delay in approving them. On the other hand, Dr MacShane said in evidence “I will not hide from the Committee my view that the British Government feels there has not been enough operational support from the Government of Cyprus to give effect to the clear wish of the European Union as a whole.”
122. We regret that valuable aid for the people of northern Cyprus is being held up by political and procedural disputes within the EU. We recommend that the Government use its good offices to persuade all parties to remove the remaining obstacles to disbursement of this aid.
Direct trade with the North
123. On 7 July 2004, the European Commission proposed to the Council of Ministers “A regulation to facilitate direct trade from the northern part of Cyprus. The proposal offers a preferential regime for products originating in the North, entering the Customs Territory of the European Union. It is proposed that the preferential regime should take the form of a tariff quota system which would be established to encourage economic development while avoiding the creation of artificial trade patterns or facilitating fraud.”
124. The legal basis of the draft regulation proposed by the Commission is Article 133 of the Treaty of Rome, which allows for decision by qualified majority voting. We were told by the former constitutional adviser to the President of Cyprus that the United Kingdom was instrumental in seeking a legal basis which would avoid the need for unanimity, and thus rule out any possibility of a Cypriot veto. Article 133 deals with trade with third countries, whereas northern Cyprus is of course part of the EU, although the acquis is suspended in the North. The government of Cyprus therefore regards the proposed use of Article 133 as “legally wrong and politically questionable.”184
125. The Cyprus High Commissioner in London invited us to take note of a legal opinion given by the legal service of the Council of Ministers. This opinion points out that Article 133 has previously been used to regulate aspects of trade with territories which are outside the Community customs territory and cites Gibraltar as an example. The legal service suggests, however, that by passing the draft regulation the Council would effectively be partially ending the suspension of the acquis in northern Cyprus, a decision which would require unanimity. The service concludes that Article 133 cannot, therefore be used as the legal basis for the draft regulation, unless the Council has first decided unanimously in favour of a partial withdrawal of the acquis.
126. The legal service of the Council also considered the question of whether direct trade would imply recognition of the ‘TRNC’. In this case, the service was of the opinion that the matter could be clarified by appropriate wording in the regulation. However, it stopped short of sanctioning the draft regulation’s provision for the Commission to designate a competent authority to implement the regulation in the North, asserting that this must be subject to the consent of the government of Cyprus.
127. We asked the European Commission’s witness to comment on the legal opinion. Mr Mirel confirmed that the Commission is very firmly committed to legislating under Article
133 and told us, “if we had to go before the court, I am sure we would win.” Christopher Brewin, author of The European Union and Cyprus, felt that the legal opinion, although “powerfully” argued, made “little sense.” He speculated that “political pressures from Greece and the Republic of Cyprus” were at work. On the other hand, Philippos Savvides thought that “if you take it to the extreme on shaky legal grounds, so that you force the Papadopoulos government to take the Commission or the EU to court, you risk a decision most likely against the Commission.” At the time of writing this Report (January 2005) the legal position remains unresolved.
128. There is of course also a significant political aspect to the direct trade issue. The Cyprus Ministry of Foreign Affairs told us that “the so-called ‘direct trade’ is purely a political reward for the Turkish Cypriots, not justified by economic considerations.” The Cyprus MFA believes that direct trade would lead to “the creeping or overt recognition of the secessionist entity in the north.”
129. Those of us who visited Cyprus found that although there was a great diversity of views among Greek Cypriots about many aspects of the Annan Plan and related issues, there was almost complete unanimity on the direct trade issue. Across the political spectrum, opinion among Greek Cypriots is very firmly that moves to ‘end the isolation’ of Turkish Cypriots will backfire, making a settlement less rather than more likely. The Cyprus Ministry of Foreign Affairs stated that direct trade “would help to solidify and deepen the division of the island, and would give a political message to the Turkish Cypriots that they do not need to cooperate with the Greek Cypriots.”
130. Similar fears were expressed by Philippos Savvides
I think yes indeed that I am all in favour of helping the Turkish Cypriots improve their social and economic life and I do think that the European Union is in the process of doing that and I have no problem with this process. My only concern is not to take measures and not to make gestures which would solidify the status quo, which would create, as I wrote in an article, another Taiwan in the Mediterranean. We do not want something which is not recognised, which has economic and other relations with countries, which will solidify and cement the partition: we want to help to unify the island.
131. Although sympathetic to the need to assist Turkish Cypriots to improve their standard of living, Michael Attalides believes that the direct trade proposal “may prove to be counterproductive” and “could have further, probably unintended consequences … leading towards the normalization or reinforcement of partition.” Similarly, Friends of Cyprus told us that direct trade as proposed by the Commission would be “totally counterproductive.”
