Leaders wrestle to break island’s bitter deadlock

Few outside observers still have doubts about the Greek and Turkish Cypriot leaders’ commitment to ending the island’s 35-year division.

After 14 months of regular meetings, their blue-upholstered armchairs at the United Nations “good offices” mission outside Nicosia have acquired a comfortable, well-worn look.

Demetris Christofias and Mehmet Ali Talat are well-qualified negotiators, with a shared trade union background and sufficient language skills to argue the details of a peace settlement in English.

Self-interest also plays a role. If a deal on setting up a bizonal, bicommunal federation is reached, Mr Christofias and Mr Talat would almost certainly be the first to hold the rotating presidency of a reunified Cyprus.

If not, both men are likely to be punished by voters and replaced by hardline nationalists who might opt for a permanent partition of the island.

Yet the UN-sponsored talks are dragging. Last week Mr Christofias admitted that the leaders were not yet ready to discuss in depth the issue of property, which, together with territory and security, lies at the core of a settlement.

“This is a comprehensive and difficult issue and they will go on working,” says Alexander Downer, former foreign minister of Australia and UN special adviser to the negotiations.

Though Nicosia-based diplomats try to avoid talk of deadlines and last chances, Mr Talat is already feeling the heat. His leftwing Republican Turkish Party was defeated last April at a parliamentary election in the north by Dervis Eroglou, whose National Unity Party favours a two-state solution.

Without at least a framework deal in place, Mr Talat’s chances of winning a second presidential term in the April poll look increasingly slim.

Public opinion in the north, once overwhelmingly in favour of reunification – and access to the benefits of European Union membership – is hardening.

“The talks don’t have a positive image and people aren’t very hopeful,” says Emine Erk, a Turkish Cypriot human rights lawyer. “There seems to be a zero-sum attitude, that you’re only happy with the talks if the other side is giving ground.”

Mr Christofias in turn faces pressure from “rejectionists” in the Greek Cypriot south, including influential media barons and members of the centrist Democratic party, which is the junior partner in his communist-led coalition government.

While communist discipline still appears strict, some analysts doubt whether Mr Christofias has the full support of his party on reunification.

However, the election victory of George Papandreou’s Socialist party in Greece has given the island’s pro-settlement politicians a welcome boost.

Mr Papandreou intends to rebuild the close relationship with Turkey he established as foreign minister 10 years ago.

“We have to revive a dynamism that will not only help Turkey on its course towards Europe but contribute to a solution of the Cyprus issue,” he said during a visit to Nicosia.

Next month’s EU summit, at which the bloc’s 27 heads of government are due to assess Turkish progress, will test the resolve of both Mr Papandreou and Mr Christofias. They hope that Turkey will inject fresh momentum into the Cyprus talks, as well as its own bid for accession, by agreeing to open one of its ports to Greek Cypriot traffic.

But if not, Mr Christofias has implicitly ruled out using a veto against Ankara, saying: “Our intention is not to punish Turkey.”

Many Greek Cypriots are uncertain about the benefits of signing up to a federal state that they would have to finance in its early years, as Turkish Cypriot per capita income is about half that of the south.

Greek Cypriots have avoided fostering cross-border relationships because of a widely held view that any form of bicommunal contact – from schoolchildren exchanging visits to football matches against teams from the north – implies “recognition” of the self-proclaimed Turkish Cypriot republic in the north.

The issue of “recognition” also places constraints on trade across the Green Line, the unofficial border between north and south, which has been developing gradually under an EU umbrella.

Most Turkish Cypriot products are still shipped to Turkey for export, while goods purchased by Greek Cypriots are generally transported in bulk and packaged in the south for sale locally.

“When Cyprus joined the EU in 2004 we were promised direct trade with the Union. That hasn’t happened,” says Oya Barcin, head of trade development at the Turkish Cypriot chamber of commerce.

Both sides of the island are feeling the impact of the global slowdown, following a collapse in the holiday property market and a sharp decline in tourist arrivals this year.

Greek Cypriot unemployment has reached 5.5 per cent, the highest rate since 1974. Turkish Cypriots have also lost jobs in the construction sector in the south.

A weak recovery is forecast for the south, while the isolated economy in the north faces continuing stagnation.

Studies indicate that reunification would bring sustained growth in tourism and business services, the pillars of the Greek Cypriot economy.

Higher education, which underpins the Turkish Cypriot economy and is expanding in the south, would become a growth sector, while the north’s mass tourism market would quickly be upgraded.

“There would obviously be the short-term costs of economic adjustment, but the medium-term prospects, with Greek Cypriot companies gaining access to the large Turkish market, would be very exciting,” says Charilaos Stavrakis, Greek Cypriot finance minister.

Settling issues of property and territory would unlock domestic investment and allow a federal Cyprus to develop a long-term strategy for attracting foreign investment, according to UN advisers. As a result of the island’s frozen conflict, ownership of property worth an estimated €20bn – mainly in the north – remains in dispute.

One arresting example is the derelict resort of Varosha outside Famagusta – a popular Mediterranean playground in the 1960s – with crumbling high-rise hotels surrounded by barbed wire.

“Just the rebuilding of Famagusta as a high-quality resort would make the whole island more prosperous for years to come,” says Symeon Kassianides, a Greek Cypriot businessman.

But so far neither Mr Talat nor Mr Christofias has tried to put forward a vision of a prosperous, reunited Cyprus offering a wealth of opportunity to both communities.