132. The other point of view was represented by Özdem Sanberk. He called for “the opening of trade and transport and also empowering the equal rights of the Turkish Cypriots. If that happens the process of rapprochement will start and the elements of mistrust will diminish. I think this is crucial; I cannot stress more the importance of starting direct trade and direct transport and furthering the equal rights of the Turkish Cypriots.”
133. Mr Sanberk’s position was echoed by Lord Hannay, who told us
… there are many arguments being put forward by the Government of Cyprus to the effect that it would be a bad thing to resume trade from the north to the European Union because this would consolidate the separation of the island. My own view is that that is very counter-intuitive. I think that if trade from the north were resumed, this would help what is an absolutely essential feature of the reuniting of the island which is to narrow the gap between the economic prosperity of the north and the economic prosperity of the south.
134. We certainly do not discount the strong misgivings of Greek Cypriots about the direct trade proposals, which were very forcibly expressed to us in Cyprus, and we have considered them at length and with care. We are concerned, however, that whether intended or unintended, the consequences of a failure to agree the proposals would be to consign Turkish Cypriots to continuing poverty and to place pro-solution politicians in northern Cyprus under possibly unbearable strain. Neither do we believe that direct trade will diminish the desire of Turkish Cypriots to experience the other benefits of EU membership—on the contrary, we believe that experience of direct trade and contact with the rest of Europe will provide Turkish Cypriots with an even greater incentive than before to seek an overall solution to the Cyprus problem, so that they can achieve the potentially substantial economic and political benefits which go with it. In our view, direct trade should hasten a solution, not prevent one.
135. Writing to our Chairman in May 2004, Foreign Secretary Jack Straw stated that “steps should be taken quickly to end the isolation of Turkish Cypriots.” His statement was one of many at the time, including those by the Prime Minister, by the UN Secretary-General, by Secretary of State Powell and by the European Union. In September, the FCO told us that it wished “to see fully effective regulations on trade and aid implemented as soon as possible.” However, as the anniversary of their vote in favour of a comprehensive settlement approaches, Turkish Cypriots are still waiting, and with diminishing confidence, on those who have promised them an end to isolation. We conclude that undertakings given to Turkish Cypriots by the international community must be honoured. We recommend that the Government do more to turn its words into action, by working with the Luxembourg presidency of the EU to remove obstacles to direct trade with and travel to northern Cyprus, and that it encourage the wider international community to do the same.
136. Trade of course takes place through ports and airports. We now consider the legal and political ramifications of how this can be achieved.
Opening up the airports of the North
137. Cyprus has a number of well-appointed airports. The former international airport at Nicosia is in no-man’s land and is no longer operational. It has the potential, however, to accept traffic once again, if agreement can be reached. In the South, there are commercial airports at Larnaca and at Paphos. In the North, the main airport is at Ercan (Tymbou), with a well-appointed diversion airfield available at the military airbase at Gecitkale (Lefkoniko). The British forces airfield at Akrotiri in the South is not normally open to civilian traffic.
138. The legality of international flights is governed by the Chicago Convention on International Civil Aviation. Different countries implement the Convention in different ways. The United States, for example, has entered into open skies agreements with a range of countries, and the FCO told us that under these agreements it is possible for flights originating from one of those countries (such as Turkey) to stop off en route at an airport in another country (which could be Cyprus) “without permission from the US authorities provided the intermediate airport meets US security standards.” American federal aviation authorities have apparently inspected Ercan (Tymbou) airport in northern Cyprus, but no scheduled flights have yet taken place. According to the FCO, “The US Government has not yet made a policy determination on the issue of direct flights to northern Cyprus.”
139. The European Union has an open skies policy but (as we have pointed out in our Reports on Gibraltar) this does not cover airports in territories where the acquis is not fully in force, such as northern Cyprus. According to the FCO, “EU operators wishing to fly to the north therefore need a route licence and to file flight plans with the relevant authorities in accordance with the appropriate national legislation. … The Commission have made clear they consider flights to the north as primarily an issue for national governments and do not plan any initiatives themselves.”

140. The United Kingdom’s implementation of the Chicago Convention does not allow for intermediate stops in the way that the Americans’ does. The Convention is applied in the United Kingdom by Air Navigation Orders issued under Section 60 of the Civil Aviation Act 1982. At present (February 2005) an operator wishing to fly between the United Kingdom and northern Cyprus is obliged to file a flight plan to Turkey. The aircraft must land in Turkey under the terms of the permit. Such aircraft remain on the ground in Turkey for about 45 minutes before they take off again and fly to Cyprus, operating under a different permit, issued by the Turkish authorities. About 50 flights per week perform this two-part movement.
141. We received many letters from exasperated Turkish Cypriots and expatriate Britons, calling for direct flights. Clearly, anyone travelling between the United Kingdom and northern Cyprus must find it inconvenient and tiresome to have to stop off in Turkey, although since the Green Line restrictions were eased most travellers have had the alternative option of flying direct to southern Cyprus and